Medicaid Financial Eligibility in Pathways Based on Old Age or Disability in 2022: Findings from a 50-State Survey
Description of Pathways to Full Medicaid Eligibility Based on Old Age or Disability
Supplemental Security Income (SSI) Enrollees
States generally must provide Medicaid to people who receive federal Supplemental Security Income (SSI) benefits.1 This is the only pathway where eligibility is based on old age or disability that states must include in their Medicaid programs. To be eligible for SSI, people must have low incomes, limited assets, and an impaired ability to work at a substantial gainful level as a result of old age or significant disability. The maximum SSI federal benefit rate is $841 per month for an individual and $1,261 for a couple2 in 2022, which is 74 percent of the federal poverty level (FPL). The effective SSI income limit may be somewhat higher than 74% FPL in some states, due to state supplemental payments and/or additional income disregards.3 SSI enrollees also are subject to an asset limit of $2,000 for an individual and $3,000 for a couple.4
SSI eligibility is determined by the Social Security Administration (SSA). If states do not want to accept SSA’s determination of an SSI enrollee’s income, assets, and/or disability status when determining Medicaid eligibility, states can use different rules under Section 209 (b). Specifically, states can use financial and/or functional eligibility criteria that are more restrictive than the federal SSI rules, as long as the state’s rules are no more restrictive than the rules it had in place in 1972, when the SSI program was established.5
Working People WIth Disabilities
States can choose to cover working people with disabilities whose income and/or assets exceed the limits for other eligibility pathways.6 This option enables people with disabilities to retain access to the medical and LTSS they need as their income increases. Medicaid often is especially important to working people with disabilities because private insurance typically does not cover all of the services and supports they need to live independently and to work.7 States can choose to apply an asset limit to this pathway. Eliminating asset limits, or increasing them beyond the SSI limit of $2,000 for an individual and $3,000 for a couple, recognizes that enrollees are likely to incur expenses related to work or community living and enables them to accrue some savings to meet future expenses. States also can choose to charge monthly premiums, usually on a sliding scale based on income.
Katie Beckett Children With Disabilities
States can choose to elect the “Katie Beckett” option to extend coverage to children up to age 19 with significant disabilities living at home, without regard to household income. These children must meet SSI medical disability criteria and otherwise qualify for an institutional level of care according to functional eligibility criteria set by the state. States can target different populations based on the type of institutional care (hospital, skilled nursing facility, intermediate care facility, intermediate care facility for individuals with “mental disease,”8 intermediate care facility for individuals with intellectual or developmental disabilities) that would be required if the child was not receiving Medicaid services in the community.
Katie Beckett income limits are generally 300% of SSI ($2,523 per month in 2022), with a $2,000 asset limit, considering only the child’s own income and assets. Under the Katie Beckett pathway, parental income and assets are disregarded when determining Medicaid eligibility for children with disabilities living at home, just as they are for children with disabilities residing in an institution. This option makes it possible for children to receive necessary care while remaining at home with their families.
Katie Beckett children can be covered through the optional state plan pathway or through a home and community-based services (HCBS) waiver.9 These waivers allow states to expand financial eligibility and offer HCBS to seniors and people with disabilities who would otherwise qualify for an institutional level of care and can be targeted to a specific population. Providing coverage through a waiver also allows states to cap enrollment, which can result in waiting lists and is not permitted under state plan authority.
Medically Needy Populations
States can choose to adopt the medically needy option to extend Medicaid to people with high medical expenses who would be eligible in a categorically needy pathway, except that their income and/or assets exceed the maximum limit for that pathway.10 See Box 1 below for an explanation of how medically needy pathways differ from categorically needy pathways. All states electing medically needy coverage must include pregnant people and children. States also can choose to extend medically needy coverage to other groups such as seniors, people with disabilities, and/or low-income parents. Medically needy income limits are typically very low.11 States also can choose to apply an asset limit to medically needy pathways. The asset limit is typically the SSI amount of $2,000 for an individual and $3,000 for a couple, though it can be higher at state option.
Box 1: Categorically Needy vs. Medically Needy Pathways
Before the Affordable Care Act (ACA), Medicaid eligibility was limited to certain categories of people.12 These “categorically needy” groups include children, pregnant people, low-income parents, seniors, and people with disabilities. The ACA eliminated the need to fit into one of these categories by expanding Medicaid to nearly all adults with incomes up to 138% FPL ($1,563 per month for an individual in 2022). In states that have not adopted the ACA Medicaid expansion, people still must fit into one of the specified categories to qualify for coverage today. In addition, these categories remain relevant to determining Medicaid eligibility under the “medically needy” option because people who qualify as “medically needy” must fit into one of the traditional categories. States cannot use the medically needy option to cover people who do not fit into one of the traditional categories, such as childless adults, regardless of how poor they are or how extensive their medical needs are.
