Indiana Medicaid Expansion: HIP 2.0, Work Rules, and 2025 Changes

Indiana’s Medicaid expansion, known as the Healthy Indiana Plan 2.0 or HIP 2.0, covers adults ages 19 to 64 with household incomes up to 138% of the federal poverty level and enrolled roughly 700,000 people as of May 2025.¹ Indiana adopted the expansion under the Affordable Care Act in 2015 through a Section 1115 waiver that layers cost-sharing, personal POWER Accounts, and tiered benefits onto the standard framework. That structure is now being reshaped by a 2024 federal court ruling, two new state laws, and federal work-requirement provisions that take effect in 2027.

Who Qualifies and What’s Covered

HIP 2.0 is open to Indiana residents ages 19 to 64 with incomes at or below 138% of the federal poverty level. Enrollment is not capped. The program operates under a Section 1115 waiver first approved in January 2015 and currently set to expire December 31, 2026, with a temporary extension approved by CMS on November 26, 2025.²

Enrollees fall into one of three tiers:

HIP Plus is the fuller benefit package. It includes vision, dental, and chiropractic coverage, and members generally have no copayments beyond a monthly POWER Account contribution (except for non-emergency use of the emergency room).³
HIP Basic is the fallback for members at or below the federal poverty level who do not make POWER Account contributions. It drops vision, dental, and chiropractic coverage and requires copayments at the point of service.⁴
HIP State Plan covers parents, people receiving Transitional Medical Assistance, pregnant women, and those deemed medically frail. These members get standard Medicaid benefits, including non-emergency medical transportation, and their coverage does not depend on account contributions.⁴

One coverage boundary to know: unlike standard Medicaid, HIP does not provide three months of retroactive coverage. Under the original program design, coverage began only after the first POWER Account payment was made.⁴

POWER Accounts and the 2024 Court Ruling

Every HIP enrollee has a POWER Account with $2,500 available each year to cover initial health costs. The state funds most of it. Members contribute a fixed monthly amount based on income, from $1 for those below 22% of the federal poverty level to $20 for those between 101% and 138%.⁵ Married couples can split the contribution. Tobacco users face a 50% surcharge that can be removed if they stop.⁴

Unused funds can roll over to reduce the next year’s contribution, and completing preventive services doubles that reduction. Total cost-sharing is capped at 5% of household income.³

The consequences of missing a payment depend on income. Members above the poverty level who fail to contribute are removed from the program. Members below the poverty level are moved to HIP Basic rather than losing coverage.³ A six-month lockout on re-enrollment has been inactive since 2020 and cannot be enforced without further judicial authorization.⁴

The contribution requirement itself is currently paused. In June 2024, Chief Judge James E. Boasberg of the U.S. District Court for the District of Columbia vacated the federal government’s 2020 approval of the POWER Account contribution rules, finding them inconsistent with the objectives of the Medicaid Act. The ruling noted that about 60,000 Hoosiers, or 29% of those subject to the premiums, had been disenrolled for nonpayment, and that more than half of beneficiaries missed at least one payment between 2015 and 2016.⁶ The court also struck down the state rules on retroactive coverage and non-emergency medical transportation.

Following the ruling, Indiana’s Family and Social Services Administration (FSSA) stopped collecting POWER Account contributions, and members now have access to HIP Plus benefits without monthly payments while the state appeals.⁷

What’s Changing: State Work Requirements and More Frequent Checks

Two Indiana laws passed in 2025 and 2026 tighten eligibility for HIP.

Senate Enrolled Act 2 (2025)

Governor Mike Braun signed SEA 2 on May 1, 2025. The law requires HIP enrollees to log at least 20 hours per week of work or volunteer activity with the state, moves eligibility checks from annually to quarterly, and adds a financial asset lookback period intended to prevent people from transferring assets to qualify.⁸⁹ The bill includes more than a dozen exemptions, and implementation of the work requirements needs federal approval.

The Senate passed it 37-10. Critics, including Senate Minority Leader Shelli Yoder and the American Cancer Society Cancer Action Network, said the requirements would raise administrative costs and cause eligible people to lose coverage.⁸

Senate Bill 1 (2026)

In 2026, the General Assembly passed SB 1 and Governor Braun signed it. It requires more frequent Medicaid redeterminations, shortens HIP eligibility periods, adds work-requirement documentation rules (including a requirement that work conditions be met in the three months before applying), and directs FSSA to verify immigration status for all applicants.¹⁰ The House passed it 62-31 after amendments raised the dependent-care exemption age from 6 to 14 and allowed workers to meet job requirements over a one-month period rather than weekly.

