§ 435.558 Noncompliance procedures.
(a) Provision of notice of noncompliance. If a State is unable to verify that an applicable individual has met the requirement to demonstrate community engagement under §§ 435.552 and 435.556, or is deemed compliant under § 435.553 or, if applicable, § 435.555, as specified in paragraph (b) of this section, the State must:
(1) Provide such individual with the notice of noncompliance described in paragraph (c) of this section;
(2) Provide such individual with a period of 30 calendar days beginning on the date on which such notice of noncompliance is received by the individual consistent with paragraph (c)(4) of this section, to make a satisfactory showing to the agency—
(i) Of compliance with such requirement (including, as applicable, by showing that such individual demonstrated or should be deemed to have demonstrated community engagement under § 435.553 or, if applicable, § 435.555, for each month required under the State plan); or
(ii) That such requirement does not apply to such individual on the basis that such individual does not meet the definition of applicable individual under § 435.551, including by meeting the criteria for one or more of the categories of a specified excluded individual as defined at § 435.554.
(3) Continue to furnish Medicaid for an enrolled beneficiary until the individual is determined ineligible consistent with § 435.930(b).
(b) Defining “unable to verify” community engagement. The agency is considered to be unable to verify that an applicable individual is compliant with the requirement to demonstrate community engagement as follows:
(1) At application, the agency is unable to verify compliance with community engagement when it does not have sufficient information after reviewing the information provided by the individual at application and the reliable information available to the State to determine that the individual has demonstrated or is deemed to have demonstrated community engagement for the number of months required under the State plan.
(2) As part of a renewal under section 1902(e)(14)(L) of the Act and § 435.916, the agency is unable to verify compliance with community engagement when it does not have sufficient information to determine that the individual has demonstrated or is deemed to have demonstrated community engagement for the number of months required under the State plan, after—
(i) Reliable information available to the State accessed at renewal consistent with § 435.916(a)(2) are not sufficient to verify compliance with the community engagement requirement; or
(ii) The renewal form provided to the beneficiary in accordance with § 435.916(a)(3) for those whose eligibility cannot be renewed based on reliable information under § 435.916(a)(2) is not returned or the information returned on the renewal form is not sufficient to verify compliance with community engagement.
(3) If applicable, as part of the more frequent verification of compliance under § 435.557(d), the agency is unable to verify compliance with the community engagement requirement when it does not have sufficient information to determine that the individual has demonstrated or is deemed to have demonstrated community engagement for the number of months required under the State plan after—
(i) Accessing reliable information in accordance with § 435.557(d) and information is not sufficient; or
(ii) Accessing reliable information in accordance with § 435.557(d) and following the State's procedures under § 435.952(d) to request information from the individual, when the requested information is not returned or the information returned is not sufficient.
(c) Content and form of noncompliance notice. A notice of noncompliance—
(1) Must include clear statements containing the following information—
(i) How to make a satisfactory showing of compliance with the community engagement requirement, including:
(A) Which month(s) will be assessed by the State in accordance with § 435.556(a);
(B) How to show the individual demonstrated community engagement under § 435.552; and
(C) How to show the individual should be deemed to have demonstrated community engagement as specified at § 435.553 or, if applicable, § 435.555;
(ii) How to make a satisfactory showing that the community engagement requirement does not apply to the individual on the basis that the individual does not meet the definition of an applicable individual at § 435.551, including because the individual meets the criteria for one or more of the categories of a specified excluded individual under § 435.554;
(iii) The deadline for providing the information under paragraph (c)(1)(i) or (ii) of this section to the State;
(iv) A description of how the information under paragraph (c)(1)(i) or (ii) of this section may be submitted to the State through any of the modalities described in § 435.907(a);
(v) A description of the consequences of noncompliance with the community engagement requirement and failure to respond to the notice of noncompliance for Medicaid eligibility and eligibility for advance payments of the premium tax credit (APTC) and the premium tax credit (PTC) used to pay for coverage through a Health Insurance Exchange;
(vi) How such individual may reapply for medical assistance under the State plan (or a waiver of such plan) if the individual's application is denied or the individual is disenrolled from coverage under the State plan or waiver, as applicable; and
(vii) For States that have elected to provide the short-term hardship exception under § 435.555, the information about short-term hardship events described in § 435.555(c).
(2) Must be provided in a manner consistent with § 435.905(b).
(3) Must, if provided in electronic format, comply with § 435.918(b).
(4) Is considered to be received 5 days after the date on the notice, unless the applicant or beneficiary shows that he or she did not receive the notice within the 5-day period.
(d) State responsibilities in the event of no satisfactory showing. If no satisfactory showing is made after the 30-calendar day period consistent with paragraph (a)(2) of this section, the State must—
(1) Consider all other bases of eligibility for medical assistance under the State plan (or waiver of such plan) in accordance with §§ 435.911 and 435.916(f) prior to denying coverage at application or determining that an individual is ineligible;
(2) For individuals determined ineligible under the State plan (or waiver of such plan) after considering all bases of eligibility, as applicable:
(i) Deny such individual's application and provide written notice and fair hearing rights consistent with §§ 435.917 and 435.918 and part 431, subpart E of this subchapter;
(ii) Disenroll such beneficiary not later than the end of the month following the month in which the 30-calendar day period under paragraph (a)(2) of this section ends and after the provision of advance written notice and fair hearing rights consistent with §§ 435.917 through 435.918 and part 431, subpart E of this subchapter prior to the disenrollment;
(iii) Include in the clear statement of the specific reasons supporting the intended action under § 431.210(b) of this subchapter that the individual failed to:
(A) Make a satisfactory showing of compliance with the community engagement requirement under § 435.552, including by meeting the criteria for an exception to be deemed as having demonstrated community engagement under § 435.553 or, if applicable, § 435.555, for the month(s) specified in accordance with § 435.556(a); and
(B) Make a satisfactory showing that the community engagement requirement does not apply to the individual on the basis that the individual does not meet the definition of applicable individual at § 435.551, including failure to demonstrate the individual meets the criteria for one or more of the categories of a specified excluded individual under § 435.554; and
(iv) Determine the individual's or beneficiary's potential eligibility for other insurance affordability programs in accordance with § 435.1200(e).
(e) Prohibition on restrictions to re-applying for coverage. An agency must not impose any restriction on an applicable individual's ability to re-apply for coverage or their ability to receive coverage if determined eligible upon reapplication based on a prior denial of eligibility or disenrollment for noncompliance under this section.
(f) Reconsideration period. A State must reconsider eligibility consistent with § 435.916(a)(3)(iii), if an individual, who was enrolled with eligibility based on MAGI, was disenrolled for failure to submit information requested in a notice of noncompliance and submits the information during the reconsideration period described in § 435.916(a)(3)(iii).
[91 FR 33469, June 3, 2026; 91 FR 39028, June 29, 2026]