Implementation Guides

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CS20 –Non-Financial Requirements –
Substitution of Coverage
Statute: Section 2102(b)(3)(C) of the SSA
Regulation: 42 CFR 457.340(d)(3), 457.350(i), and 457.805

INTRODUCTION

This state plan page (fillable PDF) must be completed by states with separate child health
assistance programs.
In state plan page CS20, states provide information about their policies and procedures to
prevent the substitution of group health coverage or other commercial health insurance with
public funded coverage.
States must use this state plan page if they are making changes to their waiting period policies
effective January 1, 2014. Those states that do not currently have a waiting period need not
complete this state plan page, unless they are making changes to other substitution of coverage
prevention strategies.

BACKGROUND

Children who are eligible or potentially eligible for Medicaid or covered under a group health
plan or under health insurance coverage, as defined in section 2791 of the Public Health Service
Act, are not included in the definition of targeted low-income child and therefore are not eligible
for CHIP.
Section 2102(b)(3)(C) of the Social Security Act requires states to include in their state plan a
description of procedures the state uses to ensure that CHIP coverage does not substitute for
coverage under group health plans.
This state plan page addresses only substitution related to enrollment in coverage provided
directly through CHIP. Substitution of coverage for states offering premium assistance or family
coverage is addressed in those sections of the state plan.
States use various procedures to prevent substitution of coverage, including monitoring through
survey data, private insurance database checks, and strategies that encourage or support
affordable employer-sponsored health insurance coverage for children. Another common
mechanism states use to discourage substitution is the imposition of a minimum period of
uninsurance (waiting period) for individuals who drop private coverage.
Due to concerns that waiting periods in CHIP may cause disruptions in coverage, 42 CFR
457.340 was amended to require states to implement processes to facilitate the enrollment of a
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CS20 –Non-Financial Requirements –
Substitution of Coverage
CHIP eligible child, following the completion of the waiting period, without requiring a new
application or information already provided by the family. The processes must ensure a smooth
transition for children from coverage through the Exchange or other insurance affordability
program to CHIP, and enrollment of otherwise CHIP-eligible children at the end of a waiting
period.
For individuals enrolled in another insurance affordability program during the waiting period, the
state must notify the other insurance affordability program of the date on which the waiting
period ends and the individual is eligible to enroll in CHIP (42 CFR 457.350(i)(3)). These
provisions were made final in rulemaking published on July 15, 2013 (78 FR 42160).
In addition, pursuant to the July 15, 2013 final rule, states with waiting periods must apply the
following exceptions from the waiting period:
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The premium paid by the family for coverage of the child under the group health plan
exceeded 5 percent of household income;
The child’s parent is determined eligible for advance payment of the premium tax credit
for enrollment in a QHP through the Marketplace because the ESI in which the family
was enrolled is determined unaffordable in accordance with 26 CFR 1.36B–2(c)(3)(v);
The cost of family coverage that includes the child exceeded 9.5 percent of the household
income;
The employer stopped offering coverage of dependents (or any coverage) under an
employer-sponsored health insurance plan;
A change in employment, including involuntary separation, resulted in the child’s loss of
employer-sponsored insurance (other than through full payment of the premium by the
parent under COBRA);
The child has special health care needs; and
The child lost coverage due to the death or divorce of a parent.

States have the flexibility to allow additional exceptions.
Note: waiting periods may not be applied to children losing eligibility for Medicaid or other
insurance affordability programs.
Effective Date: The waiting period provisions in the July 15, 2013 final rule are effective on
January 1, 2014, unless a change in state law is needed for a state to comply with this provision.
States that need a change in state law must notify CMS in writing with an explanation, and those
states will not be required to submit this state plan page in 2013. For states with annual
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CS20 –Non-Financial Requirements –
Substitution of Coverage
legislative sessions, the effective date for the application of the 90-day maximum waiting period
and required exemptions must be no later than the first day of the next fiscal year beginning after
the close of the first regular session of the 2014 state legislature. For states that have a two-year
legislative session, each year of the session is considered a separate regular session for this
purpose.

