Medicaid Eligibility

Using Federal Guidelines, the states have some discretion in determining which groups their Medicaid programs will cover and the financial criteria for Medicaid eligibility. To be eligible for Federal funds, States are required to provide Medicaid coverage for most individuals who receive federally assisted income maintenance payments, as well as for related groups not receiving cash payments. Recipients of Aid to Families with Dependent Children (AFDC) and Supplemental Security Income (SSI) are examples of some of the mandatory Medicaid eligibility groups.

States also have the option to provide Medicaid coverage for what are referred to as "categorically needy" groups. These optional groups share characteristics of the mandatory groups, but the eligibility criteria are more liberally defined. Examples of the optional groups that States may cover as categorically needy (and for which they will receive Federal matching funds) under the Medicaid program include certain aged, blind, or disabled adults who have incomes above those requiring mandatory coverage, but below the Federal poverty level; institutionalized individuals with income and resources below specified limits; and persons who would be eligible if institutionalized but are receiving care under home and community-based services waivers.

Medically Needy Eligibility Groups

The option to have a "medically needy" program allows States to extend Medicaid eligibility to additional qualified persons who may have too much income to qualify under the mandatory or optional categorically needy groups. This option allows individuals to "spend down" to Medicaid eligibility by incurring medical and/or remedial care expenses to offset their excess income, thereby reducing it to a level below the maximum allowed by that State's Medicaid plan. States may also allow families to establish eligibility as medically needy by paying monthly premiums to the State in an amount equal to the difference between family income (reduced by unpaid expenses, if any, incurred for medical care in previous months) and the income eligibility standard. Eligibility for the medically needy program does not have to be as extensive as the categorically needy program.

Amplification on Medicaid Eligibility

Coverage may start retroactive to any or all of the 3 months prior to application if the individual would have been eligible during the retroactive period. Coverage generally stops at the end of the month in which a person's circumstances change. Most States have additional "State-only" programs to provide medical assistance for specified poor persons who do not qualify for the Medicaid program. No Federal funds are provided for State-only programs.

Medicaid does not provide medical assistance for all poor persons. Even under the broadest provisions of the Federal statute (except for emergency services for certain persons), the Medicaid program does not provide health care services, even for very poor persons, unless they are in one of the groups designated above. Low income is only one test for Medicaid eligibility; assets and resources are also tested against established thresholds. Categorically needy persons who are eligible for Medicaid may or may not also receive cash assistance from the AFDC program or from the SSI program. Medically needy persons who would be categorically eligible except for income or assets may become eligible for Medicaid solely because of excessive medical expenses.

States may use more liberal income and resources methodologies to determine Medicaid eligibility for certain AFDC-related and aged, blind, and disabled individuals under section 1902(r)(2) of the Social Security Act. The more liberal income methodologies cannot result in the individual's income exceeding the limits prescribed for Federal matching (for those groups which are subject to these limits).

Significant changes were made in the Medicare Catastrophic Coverage Act (MCCA) of 1988 which affected Medicaid. Although much of the MCCA was repealed, the portions affecting Medicaid remain in effect. The law also accelerated Medicaid eligibility for some nursing home patients by protecting assets for the institutionalized person's spouse at home at the time of the initial eligibility determination after institutionalization. Before an institutionalized person's monthly income is used to pay for the cost of institutional care, a minimum monthly maintenance needs allowance is deducted from the institutionalized spouse's income to bring the income of the community spouse up to a moderate level.

Medicaid - Medicare Relationship

The Medicare program (Title XVIII of the Social Security Act) provides hospital insurance (HI), also known as Part A coverage and supplementary medical insurance (SMI), which is known as Part B coverage. For persons aged 65 and older (and for certain disabled persons) who have insured status under Social Security or Railroad Retirement, coverage for HI is automatic. Coverage for SMI, however, requires payment of a monthly premium. Some aged and/or disabled persons are covered under both the Medicaid and Medicare programs.

For Medicare beneficiaries who are also fully eligible for Medicaid, Medicare coverage is supplemented by health care services that are available under the State's Medicaid program. If a person is a Medicare beneficiary, payments for any services covered by Medicare are made by the Medicare program before any payments are made by the Medicaid program. Medicaid is always" payor of last resort." As each State elects, services such as eyeglasses, hearing aids, and nursing facility care not covered by Medicare may be provided by the Medicaid program.

Limited Medicaid benefits are available for certain qualified disabled working individuals (QDWI’s), who have earnings sufficiently high to preclude entitlement to Medicare coverage except if the individual purchases coverage, and whose earnings are less than 200 percent of the Federal poverty level (FPL). State Medicaid programs must pay the HI premium for QDWI’s with income less than 150 percent of the FPL, and may pay some or all of the HI premium for QDWI’s with earnings between 150 and 200 percent of the FPL. Medicaid does not pay SMI premiums for these individuals.

For certain poor Medicare recipients known as "Qualified Medicare Beneficiaries" (QMBs) (those beneficiaries with incomes below the Federal poverty level and with resources at or below twice the standard allowed under the SSI program), the Medicaid program pays the Medicare premiums and cost-sharing expenses for Medicare HI and SMI. For "Specified Low-Income Medicare Beneficiaries" (SLMBs) (those like QMBs, but with slightly higher incomes), the Medicaid program pays only the SMI premiums.

Medicaid eligibility requirements here are accurate at present; however, they are expected to change somewhat in the near future as States implement the new welfare reform bill which was signed into law on August 22, 1996. For summary information on the Medicaid-related provisions of the new law, find the appropriate file and click on it. If you would like to file an application for Medicaid, go to your local Medicaid State agency. You can find the address and phone number for your state agency.

THESE MATERIALS WERE EDITED FROM THOSE PROVIDED BY HEALTH CARE FINANCING ADMINISTRATION (HCFA). BECAUSE THESE MATERIALS HAVE BEEN EDITED AND BECAUSE RULES AND REGULATIONS CHANGE REGULARLY, WE SUGGEST THAT YOU CONTACT YOUR LOCAL AUTHORITIES AND QUALIFIED LEGAL COUNSEL PRIOR TO ACTING.