DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850   
 
 
CMCS Informational Bulletin 
 
DATE:  November 21, 2016 
 
FROM:  Vikki Wachino, Director 
Center for Medicaid and CHIP Services 
 
SUBJECT:  Section 1115 Demonstration Opportunity to Allow Medicaid Coverage to 
Former Foster Care Youth Who Have Moved to a Different State 
 
Former foster care youth are youth under age 26 who were in foster care under the responsibility 
of the state when they turned 18 (or such higher age as the state has elected for termination of 
federal foster care assistance under title IV-E of the Act), and were enrolled in Medicaid at that 
time or at some point while in such foster care.  The purpose of this Center for Medicaid and 
CHIP Services (CMCS) Informational Bulletin is to inform states how they can pursue a 
Medicaid demonstration project under section 1115 of the Social Security Act (the Act) to 
continue to provide Medicaid coverage to former foster care youth who aged out of foster care 
under the responsibility of another state (and were enrolled in Medicaid while in foster care), and 
are now applying for Medicaid in the state in which they live.  States can provide such coverage 
through a Medicaid demonstration project under section 1115 of the Social Security Act (the 
Act).  This bulletin also encourages states that do not currently provide Medicaid coverage to 
youth who were in foster care in other states to pursue section 1115 Medicaid demonstration 
authority to do so.  For states that are considering pursuing this coverage option under section 
1115 authority, the Centers for Medicare & Medicaid Services (CMS) has provided guidance 
documents that are available on Medicaid.gov at https://www.medicaid.gov/medicaid/section-
1115-demo/how-states-apply/index.html.  
 
Background 
 
Title IV-E foster care youth have been a mandatory eligibility category since the Adoption 
Assistance and Child Welfare Act of 1980 (Pub. L. 96-272).  On March 23, 2010, the Affordable 
Care Act (ACA) was signed into law, making a number of changes to Medicaid eligibility 
effective, January 1, 2014.  To further the overall goal of the ACA to expand health coverage, it 
included a new provision to allow youth to maintain coverage under their parents or guardians 
health insurance plan until age 26 (to the extent that such plan extends coverage to dependents).  
In addition, section 2004 of the ACA added a new mandatory Medicaid eligibility group at 
section 1902(a)(10)(A)(i)(IX) of the Act to provide a parallel opportunity for former foster care 
youth to obtain Medicaid coverage until age 26 from the state responsible for the individuals 
foster care.   
 
On January 22, 2013, CMS issued a notice of proposed rulemaking, Medicaid, Childrens 
Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit 
Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange CMCS Informational Bulletin  Page 2 
 
Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, 
Medicaid and CHIP, and Medicaid Premiums and Cost Sharing, that proposed to implement the 
former foster care eligibility group in regulations at 42 CFR 435.150.  As part of that provision, 
CMS proposed to provide states the option to cover youth who were in foster care under the 
responsibility of another state, and enrolled in Medicaid, upon turning 18 or aging out of foster 
care in the other state. 
 
On November 21, 2016, CMS published a final rule, entitled Medicaid and Childrens Health 
Insurance Programs: Eligibility Notes, Fair Hearing and Appeal Processes for Medicaid and 
Other Provisions Related to Eligibility and Enrollment for Medicaid and CHIP Final Rule, that 
clarified that, after further review, the Department of Health and Human Services (HHS) had 
determined that the state option to cover youth who were in foster care under the responsibility 
of another state was not available under section 1902(a)(10)(A)(i)(IX) of the Act.  That section 
provides that, to be eligible under this group, an individual must have been in foster care under 
the responsibility of the state and to have been enrolled in the state plan under this title or 
under a waiver of the plan while in such foster care [.]  Because the provision requires coverage 
specifically for youth in foster care under the responsibility of the statenot a or any 
statewe do not believe the provision  provides states with the option to cover youth who were 
not under the responsibility of the state while in foster care under the former foster care 
eligibility group.  However, states can cover such youth pursuant to other statutory provisions, 
specifically through section 1115 demonstration authority. 
 
Currently, 14 states have an approved Medicaid state plan to cover former foster care youth who 
were in Medicaid and foster care in any state.  In this bulletin, we explain in detail what states 
must do to change from state plan authority to section 1115 demonstration authority to continue 
covering these individuals.  We also explain how states that did not elect to cover this population 
under the state plan can initiate a demonstration authority to do so.   
 
