Kentuckians Could Earn $500 Cash Bonus for Exiting Medicaid, If CMS Approves

Published October 19, 2016

Kentucky Gov. Matt Bevin’s (R) office awaits approval from the Centers for Medicare and Medicaid Services (CMS) for Kentucky HEALTH, a reform of the state’s Medicaid program, even after CMS approved Kentucky’s transition from Kynect, the state’s Obamacare exchange, to the federal exchange at

The new program would require able-bodied recipients to pay monthly premiums of $1 to $15, depending on their income levels, and give them incentives them to reduce their health care spending. Under the proposed plan, the state would pay for all out-of-pocket health care costs of recipients.

To receive premium reimbursements from Medicaid, people who have worked at least one year for an employer offering a health insurance plan would be required to enroll in the employer’s plan. People without access to employer-sponsored health insurance would enroll in a “High Deductible Health Plan Equivalent to Kentucky State Employees’ Health Plan,” according a Kentucky HEALTH overview released by Bevin’s office on June 22.

$1,000 Deductible

The deductible would be set at $1,000 per year. Using an account provided and fully funded by the state, a recipient would pay for the first $1,000 of medical expenses, “[exposing] members to the cost of care and [encouraging] cost-conscious healthcare decisions,” the overview states. The state would also pay for all medical costs above the $1,000.

At the end of each year, the state would transfer half of any unused deductible balance to the recipient’s “My Rewards Account,” which could accrue up to $500. Recipients would earn their reward in cash by exiting Medicaid and joining a commercial health insurance plan for at least 18 months.

Kentucky HEALTH would require members to engage in work-related or volunteer activity for 20 hours per week and make premium payments within 60 days of their due date, or else face a financial penalty or disenrollment.

Incentives for Individuals, Providers

Amanda Stamper, Bevin’s press secretary, says the proposal motivates recipients to become more self-sufficient and less dependent on the state.

“Kentucky HEALTH is designed to prepare and incentivize Medicaid recipients to transfer off of public assistance and into private insurance,” Stamper said. “Kentucky HEALTH incentivizes participants to become consumers rather than passive users of health care.”

The program will encourage patients to make better health care decisions and providers to increase their value to patients, Stamper says.

“As participants roll off of public assistance, they will be prepared to make smart health care choices, which will have a positive effect on the free market,” Stamper said. “Naturally, as more and more Kentuckians become consumers, quality will increase and costs will decrease in the health care market, as we see happen in all free markets.”

Running Out of Money

State Sen. Ralph Alvarado (R-Winchester) says Kentucky’s current Medicaid expansion program is unsustainable.

“We don’t have the funding to sustain the Medicaid expansion the way it is,” Alvarado said.

Kentucky HEALTH conforms to CMS rules while creating opportunities for people dependent on state care to give back to their communities, Alvarado says.

“This plan lines up with what CMS wants,” Alvarado said. “This plan provides dignity for people on Medicaid and allows them to give back to the community while the community is giving them free health care, essentially.”

Michael McGrady ([email protected]) writes from Colorado Springs, Colorado.

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