6. ICRs Regarding Short-Term Hardship Exception Requests (§ 435.555)

The following changes will be submitted to OMB for approval under control number 0938-1148 (CMS-10398 #101).

Section II.G. of this IFC discusses the State option to deem an individual to have demonstrated community engagement for a month when the individual experiences one of the short-term hardship circumstances described in section 1902(xx)(3)(B)(ii) of the Act and codified at § 435.555(d) during such month. As exceptions at § 435.555 are optional, we acknowledge that not all States may elect to grant them. However, given uncertainty at this time and so as not to underestimate, our burden estimations described below assume that all 44 jurisdictions subject to the community engagement requirement will elect to make short-term hardship exceptions available under circumstances described at section 1902(xx)(3)(B)(ii) of the Act and § 435.555(d). Generally, these circumstances are as follows: an individual receives for all or part of a month certain hospital or institutional services (or other services of “similar acuity” as the Secretary determines appropriate); subject to a request by the State, an individual resides in a county or equivalent unit of local government in which there has been declared by the President a Federal emergency or disaster, or, in which the unemployment rate is equal or greater than a particular threshold; or the individual or the individual's dependent must travel outside of their community for an extended period of time for treatment of a serious or complex medical condition.

Section 1902(xx)(3)(B)(i) of the Act and § 435.555(c) direct that determinations of short-term hardship be made under procedures established by the State. States electing to allow short-term hardship exceptions will be required to establish and document processes and procedures and make any corresponding technical edits to relevant systems (for example, eligibility and enrollment systems) necessary to effectuate short-term hardship exceptions described at § 435.555(d). Required processes and procedures include the method and timeframe by which an applicable individual or an individual acting on behalf of the ( printed page 33436) applicable individual may request a short-term hardship exception under § 435.555(d)(1) and (4) and the timely process by which the State will determine whether such requests will be granted. We estimate a one-time burden of 116 hours per jurisdiction to accomplish these tasks. Of the 116 hours, we estimate it will take 80 hours at $90.08/hr for a Business and Financial Operations analyst to perform this task, 32 hours at $99.66/hr for a Computer Programmer to implement the technical changes to the associated system, and 4 hours at $128.00/hr for a General and Operations Manager to review and provide oversight. In aggregate we estimate a one-time burden of 5,104 hours (116 hours × 44 jurisdictions) at a cost of $479,931 (44 × [(80 hr × $90.08/hr) + (32 hr × $99.66/hr) + (4 hr × $128.00/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $119,983 ($479,931 × 0.25). We have summarized the burden associated with establishing and documenting short-term hardship exceptions in Table 18.

As directed at § 435.555(c)(1), States electing the option for short-term hardship requests must provide notice informing applicable individuals that the State offers short-term hardship exceptions available under the circumstances described at § 435.555(d)(2) and (3), and the anticipated end date of the exception. Separately, § 435.555(c)(2) directs States to provide notice informing applicable individuals of short-term hardship exceptions available under the circumstances described at § 435.555(d)(1) and (4) and the method by which such exceptions may be requested.

States electing to allow short-term hardship exception requests will need to develop notices, as described above, to inform beneficiaries of the various circumstances under which short-term hardship exceptions are available under § 435.555(d), and to describe associated processes. These States will also need to establish or update the associated operational workflows to ensure individuals are notified about short-term hardships and to support required delivery modalities to individuals who receive paper notices, which is the default modality for agency communications to applicants and beneficiaries unless an individual elects to receive electronic notices as described in § 435.918 and cross-referenced in §§ 435.561(d) and 435.555(c) for communications related to community engagement. Because the mailing of paper notices is the default modality, we estimate that 75 percent of beneficiaries do not currently elect to receive electronic notices.

To comply with these requirements, we estimate that it will take a one-time burden of 80 hours at $87.52/hr for a Business Operations Specialist to develop or update the notice templates and update the associated workflows as necessary, 8 hours at $128.00/hr for a General and Operations Manager to review and approve the updated notice templates and workflows, and 24 hours at $99.66/hr for a Computer Programmer to conduct the technical changes to the associated State systems required to generate electronic notices. In aggregate, we estimate a one-time burden of 4,928 hours (112 hr × 44 jurisdictions) at a cost of $458,367 (44 × [(80 hr × $87.52/hr) + (24 hr × $99.66/hr) + (8 hr × $128.00/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $114,592 ($458,367 × 0.25). We have summarized the initial burden associated with developing short-term hardship exception notices in Table 19.