The advocacy group Hoosier Action projected SB 1 alone would cause more than 100,000 Hoosiers to lose Medicaid coverage, with combined state and federal changes potentially reaching nearly 400,000 by 2034.¹¹ FSSA disputed the projection, with a spokesperson saying the agency had “no estimate” of how many people would be affected.¹²

What’s Changing: The Federal Reconciliation Law

The federal budget reconciliation law (H.R. 1), signed by President Trump on July 4, 2025, kept the 90% federal matching rate for Medicaid expansion in place, which means Indiana’s trigger law has not been activated. But the law adds new rules that will reshape HIP:

Work reporting requirements. Starting January 1, 2027, all expansion states must require adults ages 19 to 64 to work, volunteer, or participate in a work program for at least 80 hours per month. The Congressional Budget Office estimated this provision alone would add 5.3 million to the ranks of the uninsured nationally by 2034.
Six-month redeterminations. Beginning January 1, 2027, states must verify enrollee eligibility every six months instead of annually.
Mandatory cost-sharing. Starting October 1, 2028, states must charge copayments of up to $35 per service for expansion enrollees with incomes above the federal poverty level. Providers can deny services if the copayment is not paid.
Provider tax restrictions. The law ratchets down the safe-harbor threshold for provider taxes in expansion states from 6% to 3.5% by 2032 and prohibits new provider taxes or increases as of July 4, 2025.¹³

A KFF analysis allocating the CBO’s national enrollment-loss estimates to individual states projected that Indiana Medicaid enrollment could decline by 174,000 to 290,000 people.¹⁴

The state and federal rules overlap in some places and conflict in others. Experts have warned that the federal law may override several of Indiana’s 12 exemptions to its 20-hour state work mandate, because states usually cannot deviate from federal regulations. Detailed federal guidance is not expected until July 2027.¹⁵

FSSA is preparing anyway. As of April 2026, the agency was hiring 400 new employees to monitor eligibility for the roughly 560,000 HIP enrollees subject to work requirements, with only 50 of those positions filled. Under the combined state and federal rules, HIP members will undergo at least three times more eligibility checks than before: SEA 1 requires quarterly compliance checks, while the federal law mandates full redeterminations every six months.¹⁶

The Trigger Law

Indiana has a law that would automatically end HIP if federal funding drops. Senate Enrolled Act 165, effective July 1, 2016, amended state code (IC 12-15-44.5-4) to require termination of the Healthy Indiana Plan if the federal matching rate for expansion falls below the ACA levels — currently 90% — and the state’s hospital assessment committee does not adjust its funding formula to cover the shortfall.¹⁷¹⁸

The statute says HIP is “not an entitlement program.” If the trigger fires, the FSSA secretary could fall back to a version of the original 2014 Healthy Indiana Plan, a much smaller program with capped enrollment and limited benefits, subject to federal approval.¹⁸ When the trigger drew renewed attention in late 2024, HIP covered more than 754,000 people.¹⁷ The 2025 reconciliation law left the 90% match intact, so the trigger has not been pulled.

How to Keep Coverage Through the Changes

If you are on HIP or applying for it, three things matter most in the near term. First, you no longer have to make POWER Account contributions to keep HIP Plus benefits while the state’s appeal of the 2024 ruling is pending. Second, eligibility checks are becoming more frequent under state law now and under federal law starting January 1, 2027, so keeping your address, income information, and any work or exemption documentation current with FSSA is what will most often decide whether coverage continues. Third, once the federal 80-hour monthly work requirement takes effect in 2027, expect Indiana’s own exemptions to narrow to match federal rules, and detailed federal guidance is not expected until mid-2027.

1
WFYI. Medicaid Members in HIP Program Say Federal, State Policy Changes Put Their Lives at Risk
2
Medicaid.gov. Indiana Healthy Indiana Plan 2.0 Section 1115 Demonstration
3
Indiana FSSA. POWER Accounts
4
MACPAC. Indiana Waiver: Healthy Indiana Plan 2.0
5
Indiana FSSA. Am I Eligible?
6
Indiana Capital Chronicle. FSSA Halts POWER Account Contributions After Federal Ruling
7
WFYI. Lawmakers Call on FSSA to Eliminate POWER Account Contributions From HIP Program
8
Indiana Capital Chronicle. Senators Send Medicaid Work Requirements to Governor’s Desk
9
Indiana Capital Chronicle. Medicaid Work Requirements Signed Into Law
10
Indiana Capital Chronicle. Indiana House Backs Bill With Stricter Verification for SNAP, Medicaid Eligibility
11
WFYI. Indiana Medicaid Changes Will Leave More Than 100,000 Without Coverage, According to Advocates
12
IndyStar. Indiana Medicaid Cuts
13
Georgetown CCF. Medicaid, CHIP, and ACA Marketplace Cuts and Other Health Provisions in the Budget Reconciliation Law Explained
14
KFF. Allocating CBO’s Estimates of Federal Medicaid Spending Reductions and Enrollment Loss Across the States
15
WFYI. Expert Says Federal Medicaid Work Reporting Requirements May Negate Several of Indiana’s Exceptions
16
Indiana Capital Chronicle. FSSA Hiring 400 Medicaid Eligibility Checkers Ahead of Work Requirements
17
Indiana Capital Chronicle. Indiana’s Medicaid Expansion Trigger Law Could Impact Coverage of 754K Hoosiers
18
VoteSmart. Senate Enrolled Act No. 165