CMS is committed to assisting states that have approved state plans to continue coverage of 
these former foster care youth via section 1115 demonstration authority.  In the Frequently 
Asked Questions that were published along with the notice of proposed rule-making (available 
at: https://questions.medicaid.gov/faq.php?id=5010&faqId=9568), we noted that we would 
approve state plan amendments (SPAs) that provided coverage to former foster care youth who 
were in foster care and Medicaid in another state, and are now applying for Medicaid in the state 
in which they live.  We noted that, if the provision changed in the final rule, states would be able 
to continue to receive federal financial participation (FFP) until the state (within a reasonable 
period of time) submitted a SPA and modified its policies and procedures to comply with such a 
change in federal policy.  Therefore, states will continue to receive FFP for their approved state 
plans while they work with CMCS on the section 1115 demonstration vehicle, if they choose to 
pursue this option.  If a state with an approved state plan to cover former foster care youth from 
any state does not apply for a section 1115 demonstration proposal within 6 months of the 
publication of this CIB (May 21, 2017), the state is at risk of losing FFP associated with the SPA 
authority for this population.  States should contact CMS by January 21, 2017, if they do not 
expect to be able to submit a section 1115 demonstration proposal within 6 months.  We will be 
contacting the 14 states that have approved state plans to provide the technical assistance needed 
to pursue the section 1115 Medicaid demonstration.   CMCS Informational Bulletin  Page 3 
 
CMCS eligibility and section 1115 Medicaid demonstration subject matter experts are available 
to provide technical assistance to any state interested in pursuing the section 1115 Medicaid 
demonstration opportunity.  We expect to process these section 1115 demonstration applications 
within 90 days of receipt assuming there are no issues with budget neutrality (if applicable).  As 
part of CMS commitment to process these section 1115 demonstration applications within 90 
days of receipt, we have developed guidance documents to assist states in drafting their 
applications.   
 
There are two different guidance documentsone for states that provide Medicaid coverage 
under the new adult group and one for states that do not provide coverage under the new adult 
group.  There are two different guidance documents because different authorities are needed 
depending on whether the state has taken up the new adult group.  The guidance documents are 
structured so that states can be sure to include the necessary programmatic elements for 
providing coverage of former foster care youth under a section 1115 demonstration.  States must 
also ensure that any section 1115 application meets all federal transparency requirements as 
outlined later in this Informational Bulletin.   
 
CMCS recommends that states track the enrollment of former foster care youth and that state 
Medicaid and child welfare agencies share appropriate information about these enrollments, in 
order to ensure that as many former foster care youth are enrolled as possible.  CMCS also 
encourages states to consider actions to increase and strengthen overall coverage of former foster 
care youth.  (See Attachment A.)   
 
Streamlined Process for States That Have Approved State Plans Extending Coverage to 
Former Foster Care Youth from Other States 
 
Currently, 14 states (CA, GA, KY, LA, MA, MI, MT, NM, NY, PA, SD, UT, VA, and WI) have 
approved state plans  to cover former foster care youth who were in foster care under the 
responsibility of another state.  These state plan pages were submitted through, and can be 
viewed in, the Medicaid Model Data Lab (MMDL) electronic repository.  These state plan 
provisions are not consistent with the statutory authority or final rules, and must be withdrawn 
through the state plan amendment process.  To maintain such youth in a separate former foster 
care group, these 14 states must submit an amendment to their existing section 1115 
demonstration project or a new section 1115 demonstration application and submit a SPA to 
update their current state plan page (S33 in MMDL).  The state must follow the standard section 
1115 demonstration transparency requirements, such as conducting state public notice and tribal 
notification.  Such states should first submit a section 1115 demonstration amendment or new 
demonstration and then the SPA withdrawing its current state plan authority indicating that the 
proposed effective date of the SPA will be the effective date of the approved new section 1115 
demonstration or demonstration amendment.  States will be at risk of losing FFP if these 
processes are not timely completed.   
 