TECHNICAL GUIDANCE
PREREQUISITES:
None
This state plan page is broken down into the following sections:
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Substitution of Coverage Assurance
Substitution of Coverage Prevention Strategy
Waiting Period
Additional Assurances

Substitution of Coverage Assurance
State plan page CS20 begins with the state being asked to provide assurance that it has methods
and policies in place to prevent the substitution of coverage
The state provides this affirmative assurance by checking the box next to the assurance
statement.
Substitution of Coverage Prevention Strategy
In this section, the state enters its substitution of coverage prevention strategy or policy, other
than a waiting period. If the state does not impose a waiting period, it must enter at least one
strategy. If the state imposes a waiting period, it enters any other substitution prevention
strategies it has here.
For each strategy/policy, the state must provide the name and description of the policy. If there is
more than one strategy, the state reselects the button to the left of the name/description grid and
repeats the process until all have been entered.
Review Criteria

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CS20 –Non-Financial Requirements –
Substitution of Coverage
If the state answers “No” to the waiting period (below the substitution prevention strategy
name/description grid), the state must enter at least one substitution of coverage prevention
strategy or this state plan page cannot be approved. The description should be sufficiently
clear, detailed and complete to permit the reviewer to determine that the state’s election meets
applicable federal statutory, regulatory and policy requirements.
If the state has other substitution of coverage prevention strategies in addition to a waiting
period, it must enter the other substitution of coverage prevention strategies in addition to
selecting “Yes” to the waiting period question. The description should be sufficiently clear,
detailed and complete to permit the reviewer to determine that the state’s election meets
applicable federal statutory, regulatory and policy requirements.
Waiting Period
This section begins with a Yes/No question as to whether the state has a waiting period during
which an individual is ineligible due to having dropped group health coverage.
If the answer is no, the state continues to the additional assurances, described below.
If the answer is yes, the state then enters the length of the waiting period from the displayed
options.
If the state selects “Other”, the state must select the number of days from the list provided.
Review Criteria
The state must check the assurance box or this state plan page cannot be approved.
Exceptions to the Waiting Period
This section begins with the following statement: “The state allows exemptions from the
waiting period for the following reasons:” followed by a list of seven pre-selected
exemptions which are required of all states with waiting periods.
The exemption list is followed by a Y/N question for the state to indicate if it allows other
exemptions.
If the answer is yes, the state must provide a description of each additional exemption(s). If
there is more than one additional exemption, the state reselects the button to the left of the
description box and repeats the process until all have been entered.
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CS20 –Non-Financial Requirements –
Substitution of Coverage
Review Criteria
The description should be sufficiently clear, detailed and complete to permit the reviewer
to determine that the state’s election meets applicable federal statutory, regulatory and
policy requirements.
Note: While they currently do not appear on the state plan page, CMS is implementing the
waiting period provisions of the July 15, 2013 final rule. As a result, CMS CHIP state plan
reviewers will ask states electing to implement or continue a waiting period in 2014 questions in
the following areas:
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State processes to facilitate enrollment of CHIP-eligible children at the end of a waiting
period, without requiring a new application or information already provided by the
family;
State processes to coordinate coverage of children subject to a waiting period with other
insurance affordability programs, including safeguards to prevent gaps in coverage for
children transitioning from another insurance affordability program to CHIP at the end of
a waiting period; and
State notification of the other insurance affordability program of the date on which the
waiting period ends and the individual is eligible to enroll in CHIP.

Additional Assurances
Pregnant Women Assurance
If the state provides coverage to targeted low-income pregnant women, the state must
provide assurance that any waiting period does not apply to pregnant women.
The state provides this affirmative assurance by checking the box next to the assurance
statement.
Review Criteria
If the state provides coverage to pregnant women, it must check the assurance box or this
state plan page cannot be approved.
Dental Only Supplemental Coverage
States that provide dental only supplemental coverage must provide the following
assurances:

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CS20 –Non-Financial Requirements –
Substitution of Coverage
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That the other coverage exclusion (i.e. substitution of coverage) does not apply to
children who are otherwise eligible for dental only supplemental coverage as
provided in section 2110(b)(5) of the SSA; and
That the waiting period does not apply to children eligible for dental only
supplemental coverage.

The state provides these affirmative assurances by checking the boxes next to the assurance
statements.
Review Criteria
If the state provides dental only supplemental coverage, it must check both assurance
boxes, or this state plan page cannot be approved.

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