Medicaid prescription copays and the federal limits on them

The most a state Medicaid program can charge most enrollees for a preferred prescription drug is $4, under a federal regulation, 42 CFR 447.53¹, that CMS rewrote in a July 2013 final rule⁵. For a drug the state lists as non-preferred, the ceiling is $8 for people with family income at or below 150 percent of the federal poverty level.

For many generics, which fill most Medicaid prescriptions, $4 is more than the pills cost the pharmacy. In October 2026, pharmacies paid an average of about 85 cents for 30 tablets of atorvastatin 20 mg and 54 cents for 30 tablets of lisinopril 10 mg, according to GxRadar's analysis of CMS's National Average Drug Acquisition Cost survey¹². Medicaid pays the pharmacy more than the ingredient cost, because states add a professional dispensing fee⁴ on top, as our explainer on how Medicaid pays for generic drugs describes.

Whether an enrollee pays anything at all depends on the state. As of January 2026, 19 of the 41 states that expanded Medicaid charged expansion adults cost sharing for some services, and prescription drugs were the most common target, KFF reported in May 2026⁷. Fifteen of those states charged for generic drugs. A 2025 federal law will, for the first time, require states to charge some expansion adults, starting in October 2028.

The federal ceiling for drug copays

States may charge copayments, coinsurance or deductibles in Medicaid, but federal rules cap each one. For drugs, the cap turns on two questions: whether the state calls the drug preferred, and where the enrollee's family income falls relative to the federal poverty level (FPL). A state that does not separate preferred from non-preferred drugs must treat every drug as preferred, the regulation says.

Source: 42 CFR 447.53(b) and (c)¹. These are the regulation's base amounts. The dollar figures rise with inflation each year, as described below.

Two other provisions shape what happens at the counter. Under 42 CFR 447.52(c)², the maximum cost sharing a state sets may never equal or exceed what the agency pays for the service, a payment that for many generics is itself capped by the federal upper limit. And under 447.53(e), when a prescriber determines that the preferred drug for the same condition would be less effective or would cause adverse effects, the state must have a "timely process" to charge only the preferred-drug amount for the non-preferred one. How that process works in a given state is a question for the pharmacist or the state Medicaid office. Commercial plans run a similar preferred and non-preferred system through tiered formularies.

How the dollar amounts have changed

Before 2014, Medicaid's "nominal" copay was a sliding scale tied to what the state paid for the item. A November 2008 CMS final rule⁶ implementing the Deficit Reduction Act of 2005 published that scale for three federal fiscal years. Each year's figures were raised by the medical care component of the Consumer Price Index for All Urban Consumers (CPI-U) and rounded up to the next 5 cents.

Source: CMS final rule, 73 FR 71828 (Nov. 25, 2008).

By 2013 the top step had reached $3.90 for services the state paid more than $50 for, CMS wrote in the 2013 rule⁵. That rule replaced the scale with flat amounts: $4 for outpatient services and preferred drugs, and $8 for non-preferred drugs. CMS described the $4 figure as "a modest $0.10 increase from the current maximum." The agency said the next inflation update would wait until Oct. 1, 2015.

Since then, the regulation has said the dollar maximums "shall be increased each year, beginning October 1, 2015," by the September-to-September change in the medical care CPI-U, again rounded up to the next 5 cents. The update does not apply to the 20 percent coinsurance option, which is already tied to cost. CMS's Medicaid.gov page on out-of-pocket costs⁸ still shows an FY 2013 table, and GxRadar did not find a federal publication listing the indexed figure for each later year, so analysts such as MACPAC¹⁰ and KFF quote the regulation's $4 and $8 base amounts. Many states charge less than the maximum, and some charge nothing for drugs. North Carolina is moving the other way: KFF reported that a recent state law sets that state's Medicaid copays at the federal maximum starting July 1, 2027.

Who is exempt, and which drugs carry no copay

Exemptions are listed in 42 CFR 447.56³, and the Medicaid.gov exemptions page⁹ summarizes them in plain terms. States may not charge cost sharing to:

• most children under 18, and children in foster care regardless of age;
• pregnant women, for pregnancy-related services through the postpartum period (the regulation treats every service to a pregnant woman as pregnancy-related unless the state plan says otherwise);
• people receiving hospice care;
• people in an institution whose income, apart from a personal-needs allowance, goes toward the cost of their care;
• American Indians and Alaska Natives who have ever received an item or service from an Indian health care provider or through referral;
• women covered through the breast and cervical cancer treatment pathway.

Some services are exempt for everyone. Emergency services, family planning services and supplies "including contraceptives and pharmaceuticals," preventive services for children, and pregnancy-related services carry no cost sharing. The regulation counts counseling and drugs for tobacco cessation as pregnancy-related services.

One carve-back matters at the pharmacy. Under 447.53(d), a state may charge an otherwise exempt person the nominal copay for a non-preferred drug. The carve-back covers non-preferred drugs only, so exempt people still pay nothing for a preferred one, as KFF's summary⁷ of the rules reflects.

The 5 percent cap, and what happens when someone cannot pay

Medicaid premiums and cost sharing for everyone in a household may not exceed 5 percent of family income, measured monthly or quarterly as the state chooses. The state has to track that total through a mechanism "that does not rely on beneficiary documentation," and it must tell enrollees and providers when a family reaches the cap.

What happens when someone cannot pay depends on income. For enrollees at or below 100 percent of FPL, and for the exempt groups, the state plan must say that no provider may deny services because the person cannot pay the copay. Above 100 percent of FPL, a state may let a pharmacy require the copay before it dispenses. A pharmacy may still reduce or waive cost sharing case by case, under 447.52(e)(3)².

When it does, the pharmacy absorbs the cost. Under 447.56(c), the state reduces its payment to the provider by the copay amount "regardless of whether the provider has collected the payment or waived the cost sharing." Our explainer on how pharmacies get paid covers the rest of that transaction, and the NADAC price pages show what pharmacies pay for 47 common generics.

What changes in October 2028

Section 71120 of Public Law 119-21¹¹, the budget reconciliation law signed July 4, 2025, adds a new subsection to the Medicaid cost-sharing section of the Social Security Act. Beginning Oct. 1, 2028, states must impose cost sharing "in an amount greater than $0" on expansion adults whose family income is above the poverty line. KFF describes that group as expansion adults with income from 100 to 138 percent of FPL.

For most items and services, the new ceiling is $35. Prescription drugs are handled separately. Cost sharing on a drug for this group may not exceed the limits that already apply under section 1916A(c) of the Act, the provision the drug regulation above carries out. Primary care, mental health and substance use disorder services, and care at federally qualified health centers, certified community behavioral health clinics and rural health clinics become exempt for the group. The 5 percent household cap carries over, and states may let providers require payment before giving care.

Congress set no minimum copay beyond "greater than $0" and does not list which services must carry one. KFF wrote that CMS guidance may address how much flexibility states will have. Until then, an enrollee's pharmacy copay will keep depending on the state plan, which a pharmacist or the state Medicaid agency can look up. The requirement takes effect Oct. 1, 2028, the first day of federal fiscal year 2029.