We also estimate it will take 1 minute (0.017 hr) at $38.66/hr for a Mail Clerk to mail each of the 2 short-term hardship exception notices to 75 percent of the applicable beneficiaries (20 million total applicable beneficiaries). This results in 30 million outreach notices (20,000,000 applicable beneficiaries × 0.75 that will not elect electronic delivery × 2 notices) in the initial year. In aggregate, we estimate a one-time burden of 510,000 hours (30,000,000 total mailings × 0.017 hr per mailing) for Mail Clerks to complete all mailings at a cost of $19,716,600 (510,000 × $38.66/hr). Accounting for the Federal administrative match of 50 percent, the labor burden of this requirement will cost States $9,858,300 ($19,716,600 × 0.50).

In addition, the mailing of the initial notices will add ancillary non-labor costs. We assume these costs include paper, toner, envelopes, and postage (envelope weight is normally considered negligible when citing these rates and is not included) for hard-copy mailings:

Paper: $3.50 for a ream of 500 sheets. The cost for one page is $0.007 ($3.50/500 sheets). ( printed page 33437)

Toner: $70 for 10,000 pages. The toner cost per page is $0.007 ($70/10,000 pages).

Envelope: Bulk envelope costs are $440 for 10,000 envelopes or $0.044 per envelope.

Postage: The cost of first-class metered mail is $0.73 per letter up to 1 ounce. We estimate that a sheet of paper weighs 0.16 ounces (10.0 lb/1,000 sheets × 16 oz/lb), and do not anticipate additional postage for mailings in excess of 1 ounce.

We estimate the aggregate cost per mailed notice is $0.802 [($0.007 for paper * 2 pages) + ($0.007 for toner * 2 pages) + $0.73 for postage + $0.044 per envelope]. Assuming 30 million initial mailings in the initial year, we assume non-labor ancillary costs of $24,060,000 (30,000,000 × $0.802). Accounting for the Federal administrative match of 50 percent, the non-labor burden of this requirement will cost States $12,030,000 ($24,060,000 × 0.50). We have summarized the initial burden associated with mailing short-term hardship exception notices in Table 20.

States will also need to conduct ongoing annual maintenance of short-term hardship exception notice templates and the associated operational workflows to ensure continued compliance with required delivery modalities and timing. We estimate this ongoing annual activity will require approximately 28 hours per State (one-quarter of the 112-hour one-time effort) to review, update, and implement minor policy, operational, and technical changes to notices and delivery workflows. Of the 28 hours, this includes 20 hours at $87.52/hr for a Business Operations Specialist to update notices and workflows, 2 hours at $128.00/hr for a General and Operations Manager to review and approve updates, and 6 hours at $99.66/hr for a Computer Programmer to make necessary technical adjustments to the State's electronic data collection methods.

In aggregate, we estimate an annual burden of 1,232 hours (28 hr × 44 jurisdictions) at a cost of $114,592 (44 × [(20 hr × $87.52/hr) + (6 hr × $99.66/hr) + (2 hr × $128.00/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $28,648 ($114,592 × 0.25). We have summarized the ongoing burden associated with maintaining short-term hardship exception notices in Table 21.

In addition, we continue to estimate 1 minute (0.017 hr) at $38.66/hr for a Mail Clerk to process and mail each beneficiary notice. We assume that the initial estimate of 15 million beneficiaries that receive paper notices will be moderately reduced in subsequent years as more beneficiaries opt to receive their notices electronically. On an ongoing basis we assume that 11.25 million beneficiaries (0.75 × 11,250,000) will need to be mailed 2 paper short-term hardship exception notices. For the combined 22.5 million beneficiary notices (11,250,000 × 2), this equals 382,500 hours annually (22,500,000 mailings × 0.017 mailings/hr) at an annual cost of $14,787,450 (382,500 hours × $38.66/hr). Accounting for the Federal administrative match of 50 percent, the annual labor cost to States is $7,393,725 ($14,787,450 × 0.50).

In addition, the ongoing mailing of the notices will add ancillary annual non-labor costs associated with paper, toner, envelopes, and postage. Assuming 22.5 million mailings annually at a cost of $0.802 [($0.007 for paper × 2 pages) + ($0.007 for toner × 2 pages) + $0.73 for postage + $0.044 per envelope], we estimate an additional ( printed page 33438) aggregate annual non-labor cost of $18,045,000 (22,500,000 × $0.802). Accounting for the Federal administrative match of 50 percent, the non-labor burden of this requirement will cost States $9,022,500 ($18,045,000 × 0.50). We have summarized the ongoing State burden associated with mailing short-term hardship exception notices in Table 22.

