The Deficit Reduction Act of 2005 (DRA) provides state Medicaid agencies with new options as of March 31, 2006, to impose increased premiums and cost sharing upon certain Medicaid recipients above 100 percent of the federal poverty level (FPL). It allows states to make the payment of premiums a condition of Medicaid eligibility and payment of cost sharing a condition of receiving services. In addition, the DRA allows states to vary the premiums and cost sharing charged based on income, eligibility category, and type of service.

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