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• Families of Phase I children are not subject to cost sharing.

• Families of Phase II children will be subject to cost sharing in the form of sliding-scale premiums and co-payments for certain services. To ensure that cost sharing does not exceed 5 percent of the family's yearly income, families will use the "shoe-box" approach. Refer to Tables A and B below for cost sharing schedules.

• American Indian children are not subject to cost sharing.

TABLE A: PREMIUMS

Income (as a percent of the FPL) Monthly One Child Monthly Two or More Children above 150 through 175 percent $22 $33 above 175 through 200 percent $33 $50 above 200 through 225 percent $42 $53 above 225 through 250 percent $53 $70 above 250 up to and including 275 percent $62 $73 above 275 up to and including 300 percent $73 $90

TABLE B: CO-PAYMENTS

Service Co-payment Prescription Drugs C Generic, Compound and Sole-Source $3 Prescription Drugs C Brand Name $10 Emergency Ambulance Transportation $10

State Action to Avoid Crowd Out

• Since Phase I limits family income to 150 percent of the FPL, the possibility of crowd out is reduced as many of the lower income families do not have the option of employer-based health insurance.

• Poverty level children with other insurance are covered by the state under the regular Medicaid matching rate, thereby reducing the incentive for families to drop coverage.

• Phase II minimizes crowd out by requiring that applicants be uninsured for 3 months before they are allowed to enroll in Phase II. Those who lose coverage involuntarily are exempted from this requirement.