Beyond notices, States will also have additional burden associated with requesting short-term hardships as described at § 435.555(d)(2) and (3).

Emergency or Disaster Exception: The emergency or disaster-related exception, codified at § 435.555(d)(2) exists when an emergency or disaster is declared by the President under the National Emergencies Act or the Robert T. Stafford Disaster and Emergency Assistance Act. For emergencies declared under the National Emergencies Act (NEA), States must notify CMS timely of its plan to effectuate a short-term hardship exception at § 435.555(d)(2)(ii) in which the State identifies its inclusion in the scope of an NEA-declared emergency, how the emergency affects the ability of applicable individuals to demonstrate community engagement, either in a particular county (or equivalent unit of local government), multiple counties, or statewide, and the anticipated duration of this effect on applicable individuals. Moreover, for Robert T. Stafford Disaster and Emergency Assistance Act (Stafford Act)-related declarations, in the event States would like extension of the exception beyond the duration described at § 435.555(d)(2)(iv), States must submit a notification to provide information in support of such extension.

In 2025, the 44 jurisdictions with populations subject to community engagement experienced nine NEA declarations and 44 Stafford Act Major Disaster or Emergency declarations. [ 123 124 ] Of the 44 Stafford Act declarations, we estimate that approximately 11, or 25 percent, may result in a State requesting an extension of the short-term hardship exception. In total, we estimate that there will be 20 emergency or disaster declarations (nine NEA declarations + 11 Stafford Act declarations) annually that would require a State to submit a request to CMS for either an exception or an extension.

We estimate it will require 22 hours annually to compile the necessary information and to request each emergency or disaster-related short-term hardship exception or exception extension to CMS. We estimate that it will take 20 hours at $87.52/hr for a Business Operations Specialist to perform the task and 2 hours at $128.00/hr for a General and Operations Manager to review the data and submit the short-term hardship requests. We estimate a total burden of 440 hours (22 hr/response × 20 responses) at a cost of $40,128 (20 responses × [(20 hr/response × $87.52/hr) + (2 hr/response × $128.00/hr)]). Accounting for the Federal administrative match of 50 percent, we estimate that this requirement will cost States $20,064 ($40,128 × 0.50). We have summarized the total burden in Table 23.

Unemployment Hardship Exception: The unemployment-related short-term hardship exception, implemented at § 435.555(d)(3), exists when the unemployment rate in a county or equivalent unit of local government is at or above the lesser of 8 percent or 1.5 times the national unemployment rate. As noted, this short-term hardship exception is contingent on a State first making a request of CMS relating to this circumstance.

To submit the necessary documentation to support the unemployment-related short-term hardship exception, we expect that a State will have to assess the circumstances within a county or equivalent unit of local government and then compile the necessary information to submit to CMS. Based on an analysis of 2024 county-level unemployment statistics, and by using BLS' 2024 average unemployment rate of 4.0 percent, we assume that around 23 of the applicable States will have at least one county that. [ 125 126 ] Not all potentially eligible States will decide to request such an exception from CMS, whereas some States with multiple counties meeting an unemployment threshold may submit more. In total, we estimate that annually there would be 40 unemployment-related short-term hardship exception requests across 20 State respondents.

It will require between 84 and 104 hours annually to compile the necessary information and to report each unemployment-related short-term hardship exception to CMS. Of that range, we estimate that it will take between 80 and 100 hours at $87.52/hr for a Business Operations Specialist to perform the task and 4 hours at $128.00/hr for a General and Operations Manager to review the data and submit the short-term hardship requests. To avoid underestimating our burden analysis, we are using the high end of our estimates to score the PRA-related impact of the reporting requirements. In this regard we estimate a total burden of 4,160 hours (104 hr/response × 40 responses) at a cost of $370,560 (40 responses × [(100 hr/response × $87.52/hr) + (4 hr/response × $128.00/hr)]). Accounting for the Federal administrative match of 50 percent, we estimate that this requirement will cost States $185,280 ($370,560 × 0.50). We have summarized the total burden in Table 24.

