4. State Responsibilities When There Is No Satisfactory Showing of Compliance

In § 435.558(d), we describe States' responsibilities when an applicable individual does not make a satisfactory showing of compliance with the community engagement requirement after receiving the notice of noncompliance, consistent with section 1902(xx)(6)(A)(iii)(I) of the Act. We specify at § 435.558(d)(1) that the State must consider all bases of eligibility prior to determining an applicable individual is ineligible consistent with §§ 435.911 and 435.916(f). Federal regulations in § 435.911(c)(2) and (d)(1), in turn, require that if a State has any information that indicates the individual is potentially eligible for a non-MAGI eligibility group, the State must collect the needed additional information to determine eligibility for Medicaid on any non-MAGI basis. If the State determines the individual is eligible on another basis, the State must enroll the individual in such group. Thus, consistent with these existing requirements, as part of the community engagement noncompliance procedures, States must evaluate an individual's eligibility for Medicaid on all bases before making a determination that an individual is ineligible for Medicaid.

At § 435.558(d)(2), we specify that States must deny eligibility or disenroll an applicable individual from coverage when the individual does not make a satisfactory showing to demonstrate compliance with the community engagement requirement. As with other decisions affecting an individual's eligibility, the State must provide written notice (including at least 10 days advance notice in the case of an eligibility termination or reduction) and grant the individual an opportunity for a fair hearing in accordance with §§ 435.917 through 435.918 and 42 CFR part 431, subpart E . For applicants, we specify at § 435.558(d)(2)(i) that States must deny the individual's application and provide written notice and fair hearing rights consistent with §§ 435.917 through 435.918 and 42 CFR part 431, subpart E . For beneficiaries, at § 435.558(d)(2)(ii), we implement the requirement in section 1902(xx)(6)(A) of the Act to disenroll individuals from coverage who are determined ineligible under the State plan (or waiver of such plan) on all bases not later than the end of the month following the month in which the 30-calendar day period ends and after the provision of advance notice and fair hearing rights consistent with §§ 435.917 through 435.918 and 42 CFR part 431, subpart E . While § 435.558(d)(2)(ii) sets an outer bound ( printed page 33414) for when an individual who does not make a satisfactory showing must be disenrolled, it does not change the requirement for States to conduct periodic renewals of eligibility consistent with section 1902(e)(14)(L) of the Act and § 435.916, and therefore, the time frame to complete the disenrollment should not be used as a waiting period to provide coverage beyond the end of an individual's eligibility period.

In § 435.558(d)(2)(iii), we require that the notice under § 435.558(d)(2)(i) and (ii) must include a clear statement of the specific reasons supporting the denial or disenrollment, as appropriate, which explains that the applicant or beneficiary failed to:

Make a satisfactory showing of compliance with the community engagement requirement under § 435.552, including by meeting the criteria for an exception to be deemed as demonstrating community engagement under § 435.553 or, if applicable, § 435.555, for the month(s) specified in accordance with § 435.556(a); and

Make a satisfactory showing that the community engagement requirement does not apply to the individual on the basis that the individual does not meet the definition of applicable individual in § 435.551, including failure to demonstrate the individual meets the criteria for one or more of the categories of a specified excluded individual under § 435.554.

For both applicants whose application is denied and beneficiaries who are disenrolled from coverage, we specify in § 435.558(d)(2)(iv) that the State must determine the individual's potential eligibility for other insurance affordability programs in accordance with § 435.1200(e).