DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
 
 
 
 
April 25, 2013 
 
Medicaid/CHIP Affordable Care Act Implementation 
 
Childrens Health Insurance Program (CHIP) coverage for children who lose Medicaid eligibility 
due to the elimination of income disregards as a result of the conversion to MAGI. 
 
Section 2101(f) of the Affordable Care Act  
 
Answers to Frequently Asked Questions 
 
General 
 
1)  What is the objective of section 2101(f) of the Affordable Care Act? 
 
A: Section 2101(f) of the Affordable Care Act (implemented through regulations for the CHIP 
program at 42 CFR 457.310) provides that states maintain coverage under a separate CHIP 
for children who lose Medicaid eligibility (including eligibility under a Medicaid expansion 
or M-CHIP program) due to the elimination of disregards under the new modified adjusted 
gross income (MAGI) based methodologies, which will be effective on January 1, 2014.    
This provision was intended to create a mechanism to ensure a smooth transition and 
continuity of coverage for children as the new income counting rules take effect. 
 
2)  What are the disregards that are referenced by section 2101(f) of the ACA? 
 
A: Income and expense disregards, including block disregards, that were used to calculate 
childrens income eligibility under the states Medicaid program prior to January 1, 2014 
must be considered in implementing this provision.   
 
3)  Do states that currently do not have a separate CHIP or whose separate CHIP only 
serves a limited population need to create a separate CHIP for this population? 
 
A:  Yes, children protected by section 2101(f) must be enrolled in a separate CHIP.  A state 
could design its CHIP program to operate in the same manner with respect to this population 
as the states existing title XXI Medicaid expansion program (as a Medicaid look-alike 
program) so as to reduce administrative burden for states and confusion for families. 
 
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Eligibility 
 
4)  Should this provision be applied to new applicants or just existing enrollees? 
 
A:  The provision should be applied only to children who were enrolled in Medicaid on 
December 31, 2013 and who lose Medicaid eligibility at their first Medicaid renewal in which 
MAGI-based methodologies are applied. 
 
5)  Do these children automatically meet the definition of a targeted low-income child 
regardless of other CHIP eligibility factors? 
 
A: Yes.  These children are considered to be targeted low-income children and eligible to 
receive child health assistance in a separate child health program. Other eligibility factors 
such as the states separate CHIP upper income limit, current creditable health insurance 
coverage or other state defined criteria, should not be applied to this population or preclude 
them from receiving coverage under the separate CHIP.  The only exceptions to CHIP 
eligibility that apply are those found in section 2110(b)(2) of the Social Security Act and 
implemented through 457.310(3)(c), which include: 
  Children who  have access to coverage through a state health benefits plan on the 
basis of a family members employment with a public agency (public employee 
restriction); 
  Children who are inmates of a public institution; 
  Children who are patients in an institution for mental disease (IMD).   
 
6)  How long will such children remain eligible for coverage through a separate CHIP? 
 
A:  Once children protected by Section 2101(f) are enrolled in a separate CHIP, they remain 
enrolled until their next scheduled annual review (12 months), unless they reach age 19, move 
out of state, request removal from the program, or are deceased. At the point of renewal, these 
children will be considered for CHIP eligibility based on all the eligibility criteria applicable 
to children generally for coverage under the states separate CHIP, including the income 
standard.   
 
7)  How many children will this provision impact? 
 
A: We anticipate that this provision will impact a relatively small number of children, and 
mostly in states without a separate CHIP that already provides coverage for all children above 
the states Medicaid income limit.  This provision only applies to children who are made 
ineligible for Medicaid as a result of the elimination of income disregards and are not 
otherwise eligible for an existing separate CHIP.    
 
8)  How can states implement this provision? 
 
A:  Below are several options states may consider in implementing section 2101(f).   Under 
each, the state may not find such children ineligible for a separate CHIP based on current or 
recent insurance coverage or other state-specific restrictions on eligibility.  The only 
restrictions on CHIP eligibility that may be applied to the protected children are those 
described above in response to Question 5.  
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Option #1  
Demonstrate that all Medicaid children qualifying for section 2101(f) protection will 
qualify for the states existing separate CHIP. 
States with an existing separate CHIP may be able to demonstrate that the income standard for 
the states separate CHIP (after conversion for MAGI) is sufficiently above the states 
converted Medicaid standard for children that all, or virtually all, children losing Medicaid as 
a result of the loss of disregards under MAGI will be income-eligible for the states separate 
CHIP.  The state would need to demonstrate that most if not all affected children would be 
eligible for the states separate CHIP without any modification of the program.  Note that 
because state Medicaid programs may cover children in different age ranges (under 1, ages 1-
5, and ages 6-18) up to different income standards, this analysis would need to be done 
separately for each age range.   
 
Under this option,  States would also need to develop procedures to ensure that children being 
transferred from Medicaid to CHIP after a loss of Medicaid eligibility at their 2014 
redetermination are not denied CHIP based on eligibility criteria which may not be applied to 
these children in accordance with section 2101(f)  (see Question 5). 
 
Option #2:  
 
Enroll all children in a separate CHIP who lose Medicaid due to income at their first 
renewal applying MAGI methods.  
 
