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Katiri Zuluaga

Manager, State Initiatives

Medicaid Work Requirements to be Enacted in Indiana

February 8, 2018 | Addictions | Medicaid | Waivers/SPAs | Comments
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Indiana is now the second state to receive approval from the Centers for Medicare and Medicaid Services (CMS) for a waiver request that imposes work requirements on Medicaid beneficiaries to maintain coverage. Indiana’s Section 1115 waiver also enacts a Substance Use Disorder (SUD) Program which will include coverage for residential treatment in Institutions for Mental Disease (IMD) and will increase premiums for beneficiaries who use tobacco and are not engaged in tobacco cessation activities. The National Council for Mental Wellbeing strongly opposes work requirements and any attempts to restrict access to needed behavioral health services.

Work Requirements

Individuals who do not qualify for exemption will be required to prove they are spending 20 hours a week on “community engagement activities” such as working, school or volunteering to keep their Medicaid coverage. Failure to comply with the work requirements for eight out of 12 months each year will result in suspension of coverage, at which point an individual can be disenrolled from Medicaid for noncompliance. Individuals who are disenrolled will have to reapply for Medicaid benefits and prior noncompliance history will be considered in eligibility.

Substance Use Disorders

Included in the waiver, Indiana will enact a SUD program with the goal of combating opioid use disorder. The waiver will add short-term residential addiction treatment services (including those delivered in an IMD), early intervention, outpatient services and recovery management services. Crisis stabilization and withdrawal management will also be permitted in IMDs.


Beneficiaries in active SUD treatment are exempted from work requirements, along with the medically frail, pregnant women, students and caregivers of dependents. The waiver uses the federal definition of medically frail, which includes disabling mental disorders and chronic substance use disorders as eligible conditions for exemption. However, how state officials choose to interpret and identify Medicaid enrollees with chronic substance use disorders will determine if this exemption is upheld.


The waiver includes a shift in premium costs from two percent of household income to costs based on income bands. This change to determine costs on a range of incomes will result in many low-income beneficiaries paying more than two percent of their income as a premium. Lock-out provisions for failure to pay premiums remain in effect and individuals at 100 percent of the Federal Poverty Level (FPL) can be denied benefits for up to six months if they fail to pay their premiums. Approximately 25,000 low-income beneficiaries have already been disenrolled from Indiana’s Medicaid program due to failure to make payments. Additionally, individuals who use tobacco and are not actively engaged in tobacco cessation activities will incur a surcharge on their premium.

Kentucky was the first state to receive approval to enact work requirements on Medicaid beneficiaries. At least eight other states currently have pending 1115 waivers that include work requirements under review with CMS. To read the entire approved Indiana waiver click here.