1. Compliance and Verification Provisions

Section 1902(xx) of the Act prescribes specific requirements for how applicable individuals demonstrate compliance with the community engagement requirement (section 1902(xx)(2) of the Act). We aligned definitions of compliance activities as closely as possible with existing statutory and regulatory requirements across Medicaid and/or other Federal benefit programs to minimize disruption of States' existing eligibility systems and operational capacities. For instance, the ( printed page 33466) statute at section 1902(xx)(2)(F) and (G) of the Act refers to an individual's “monthly income” and “average monthly income,” but does not further define how States should calculate monthly income for these purposes. For the calculation of an applicable individual's monthly income under new § 435.552(f) and average monthly income under new § 435.552(g), we define “monthly income” to have the same meaning as the individual's household income used for financial eligibility for Medicaid. Most applicable individuals are eligible for or enrolled in the adult group under § 435.119, which is a group that has an income standard based on MAGI using MAGI-based methodologies, as described in § 435.603. Similarly, most section 1115 demonstrations that have applicable individuals (as discussed in section II.B. of this IFC) have an income standard based on MAGI and use MAGI-based methodologies for the relevant demonstration population.

In some instances, we considered alternative approaches for operationalizing a new requirement in light of existing Medicaid eligibility and enrollment rules. For example, timeliness standards for Medicaid eligibility determinations at § 435.912 [ 159 ] as implemented in this IFC require States to complete Medicaid eligibility determinations promptly and without undue delay. In general, the determination of eligibility for any individual may not exceed 90 days for applicants who apply on the basis of disability and 45 days for all other applicants, which includes individuals whose eligibility is being determined based on MAGI.

While we believe the 45-day timeliness standard under § 435.912 for MAGI beneficiaries is necessary to prevent delays in applicants' eligibility determinations and access to coverage, we recognized that the new provision may impose an additional requirement on States. Specifically, § 435.558(a) would require States to provide notice of noncompliance to an applicable individual whom the State is unable to verify as being compliant with the community engagement requirement. Upon receiving such notice, the individual would have 30 calendar days from the date they receive the notice to demonstrate community engagement, establish that they should be deemed to have demonstrated community engagement, or show that they do not meet the definition of an applicable individual. States must account for this process when making eligibility determinations.

We considered taking no action in this IFC since depending on States' existing eligibility systems and operational capacities, the required 30-calendar day period for applicants to return information will not always result in a delay in completing a determination of eligibility for an applicable individual who receives notice of noncompliance at application. States that can make an eligibility determination for applicants who receive a notice of noncompliance must do so within the timeliness standard. However, we considered that not all applicants will respond to the notice early in the 30-calendar day period, and States are unable to notify the individual of an eligibility decision for failure to respond prior to the 30-calendar day period. We believe an exception is necessary to prevent States from being subject to compliance action for failure to meet the regulatory timeliness standard as a result of complying with section 1902(xx) of the Act. Therefore, we are adding § 435.912(e)(3) to provide a new exception to the timeliness standard at § 435.912(c)(3)(ii) for applicants who receive the notice of noncompliance under § 435.558(a) and when the State is unable to meet the 45-day timeliness standard due to the required 30-calendar day period discussed in this section of this IFC. When a State uses this exception, it must do so on a case-by-case basis and document the reason for the delay in the applicant's case record as required by § 435.912(f).