HB126 Alabama 2023 Session

Summary

Primary Sponsor

Kyle South

Republican

Session

Regular Session 2023

Title

To create the Medicaid Emergency Reserve Fund and to provide for the withdrawal and use of amounts deposited into the fund.

Summary

HB126 creates a Medicaid Emergency Reserve Fund to support Alabama's Medicaid program during budget shortfalls and sets how funds can be withdrawn and used.

What This Bill Does

It creates the Medicaid Emergency Reserve Fund in the State Treasury to cover cost variances, unforeseen costs, or to prevent a deficit if Medicaid would exhaust its general fund appropriation before year’s end, with Governor approval and after exhausting the SGF. It establishes funding mechanics, including an initial 88 million transfer to the Reserve for FY2024, a parallel 88 million transfer from the Reserve to the Medicaid Agency for that year, annual transfers of carryforward balances from SGF accounts into the Reserve, a 100 million cap, and that interest stays in the General Fund. It requires notification to key lawmakers and officials when exhaustion is anticipated, and outlines investment rules for the Reserve and oversight provisions. The act becomes effective upon passage and approval.

Who It Affects

• Alabama Medicaid Agency — can use Reserve funds to cover variances or prevent deficits, but only with Governor authorization and after SGF appropriation is exhausted.
• State General Fund accounts 0106 and 0110 (Carryforward) — sources of funds that must be transferred to the Reserve and from which carryforward amounts are appropriated back for the next year.
• Governor — approves releases from the Reserve, sets the maximum amount that can be released, and issues required notifications to lawmakers and officials.
• Legislature and fiscal officers (Senate Finance & Taxation Committee-General Fund, House Ways & Means Committee-General Fund, State Finance Director, Legislative Fiscal Officer) — receive notifications about projected exhaustion and oversee the process
• State Treasurer — responsible for investing Reserve funds in eligible investments; interest goes to the General Fund; no fees charged for compliance.
• Medicaid providers and recipients — benefit from continued payments and essential Medicaid services, avoiding cuts during funding shortfalls.

Key Provisions

• Creates the Medicaid Emergency Reserve Fund in the State Treasury and authorizes its administration under existing budget laws; sets a $100,000,000 cap on the fund.
• Defines allowed uses: to cover expenditure variances due to cost increases, unforeseen costs, or to prevent an overdraft/deficit if the Medicaid agency would exceed its State General Fund appropriation before year end; funds require Governor authorization.
• Requires the Alabama Medicaid Agency to exhaust its State General Fund appropriation for the fiscal year before funds from the Reserve may be utilized.
• Mandates notification by the Commissioner of the Alabama Medicaid Agency to the Governor (and other officials) when exhaustion is likely within 180 days, including detailed justifications and requested amounts; simultaneous notification to specified legislative and financial officers.
• Requires the Governor to notify the Medicaid Agency and other listed officials of any approved release, including the maximum amount allowed.
• Transfers unencumbered SGF carryforward balances from Accounts 0106 and 0110 to the Reserve by November 15 after each fiscal year; the Legislature must appropriate carryforward amounts back to the Reserve for the next year and also appropriate any expected transfers from those SGF accounts.
• Initial funding for FY2024 includes 88,000,000 from the SGF Carryforward to the Reserve and 88,000,000 from the Reserve to the Medicaid Agency.
• Balance in the Reserve cannot exceed 100,000,000; no transfers to the Reserve if the balance is at cap.
• The State Treasurer must invest Reserve funds in eligible investments; interest goes to the State General Fund; the Treasurer receives no fees for this work.
• Effective date: the act becomes law upon passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Medicaid Emergency Reserve Fund