There are two ways that individuals can qualify for Medicaid through a medically needy pathway.13 First, people with income above the categorically needy income limit associated with a certain population but below the state’s medically needy income limit may be eligible as medically needy. Second, people who “spend down” to the state’s medically needy income limit by subtracting incurred medical or long-term services and supports (LTSS) expenses from their income may qualify. States select a budget period between one and six months during which an individual must incur enough expenses to decrease their income below the medically needy limit. Using a longer budget period may be administratively simpler for states and enrollees and provide continuity of coverage.
States have the option to provide a more limited benefit package to people who qualify for Medicaid in a medically needy, as opposed to categorically needy, pathway. Under federal law, states must include nursing facility services in the benefit package for categorically needy populations but can choose whether to include these services in their medically needy benefit package. In states electing this option, the medically needy pathway can be an important means of expanding coverage for those with overwhelming medical and/or LTSS expenses.
Seniors and People with Disabilities up to 100% FPL
States can chose to expand Medicaid to seniors and people with disabilities whose income exceeds the SSI limit but is below the federal poverty level ($1,133 per month for an individual in 2022).14 The federal maximum income limit for this pathway is 100% FPL.15 States also can choose to apply an asset limit to this pathway. The asset limit is typically the SSI amount of $2,000 for an individual and $3,000 for a couple, though it can be higher at state option.
Family Opportunity ACt Children with Disabilities
The Family Opportunity Act (FOA) pathway provides another option for states to cover children with significant disabilities living at home. These children must meet SSI medical disability criteria and can have family income up to 300% FPL ($5,758 per month for a family of three in 2022).16 Assets are not considered when determining a child’s FOA eligibility. Unlike the Katie Becket pathway which only considers the child’s own income, the FOA option considers household income. The FOA pathway only requires SSI medical disability criteria, while the Katie Beckett option also requires an institutional level of care. Under the FOA option, states are permitted to charge premiums equal to no more than 5 percent of the family’s monthly gross countable income (up to $288 per month in premiums for a family of 3 with income at 300% FPL, $5,758 per month in 2022). FOA children can be covered through the state plan option or through a waiver that covers a similar population while deviating from state plan eligibility rules.
Section 1915 (i) HCBS for people at risk of institutional care
States can elect the Section 1915 (i) pathway to provide Medicaid eligibility to people at risk of institutional care. The ACA amended Section 1915 (i) to create an independent pathway to Medicaid eligibility.17 This allows states to provide full Medicaid benefits to people who are not eligible through another pathway and who meet the Section 1915 (i) financial and functional eligibility criteria.18 Specifically, states can cover (1) people with income up to 150% FPL ($1,699 per month for an individual in 2022) with no asset limit who meet functional eligibility criteria; and/or (2) people with income up to 300% SSI who would be eligible for Medicaid under an existing HCBS waiver. Section 1915 (i) functional eligibility requires people to have needs that are less than what is required to qualify for an institutional level of care, which enables states to offer HCBS as preventive services in efforts to delay or foreclose the need for costlier future care or institutionalization. Like HCBS waivers, states can target Section 1915 (i) services to a particular population. Unlike HCBS waivers, states are not permitted to cap enrollment or maintain a waiting list for Section 1915 (i) Medicaid eligibility. However, states can manage enrollment under Section 1915 (i) by restricting functional eligibility criteria if the state will exceed the number of beneficiaries that it anticipated serving
State Options to Expand Medicaid LTSS Financial Eligibility
Medicaid LTSS include nursing home and other institutional services as well as home and community-based services (HCBS). Medicaid remains the primary payer for LTSS, as Medicare does not cover long-term care, private insurance coverage is limited, and out-of-pocket costs often are unaffordable. Medicaid also is an important source of federal funds to support states in meeting their community integration obligations under the Americans with Disabilities Act and the Olmstead decision.19
Special income rule
States can elect the “special income rule” option to allow people with functional needs who require an institutional level of care to qualify for Medicaid LTSS with incomes up to 300% SSI ($2,523 per month for an individual in 2022).20 States also can apply an asset limit under the special income rule, usually the SSI amount of $2,000 for an individual and $3,000 for a couple.
States using the special income rule can apply it to people in institutions, such as nursing homes, and/or people receiving LTSS in the community.21 Aligning financial eligibility rules across long-term care settings is important to eliminating programmatic bias toward institutional care. If people can qualify for institutional services at higher incomes than required to qualify for community-based services, they may choose to enter a nursing facility when they need care instead of going without necessary care while spending down to the lower HCBS income limit.
Qualified Income or “Miller” Trusts
States can choose to allow individuals residing in an institution to qualify for Medicaid LTSS with income higher than 300% of SSI if their excess income is administered through a special type of trust, known as a qualified income or “Miller” trust.22 States can choose whether to cap the amount of money that can be put into a Miller trust when establishing eligibility for LTSS. States allowing Miller trusts for institutional care can also allow individuals to use Miller trusts to qualify for Medicaid HCBS. As noted above, using the same financial eligibility rules for institutional care and HCBS helps alleviate bias toward institutional care.