States can elect to enroll all children into CHIP who lose Medicaid eligibility because of 
excess income after applying MAGI-based income methodologies and the converted MAGI-
based income standard under Medicaid.  This option will capture more children than strictly 
defined under this provision (i.e. children losing Medicaid because of families increased 
earned income will also be included) but may be the easiest option to implement 
administratively.  
 
Option # 3  
 
Determine an income standard above the converted MAGI Medicaid FPL that will 
capture all or almost all the children who would have benefited from application of the 
former disregards.   
 
 States may achieve compliance with section 2101(f) by determining an income band (based 
on a percentage of the FPL) to capture children with above-average disregards and then move 
those with income above the converted Medicaid income standard but less than or equal to the 
converted standard plus the additional income band, into a separate CHIP.  As with option 1, 
states would not be required to ensure that every child losing Medicaid due to the loss of 
disregards will be identified under this option, but would need to demonstrate that all or 
virtually all  would be.  
 
 
 
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Option #4:   
 
Identify protected children using 2013 data. 
 
If, upon renewal, the state finds a child ineligible for Medicaid but that childs family income 
has not increased since the childs last determination of Medicaid eligibility in 2013 (i.e., 
prior to the application of MAGI-based methods in 2014), the state would automatically 
enroll the child in its separate CHIP.  If the family income has increased since the last 
Medicaid determination in 2013, the state would identify children protected by section 
2101(f) by subtracting the value of the allowed disregards the child received during the 2013 
determination from the childs household income based on MAGI in 2014.  If the adjusted 
household income (i.e., 2014 MAGI-based household income minus the value of former 
disregards in 2013) is at or below the income standard in effect in 2013 for the Medicaid 
eligibility group under which the child was enrolled, the state would enroll the child in the 
separate CHIP. 
 
CMS will work with states to ensure the selected option is implemented correctly as we 
recognize that there must be significant collaboration between Medicaid and CHIP agencies 
to implement 2101 (f).  We are also open to considering alternative proposals from states for 
how to implement this provision.  States are strongly encouraged to talk with CMS in advance 
of submitting their state plan amendments to implement this provision. 
 
Benefits/Cost-sharing 
 
9)  Can states design a unique benefit package and cost-sharing structure for this 
population? 
 
A: Yes. However, the benefit package and cost-sharing structure must be in compliance with 
separate CHIP rules.   
 
Implementation/Enrollment 
 
10) Are states required to submit a CHIP State Plan Amendment to provide coverage for 
children covered under this option? 
 
A: Yes, states will need to submit a CHIP SPA for approval to provide coverage to children 
under this group in accordance with 457.60.  CMS will make available a simplified SPA 
template on which the state may report how these protected children will be identified and 
enrolled and information on benefits and cost-sharing.  
 
Because of the flexibility provided states in establishing eligibility for separate CHIP 
programs, states could establish a group within an existing separate CHIP or as a standalone 
separate CHIP with eligibility criteria specific to the chosen option.  For example, a state 
could establish a CHIP group with eligibility limited to children losing Medicaid at their 2014 
redetermination using MAGI methodology.   Coverage provided under this group would 
sunset when the last child eligible for 2101(f) protection came up for their first annual renewal 
in CHIP. 
 
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11) Are states required to do a renewal at the end of the coverage period? 
 
A:  Yes.  States will need to conduct a renewal at the end of the 12-month separate CHIP 
coverage period in accordance with 457.343 to determine if the child remains eligible for 
CHIP and, if not, to determine potential eligibility for other insurance affordability programs 
and transfer the childs account, as appropriate, to the Medicaid agency or the Exchange.    
 
12) How long does this provision need to be applied? 
 
A:  As noted above, the protection afforded under section 2101(f) extends until the child 
comes up for his or her first regular renewal for coverage under the separate CHIP program, 
which would be 12 months from the childs transfer from Medicaid to the separate 
CHIP.  When the last child eligible for protection under section 2101(f) comes up for renewal 
in the separate CHIP, the state may discontinue this part of its program.  
 
13)  Will states need to maintain 2013 eligibility determination systems in order to 
implement Section 2101(f)? 
 
A:  No.  Systems programmed to determine eligibility based on 2013 rules would not properly 
determine eligibility based on MAGI methodologies and therefore could not be used to 
identify these children.  Children protected by section 2101(f) are children who lose Medicaid 
eligibility after MAGI rules (including household composition and family income) are applied 
but would have remained eligible if the former disregards had also been applied.  
 
14) Does the protection under section 2101(f) apply to children currently enrolled in a 
separate CHIP that lose coverage as a result of the conversion to MAGI? 
 
A:  No.  Section 2101(f) does not apply to children made ineligible for a separate CHIP as a 
result of the elimination of income disregards. Children losing coverage under a separate 
CHIP must be screened for eligibility for other insurance affordability programs and their 
cases electronically transferred per 457.348.  
 
Funding 
 
      15 ) Will states receive the enhanced CHIP match for these children?  
A:  Yes. States may claim the enhanced match available under title XXI for children enrolled 
in a separate CHIP in accordance with section 2101(f).    
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