Medicaid assists low-income earners and sick people with meeting their health care needs. However, there are out-of-pocket expenses that you may have to cover when you’re on Medicaid, namely copayments.

Your state of residence, annual income, and health status define the amounts that you have to take care of in copays. In fact, if you fall under certain exemptions, you may not have to worry about any copayments, to begin with.

What is a copay?

Some health services might require you to pay a fee while the insurance provider or Medicaid cover the rest of the bill. This fee is known as a copay, and it is an out-of-pocket expense that you incur.

To clarify, here is an example:

A prescription drug costs $1,000 for a month’s supply. A Medicaid patient has a $50 copay on prescriptions. When they want to refill this medication every month, the patient would pay $50 at the pharmacy. Meanwhile, Medicaid takes care of the remaining balance of $950.

Copays can apply to a range of health services, including doctor visits, particular types of procedures, and prescription drugs.

To determine if you have to pay a copay on an appointment or medication, talk to your health care provider. Most providers will know what is and isn’t covered under your state’s Medicaid program, alongside the typical copays.

Who decides on a copay?

In short, each state determines whether or not Medicaid patients have to incur a copay and the services that this applies to. Yet, the federal government also sets limits on how much these copays can be.

Generally speaking, the federal government establishes the copay amounts based on the patient’s income in relation to the poverty line. State governments may alter these values for specific services, such as prescriptions.

Equally as important is that federal guidelines exempt certain patients from making copayments when they’re covered by Medicaid. On the state level, officials can add other categories or groups to this exemption.

Additionally, the federal Medicaid program doesn’t require a copayment for some health services. ER visits and preventive care are two examples. Individual states could expand the list of services that are exempt from copayments.

Does everyone have the same copay?

The maximum amount of out-of-pocket health expenses that a patient may pay is based on their income in relation to the federal poverty level (FPL).

Individuals that make $12,880 per year or less are considered to be at or below the poverty line. For a household of two people, the 2021 FPL income is $17,420 or less. To determine the FPL thresholds for larger families, all you need to do is simply add $4,540 per household member.

For instance, if you’re married and have two children, you are at or below the FPL when you make $26,500 or less per year. This is calculated by adding $9,080 ($4,540 per child/household member) to the $17,420 FPL threshold that applies to a household with two people.

If you are blessed with a third child, simply add another $4,540 to $26,500 to find your new FPL levels as a family of five.

Medicaid Copays at 100% or Less the FPL

Patients with an annual income that is equal to or less than the FPL for their household size will have the following maximum out-of-pocket copayment costs (no matter what state they live in):

  • Institutional Care: $75. This entails inpatient hospital visits, rehab treatments, and other similar forms of care.
  • Non-institutional Care: $4. Examples of non-institutional care include doctor visits, physical therapy sessions, and more.
  • ER Visits for Non-emergencies: $8.
  • Preferred Drugs: $4.
  • Non-preferred Drugs: $8.

Some of the copay amounts are specifically tied to the patient’s income, while others are standardized for all Medicaid recipients (regardless of how much they make).

Medicaid Copays at 101% to 150% the FPL

You have to cover the copays below if your yearly household income is between 101% and 150% the poverty line:

  • Institutional Care: 10% of the cost that your state’s Medicaid agency typically pays. For instance, if the agency pays $1,000 for a night of inpatient hospital care across your state, the copay amount is 10% of that (or $100 per night).
  • Non-institutional Care: 10% of the cost that the agency pays in the state.
  • ER Visits for Non-emergencies: $8.
  • Preferred Drugs: $4.
  • Non-preferred Drugs: $8.

Medicaid Copays at More Than 150% the FPL

Medicaid copays are at their highest for those that make at least 151% the FPL threshold for their household size. If this applies to you, here are the copayments that you may incur:

  • Institutional Care: 20% of the cost that your state’s Medicaid agency pays.
  • Non-institutional Care: Also 20% of the cost that the agency covers across the state.
  • ER Visits for Non-emergencies: Within 5% of the aggregate limit amount.
  • Preferred Drugs: $4.
  • Non-preferred Drugs: 20% of the amount that the agency pays.

Before you take out your wallet or check book, it is important to know whether the medical treatment or care that you’re seeking is exempt from a copayment. That is to say, Medicaid will not require you to pay for any of the health service’s costs out of pocket. Your income doesn’t impact this exemption.

Who is exempt from Medicaid copayments?

The exemptions vary from state to state. Nonetheless, the federal government gives the following Medicaid recipients exemptions from making a copayment in any state:

  • American Indians and Alaska Natives that aren’t covered by the Indian Health Service or other tribal health programs.
  • Children that are younger than 18 years old. In some states, the maximum age for this exemption can be 19, 20, or 21.
  • Hospice care patients.
  • Institutionalized patients who spend most or all of their income on paying for care at the said institution.
  • Women that obtained Medicaid coverage through the Breast and Cervical Cancer Treatment Program.

Here are other groups of Medicaid recipients are not specifically exempt from Medicaid copayments under federal rules, but they still don’t typically incur any out-of-pocket costs in most (if not all) states:

  • Patients that reached their quarterly maximum limit of Medicaid copayments.
  • Pregnant women.
  • Terminally ill patients.

If you don’t fall under any of these categories, you may still qualify for an exemption under your state’s Medicaid program. In the same vein, you should check if the type of health service or care that you need requires a copay or not.

Some procedures exempt all Medicaid recipients, including those who aren’t amongst the groups listed above.

What services require a copay?

Firstly, unless you fall under a federally or state-defined exempt category, you will have to make a copayment for the following treatments or care:

  • Inpatient services that you receive after being officially admitted to the hospital.
  • Outpatient services, such as tests, physician visits, clinic appointments, and others.
  • Prescription medications.

To add to that, Medicaid recipients will incur a copay for emergency room visits that are for non-emergency reasons. However, before charging you a copay, the ER department must:

  1. Determine that you don’t need emergency care; and
  2. Identify an alternative medical facility (urgent care, for instance) that can treat you in a timely manner and for no cost or at a lower copayment amount than what the ER would charge you; and
  3. Notify you what the copayment will be if you get treated at the ER and inform you of what your other options are. If needed, the ER department must also give you a referral when you choose to seek care at the alternative facility (as mentioned earlier, urgent care would be an example).

Keep in mind that Medicaid patients who are in the exempt categories do not have to make any copayments to receive these services.

What services are exempt from the Medicaid copay?

All Medicaid recipients do not have to cover any out-of-pocket costs (including copayments) when they receive the following health treatments, regardless of their income and whether or not they are part of an exempt group:

  • ER visits for emergency reasons.
  • Family planning services, such as contraceptives, sterilization, birth control methods, and other similar forms of care.
  • Pregnancy-related services.
  • Preventative care. For example, immunizations, screenings, counseling, clinical or behavioral interventions, and more.

Estimating Your Copayments

The amount of copayments that you may cover (if any at all) depends on several factors, namely your income, health status, and, above all, state of residence.

The medical treatment or procedure that you need is just as instrumental in defining your copayment obligations.

To put it another way, the information that we outlined in this article should give you a starting ground for estimating your health care costs while on Medicaid. You can use it to figure out what your medical bill will look like based on your income, health, and other factors that are specific and unique to your circumstances.

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