Income from a Miller trust can be used to fund the Medicaid enrollee’s personal needs allowance as well as a monthly allowance for the beneficiary’s spouse who remains in the community under the spousal impoverishment rules (both discussed below). Any additional income from the trust goes toward the enrollee’s cost of care, and states can recover funds remaining in the trust after the individual’s death to reimburse the cost of care.
Supplemental Needs and Pooled Income Trusts
States can allow individuals to qualify for Medicaid LTSS using supplemental needs23 and pooled income24 trusts. Both of these types of trusts contain assets for the benefit of non-elderly people with disabilities, which are excluded from Medicaid financial eligibility determinations. States can choose whether to cap the amount of money that can be put into these trusts. The trust beneficiary must have a disability based on SSI criteria. Both types of trusts can be established by the individual’s parent, grandparent, legal guardian or a court and must provide that the state can receive any amount remaining in the trust upon the beneficiary’s death to cover the cost of Medicaid services provided. Pooled income trusts are established and managed by a non-profit association, with a separate account for each beneficiary, but assets are combined for purposes of fund investment and management. This option can enable individuals with relatively small trust amounts to benefit from economies of scale by being part of a larger pool of funds for investment and management purposes.
Home Equity Limits
States can choose the amount of home equity that people seeking Medicaid LTSS can have as an allowable asset.25 The federal minimum home equity limit is $636,000 in 2022, and the upper limit is $955,000.
Personal/Maintenance Needs Allowance
Once eligible for Medicaid, individuals in institutions, such as nursing homes, generally must contribute most of their monthly income to the cost of their care, with the exception of a small allowance used to pay for personal needs that are not covered by Medicaid, such as clothing.26 The federal minimum personal needs allowance is $30 per month, though states can choose to adopt a higher amount.
Certain Medicaid enrollees receiving HCBS must contribute a portion of their income to their cost of care, though states generally allow them to retain a monthly maintenance needs allowance.27 The maintenance needs allowance generally exceeds the institutional personal needs allowance described above, recognizing that, unlike those in nursing homes, individuals living in the community must pay for room and board. There is no federal minimum HCBS maintenance needs allowance; instead, states may use any amount as long as it is based on a “reasonable assessment of need” and subject to a maximum that applies to all enrollees under the HCBS waiver.28 The maintenance needs allowances established by states play a critical role in determining whether individuals can afford to remain in the community and avoid or forestall institutional placement.
Spousal Impoverishment Rules
Congress created the Medicaid spousal impoverishment rules in 1988 to protect a portion of a married couple’s income and assets and ensure that the “community spouse” is able to meet their living expenses when the other spouse seeks Medicaid LTSS. The spousal impoverishment rules supersede rules that would otherwise require Medicaid financial eligibility determinations to account for a spouse’s financial responsibility for a Medicaid applicant or enrollee by contributing to their cost of care.29 The protected income is called the spouse’s “monthly maintenance needs allowance.” The federal minimum monthly maintenance needs allowance is 150% FPL for a household of two ($2,178 as of July 1, 2021), and the federal maximum is $3,435 as of January 1, 2022.30 The protected assets are known as the “community spouse resource allocation.” The federal minimum community spouse resource allocation is $27,480 as of 2022, and the federal maximum is $137,400. States also can choose to apply a formula that allows the community spouse to retain an amount of protected assets that is the greater of either the federal minimum or one-half of the couple’s total combined assets but not to exceed the federal maximum.
States must apply the spousal impoverishment rules when a married Medicaid enrollee is receiving nursing home or other institutional care, but prior to 2014, states could choose whether to apply the spousal impoverishment rules when a married individual sought home and-community based waiver services.31 Beginning on January 1, 2014, ACA Section 2404 requires states to apply the spousal impoverishment rules to HCBS waivers.32 The ACA provision originally was set to expire at the end of 2018, but Congress subsequently adopted several short-term authorizations. The provision currently expires on September 30, 2023.33
Appendix Table 1: State Adoption of Major Optional Pathways to Full Medicaid Eligibility Based on Old Age or Disability, as of 7/1/22
Appendix Table 2: Medicaid Eligibility for SSI Beneficiaries and Optional Pathway for Seniors and People with Disabilities Up to 100% FPL, as of 7/1/22
Appendix Table 3: Medicaid Eligibility for Working People with Disabilities, as of 7/1/22
Appendix Table 4: Medicaid Eligibility Through the Medically Needy Pathway, as of 7/1/22
Appendix Table 5: Medicaid Section 1915 (i) HCBS Option as an Independent Pathway to Medicaid Eligibility, as of 7/1/22
Appendix Table 6: Medicaid Special Income Rule for Long-Term Services and Supports Eligibility, as of 7/1/22
Appendix Table 7: Medicaid Long-Term Services and Supports Trusts and Home Equity Limits, as of 7/1/22
Appendix Table 8: Medicaid Long-Term Services and Supports Post-Eligibility Treatment of Income and Spousal Impoverishment Standards, as of 7/1/22