Demonstration Project Applications for States That Provide Medicaid Coverage under the 
New Adult Group  Request for Waivers 
  CMCS Informational Bulletin  Page 4 
 
States that provide coverage under the new adult group can cover former foster care youth who 
were in Medicaid and foster care in a different state with income up to 133 percent of the federal 
poverty level (FPL) under the new adult group and receive the enhanced Federal Medical 
Assistance Percentage (FMAP).  Section 1115 demonstration authority is not needed for these 
former foster care youth who were in foster care under the responsibility of other states with 
income up to 133 percent of the FPL.   
 
Demonstration authority would be required to provide coverage for former foster care youth who 
were in foster care under the responsibility of other states and have income higher than 133 
percent of the FPL.  States that provide coverage under the new adult group have the option of 
covering former foster care youth with MAGI-based income above 133 percent of the FPL, 
under the eligibility group described in section 1902(a)(10)(ii)(XX) of the Act and implementing 
regulations at 42 CFR 435.218 (the XX group).  States would receive their standard Federal 
Medical Assistance Percentage (FMAP) for coverage of the XX group.  The streamlined 1115 
would authorize states to limit eligibility for the XX group to former foster care youth and 
services will be provided under the state plan; therefore, no budget neutrality test is needed 
(expenditures will be reported under the state plan).   
 
States that provide coverage under the new adult group, should do the following: 
1.  Submit to CMS a section 1115 demonstration application no later than six months 
after the publication of this CIB and final eligibility rule (May 21, 2017), and; 
2.  Submit a SPA to extend coverage to the optional group for individuals above 133 
percent of the FPL under 42 CFR 435.218 using the appropriate state plan page (S50 
in MMDL) at the same time the state submits the section 1115 demonstration 
amendment or new application and no later than May 21, 2017.  The effective date of 
the SPA will be the effective date of the new section 1115 demonstration or 
amendment.  
 
States That Do Not Provide Medicaid Coverage under the New Adult Group  Request 
for Expenditure Authority 
 
States that have elected not to provide Medicaid coverage under the new adult group can provide 
coverage to former foster care youth who were in Medicaid and foster care in a different state by 
requesting section 1115(a)(2) expenditure authority.  The Medicaid state plan option to cover 
adults with income above 133 percent of the FPL under the state plan is not available, since the 
new adult group and the optional group at section 1902(a)(10)(A)(ii)(XX) are linked; and, a state 
cannot elect the optional group without covering the new adult group.  States that use the 
expenditure authority vehicle must demonstrate budget neutrality.  However, CMS will allow the 
costs to be treated as pass-through costs for purposes of budget neutrality. 
 
Transparency Requirements for Demonstration Projects 
 
All new section 1115 demonstration requests must meet the transparency requirements outlined 
in 42 CFR Part 431.  States must also comply with federal tribal consultation requirements.  
Please note that while states submitting amendment requests to their approved section 1115 
demonstrations are not required to comply with the state public notice and comment process in  CMCS Informational Bulletin  Page 5 
 
42 CFR Part 431, states must continue to meet the public notice requirements outlined in the 
September 27, 1994 Federal Register notice (59 FR 49249) for section 1115 demonstrations.   
Additionally, states must assure that their section 1115 application also includes the below 
elements as listed in the federal transparency requirements at 42 CFR 431.412:     
 
1.  A comprehensive program description of the demonstration, including the goals and 
objectives to be implemented under the demonstration; 
2.  A description of the proposed health care delivery system, eligibility requirements, 
benefit coverage and cost-sharing requirements for individuals who will be impacted by 
the demonstration; 
3.  An estimate of the expected increase or decrease in annual enrollment, and in aggregate 
expenditures, including historic enrollment or budgetary data, if applicable;  
4.  Current enrollment data (for the former foster care youth), if applicable, and enrollment 
projections expected over the term of the demonstration; 
5.  The specific waiver and expenditure authorities that the state believes to be necessary to 
authorize the demonstration; 
6.  The research hypotheses that are related to the demonstrations proposed changes, goals, 
and objectives, a plan for testing the hypotheses in the context of an evaluation, and, if a 
quantitative evaluation design is feasible, the identification of appropriate evaluation 
indicators; and, 
7.  Written documentation of the states compliance with the public notice requirements set 
forth in 42 CFR 431.408 or in the September 27, 1994 Federal Register notice (59 FR 
49249), as applicable.  The report must also identify the issues raised by the public during 
the comment period and how the state considered those comments when developing the 
demonstration application. 
Additional resources regarding transparency can be found at 
https://www.medicaid.gov/medicaid-chip-program-information/by-topics/waivers/1115/section-
1115-demonstrations.html 
 
