Medicaid: Eligibility for the Aged and Disabled

Publication Date: July 2002

Publisher: Library of Congress. Congressional Research Service

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Research Area: Health

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Abstract:

Medicaid is a means-tested federal-state matching program that provides medical assistance for persons who are unable to afford needed medical and health related services. Since the program's establishment in 1965, it has become the largest single source of financing--both private and public--for long-term care for those elderly and disabled who are low-income or who have depleted their income and assets on medical and long-term care expenses. In order to be eligible for Medicaid, individuals must meet certain eligibility criteria. These criteria are determined by broad federal requirements and state decisions about whom they want to cover under their Medicaid programs. The financial eligibility standards that states do use are shaped in large part by estimates of spending that will occur with these standards. The elderly and disabled are the most expensive groups that are covered under Medicaid, largely because Medicaid covers nursing home and other institutional long-term care and because this care is expensive.

Eligibility for the program's benefits has traditionally been linked to eligibility for cash welfare assistance; that is, a person receiving welfare assistance under certain programs can also become eligible for Medicaid. For the elderly and disabled groups, the cash welfare program linked to Medicaid eligibility is the Supplemental Security Income (SSI) program. It provides federal cash welfare assistance to needy aged, disabled and blind individuals who have little or no income and resources. Medicaid law generally requires that states cover persons receiving SSI.

Medicaid, however, also covers elderly and disabled persons who are not poor and who may have income in excess of SSI welfare standards. It does so through options in Medicaid law that allow states to cover persons who need help with medical expenses. One of these options is a medically needy program by which states may cover persons regardless of income who incur medical expenses that deplete their income to levels that make them needy. Medicaid also allows states to use a higher income standard (up to 300% of basic SSI payment) for those who reside in nursing homes or other medical care institutions or who are eligible for certain long-term care services offered in the community. It is through these two options that Medicaid ends up covering long-term care expenses for many non-poor elderly persons. To make sure that persons with income and assets exceeding the welfare standards apply their resources toward the cost of their care, Medicaid eligibility rules include additional provisions that impose penalties on individuals who give their assets away in order to gain Medicaid eligibility sooner than they otherwise would and require states to recover assets from beneficiary's estates up to amounts paid for long-term care services after their death.

Medicaid eligibility rules also result in a diverse disabled population receiving coverage. Many disabled persons become eligible because they cannot work and are dependent on welfare assistance from SSI. However, Medicaid provides incentives for other disabled persons to work and retain Medicaid coverage. The disabled population also includes children who need a broad range of home and community based care as well as some who need nursing home care.