In early December, Kathleen Sebelius, the secretary of the Department of Health and Human Services, sent a letter to state governors informing them that the federal government would not support or pay for a limited expansion of Medicaid coverage for needy individuals and families.
The Obama administration wants states to expand Medicaid under the terms of the Patient Protection and Affordable Care Act, the healthcare legislation passed during the first Obama term. However, the Supreme Court’s ruling on the law allowed states to choose whether they wished to expand Medicaid or not. Under the terms of the law, any state that chooses to expand Medicaid to include anyone earning a specific income amount or lower would have the costs of such an expansion covered entirely by the federal government for the first several years. After that states would have to pay a percentage of the cost, but no larger than 10% by 2020.
The letter details how the Obama administration would not pay for expansions that were less than those outlined in the healthcare law. If, for example, a state chose to implement the Medicaid expansions slowly over several years, the federal government would not provide matching funds until the state met the full expanded coverage guidelines.
A handful of states have already chosen not to participate in the Medicaid expansion at all, while others have already begun implementing the expansion prior to the 2014 deadline. Many, if not most, other states will decide whether to expand Medicaid in the coming year prior to developing their 2014 budgets.
Michael Robinson, Estate Planning Attorney
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