We hope this information will be helpful.  Questions and comments regarding this approach 
may be directed to Kim Howell, Director, Division of State Demonstrations and Waivers, 
CMCS, at Kimberly.Howell@cms.hhs.gov.  
    CMCS Informational Bulletin  Page 6 
 
Attachment A  
Best Practices for Enrolling Former Foster Youth 
 
The Administration for Children and Families will be issuing an Informational Memorandum 
on this topic as well.  Below are best practices for enrolling former foster youth.   
 
Best Practices for Enrolling Former Foster Youth 
CMCS encourages states to consider a number of potential actions to increase and strengthen 
overall coverage of former foster care youth and improve health outcomes for these individuals:   
 
  Child Welfare and Medicaid Collaboration and Leadership. In order to ensure a 
high percentage of foster youth enroll, a joint, collaborative effort by the child welfare 
and Medicaid agencies in each state is necessary.  It is important for both agencies to 
communicate frequentlyespecially when setting up and designing their procedures. 
  Coordinating Data Systems and Forms. States should continue their efforts to make 
their systems as automated as possible.  Recommendations include designing an 
interface between the Medicaid and child welfare data systems, so that Medicaid can 
identify when a youth had aged out of care or the child welfare agency would know 
when it was time to initiate the youths Medicaid enrollment. 
  Training Administrators and Front-Line Staff. Youth aging out of foster care 
represent a very small proportion of the Medicaid population.  For Medicaid agencies, 
this may mean that few staff members are knowledgeable about the foster youth option. 
This also means that child welfare staff have fewer people they could contact with 
questions.  Providing ongoing training to Medicaid and child welfare administrators and 
staff is encouraged. 
  Educating Youth. Regardless of how well the Medicaid and child welfare agencies 
collaborate or how seamless or automatic the enrollment process, providing coverage to 
youth formerly in foster care will have limited utility if youth r learn to access providers 
or seek care. It is important to educate youth about maintaining health insurance 
coverage and keeping up with application forms and necessary documentation. 
  Automatic Enrollment & Automatic Recertification. In order to make it as easy as 
possible for former foster youth to maintain coverage and access to health care, states 
may want to consider automatic enrollment and automatic recertification.  Some states 
have already implemented these practices.  For example, in some states, youth retain 
their Medicaid coverage from their time in foster care beyond their 18th birthday. At any 
time, youth may contact the Medicaid office to notify them of a change in address or to 
ask for a replacement card; however, they are never required to contract the Medicaid 
office. The states Medicaid office will indicate that the youth are eligible until their 26th 
birthday. For more information about how states have implemented automatic 
enrollment and automatic recertification processes, please review a document issued by 
the U.S. Department of Health and Human Services in November 2012 entitled, 
Providing Medicaid to Youth Formerly in Foster Care Under the Chafee Option: 
Informing the Implementation of the Affordable Care Act. Available here: 
https://aspe.hhs.gov/sites/default/files/pdf/76721/rpt.pdf. 
  Helping Youth Maintain Coverage. Helping youth formerly in foster care maintain 
coverage may present some challenges for states.  One challenge has been determining  CMCS Informational Bulletin  Page 7 
 
how to assist youth once they are no longer involved with the child welfare agency (i.e., 
after they have turned 18, or up to 21 in some states); a second challenge has been 
finding ways to ensure youth know they are eligible as former foster youth, even if they 
are initially enrolled under a different coverage category (which is important if they lose 
coverage for any reason); and a third challenge has been devising procedures for 
maintaining coverage among a highly mobile population characterized by frequent 
moves and unstable living arrangements.  It is encouraged to keep service providers 
from other systems aware of these provisions (mental health and substance use 
providers, TANF providers, criminal justice providers, etc.)  It is also recommended that 
states keep youth aware of their eligibility with youth-oriented flyers and social media. 
Many examples of youth-friendly materials and other best practices can be found 
through links within the following issue brief issued by the Childrens Bureaus 
Information Gateway: https://www.childwelfare.gov/pubPDFs/health_care_foster.pdf