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Medicaid Expansion through Premium Assistance: Key Issues for Beneficiaries in Arkansas’ Section 1115 Demonstration Waiver Proposal

As states weigh whether to expand their Medicaid programs as provided by the Affordable Care Act, a few states have considered using Medicaid funds as premium assistance to purchase Marketplace (formerly called Exchange) coverage for newly eligible Medicaid beneficiaries, as an alternative to providing coverage through their traditional Medicaid programs.  The Department of Health and Human Services has indicated that it will consider approving a limited number of such demonstrations.  To date, Arkansas is the first of two states to enact legislation authorizing the expansion of its Medicaid program through premium assistance, and on June 24, 2013, Arkansas released for public comment its draft § 1115 demonstration waiver application. This issue brief provides background about Medicaid premium assistance in the individual health insurance market, summarizes major components of Arkansas’ proposal, and considers key issues affecting beneficiaries.