D. Mandatory Exceptions for Certain Individuals

Section 1902(xx)(3)(A) of the Act establishes mandatory exceptions from demonstrating community engagement via the pathways described in § 435.552(a) (see section II.C. of this IFC for more information regarding demonstrating compliance) for certain applicable individuals. States must deem an applicable individual compliant for a month if the individual meets the mandatory exception criteria (which are further described in this section of this IFC). New § 435.553 implements and interprets the mandatory exceptions in section 1902(xx)(3)(A) of the Act.

New § 435.553(a) implements section 1902(xx)(3)(A)(i) of the Act, which establishes mandatory exceptions for applicable individuals if, for part or all of a month, the individual was: (1) under the age of 19; (2) entitled to, or enrolled for benefits under Medicare part A, or enrolled for benefits under Medicare part B; (3) described in any of the mandatory eligibility groups in section 1902(a)(10)(A)(i)(I) through (VII) of the Act; or (4) a specified excluded individual as defined in section 1902(xx)(9)(A)(ii) of the Act (see section II.E. of this IFC for an explanation of specified excluded individuals, and section II.F. of this IFC for a discussion of the similarities and differences between mandatory exceptions and specified excluded individuals). States must determine whether an applicable individual met exception criteria for part or all of a relevant month. We interpret the statutory references to “a month” and “such month” to refer to any month in the State's review period (described further in section II.H. of this IFC). This could be a month during the State's review period when determining eligibility at application, a month during an individual's eligibility period at renewal, and, at State option, a month during the relevant alternative review period during which the State elects to conduct more frequent verifications of ( printed page 33364) community engagement compliance (as described in section II.H. of this IFC).

Because compliance with community engagement is assessed for a time period that predates an individual's application or renewal date (as described in more detail in section II.H.1 of this IFC), the mandatory exceptions provide protections, for example, for beneficiaries who were previously excluded from the requirement to demonstrate community engagement but whose exclusion ends, or who were enrolled in another eligibility group and, following a redetermination, transition to an eligibility group consisting of applicable individuals. These exceptions can allow such beneficiaries time to understand their rights and responsibilities and demonstrate compliance with community engagement as it was not a condition of their Medicaid eligibility previously.

For example, a beneficiary enrolled in the adult group has been excluded from the community engagement requirement because they have a dependent child who is age 13, but their child turns 14 during the individual's eligibility period. During the beneficiary's renewal, the State determines the individual is now an applicable individual subject to the community engagement requirement. The State requires beneficiaries to demonstrate 1 month of community engagement activity at renewal. Because the beneficiary was a specified excluded individual as a result of having a dependent child under the age of 14 for part or all of at least 1 month during the review period, which aligns with the eligibility period in this scenario, they meet the mandatory exception criteria for at least 1 month during the review period (see section II.H.3. of this IFC) and thus are deemed compliant with community engagement during the review period at renewal. Their eligibility would be renewed with proper notice of the determination consistent with § 435.917(b)(1); this notice would be accompanied by the outreach notice content described at new § 435.561(c) which includes information on how to comply with the requirement to demonstrate community engagement and the consequences of noncompliance, consistent with § 435.561(b) (described in section II.L. of this IFC). Going forward, the individual would be subject to the community engagement requirement.

New § 435.553(b) implements section 1902(xx)(3)(A)(ii) of the Act, which establishes an exception for incarcerated individuals. [ 43 ] Under the exception, an applicable individual is deemed compliant with community engagement for a month if “at any point during the 3-month period ending on the first day of such month, the individual was an inmate of a public institution.” Unlike the other mandatory exceptions, which require the State to deem an applicable individual as demonstrating community engagement in a month if the individual meets the exception in that month, the exception for individuals who were previously inmates of a public institution applies to a 3-month period prior to the month in which the State reviews the individual for compliance with community engagement. We believe that the 3-month timeframe for this exception reflects the significance of the transition from a public institution to a community setting. This policy aligns with Congress' recent efforts to support individuals in attaining self-sufficiency during the transition period following incarceration. [ 44 ] In addition to this mandatory exception, inmates of a public institution are defined as “specified excluded individuals” at section 1902(xx)(9)(A)(ii)(VIII) of the Act, discussed further in section II.E.8. of this IFC.

When a State assesses whether it can deem compliance with community engagement for a month for someone who was previously incarcerated, it will need to determine when an individual's incarceration ended in relation to the month(s) for which the State is determining compliance. For example, an individual was an inmate of a public institution and was released on March 15. The individual applies for Medicaid on June 1 in a State that has a 1-month review period for community engagement at application (see section II.H.1. of this IFC for further discussion of the review period). The State determines the individual is eligible in the adult group and is an applicable individual, so must assess whether the individual met or is deemed to have met the community engagement requirement in May (the month prior to the month of application). To apply the exception for incarcerated individuals, the State would assess whether the individual was an inmate at any point in the 3-month period prior to May 1. Accordingly, the State would determine whether the individual was an inmate in February, March, or April. Because the individual was an inmate in March, the State would deem the individual to have met the community engagement requirement and would enroll the individual in the adult group.

We note that an applicable individual can be deemed compliant only for the month(s) in which the individual meets the mandatory exception criteria. States that require applicable individuals to demonstrate compliance with community engagement for more than 1 month during the review period will need to verify that an applicable individual is excepted, demonstrates community engagement, or meets a combination of these community engagement criteria for the total number of months specified by the State in the review period.