Other Hardship Exceptions: For short-term hardship exceptions related to circumstances in which the individual alleges hardship due to the receipt of institutional/hospital services or other services, or in cases in which an individual alleges he or she (or a dependent) must travel outside of the individual's community for treatment of a medical condition, CMS directs under § 435.555(c)(2) that States electing the short-term hardship exception must notify applicable individuals of the method by which a short-term hardship exception may be requested. These methods will be variable across States, but we estimate, on average, it would take 1 hour at $12.92/hr for an applicable individual, or an individual acting on behalf of an applicable individual, to document and submit their short-term hardship exception request to a State. Calculating the burden for the applicable individuals that will request short-term hardship exceptions available under § 435.555(d)(1) and (4) is subject to significant approximation. In 2022 there were approximately 8.8 million non-COVID acute inpatient or ICU stays in Medicaid expansion States. [ 127 ] We assume that approximately 25 percent or 2.2 million (8.8 million × .25) of those stays were for Medicaid expansion adults subject to community engagement. Further, using Healthcare Cost and Utilization Project data, we see that the mean Medicaid length of stay (LOS) in 2023 was 5 days. [ 128 ] Hospital LOS data is typically right-skewed, 129 meaning that fewer than half of stays have an LOS longer than the mean. Therefore, we assume that only 25 percent of stays for applicable individuals, or 550,000 (2.2 million × .25) will be of a duration that may lead an applicable individual to consider requesting a short-term hardship exception. Of those 550,000 stays, we estimate that 300,000 will result in a short-term hardship exception being requested. We further assume this number includes those individuals that may need to travel outside their community for treatment of a medical condition. In aggregate, we estimate an annual burden of 300,000 hours (300,000 short-term hardship exception requests × 1 hr per request) at a cost of $3,876,000 (300,000 hr × $12.92/hr) for an applicable individual, or an individual acting on behalf of an applicable individual, to request short-term hardship exception requests. We have summarized the total burden in Table 25.

As required at §§ 435.561(b)(3)(iv)(A)-(B), States will also need to send periodic outreach notices to beneficiaries when a hardship exception under § 435.555(a) is deselected and to provide notice of the anticipated expiration of a short-term hardship event described at § 435.555(d)(2) and (3). We previously estimated in this ICR that all 44 jurisdictions will elect to include in their SPAs the short-term hardship exception to the community engagement requirement. Because we have no reliable way of estimating how many jurisdictions will deselect the hardship exception in a given year and thus will need to send notices to beneficiaries informing them of the deselection of the hardship exception, we are not estimating burden for this requirement. To estimate the number of jurisdictions that will need to provide notice of the anticipated expiration of a short-term hardship event described at § 435.555(d)(2) and (3), we rely on our previous estimate earlier in this ICR that 20 jurisdictions will request an emergency or disaster exception and 20 jurisdictions will request a high unemployment exception.

For the purpose of burden estimation, we estimate that there will be no overlap in the jurisdictions that request an emergency or disaster exception and a high unemployment exception, although it is possible that the same jurisdiction could request both exceptions. As such, we estimate 40 jurisdictions will need to send notices to beneficiaries to inform them of the anticipated expiration of a short-term hardship event described at § 435.555(d)(2) and (3). We estimate that the 20 million beneficiaries that will receive notices of the potential availability of a short-term hardship exception cited earlier in this ICR are equally divided amongst the jurisdictions, and thus 18.2 million beneficiaries ((20 million beneficiaries/44 jurisdictions) × 40 jurisdictions) will reside in the 40 jurisdictions that will need to send notices of the anticipated expiration of a short-term hardship event described at § 435.555(d)(2) and (3). We estimate it will take 1 minute (0.017 hr) at $38.66/hr for a Mail Clerk to mail the notice of anticipated expiration of a short-term hardship event described at § 435.555(d)(2) and (3) to 18.2 million beneficiaries. In aggregate, we estimate an annual burden of 309,400 hours (18,200,000 notices × 0.017 hr per mailing) for Mail Clerks to complete all mailings at a cost of $11,961,404 (309,400 hr × $38.66/hr). Accounting for the Federal administrative match of 50 percent, the labor burden of this requirement will cost States $5,980,702 ($11,961,404 × 0.50).

In addition, the mailing of notices about the anticipated expiration of a short-term hardship event described at § 435.555(d)(2) and (3), will add ancillary annual non-labor costs associated with paper, toner, envelopes, and postage. Assuming 18.2 million mailings annually at a cost of $0.802 [($0.007 for paper × 2 pages) + ($0.007 for toner × 2 pages) + $0.73 for postage + $0.044 per envelope], we estimate an additional aggregate annual non-labor cost of $14,596,400 (18,200,000 mailings ( printed page 33441) × $0.802). Accounting for the Federal administrative match of 50 percent, the non-labor burden of this requirement will cost States $7,298,200 ($14,596,400 × 0.50). We have summarized the ongoing State burden associated with mailing notices about the anticipated expiration of a short-term hardship event described at § 435.555(d)(2) and (3) in Table 26.