Medicaid Eligibility for Adults and Children

CRS Report for Congress
Medicaid Eligibility for Adults and Children
Updated September 19, 2005
Jean Hearne
Specialist in Social Legislation
Domestic Social Policy Division

Congressional Research Service ˜ The Library of Congress

Medicaid Eligibility for Adults and Children
Medicaid is a means-tested entitlement program that is largely designed and
administered by states under broad federal rules. The programs are jointly financed
by federal and state funds. Federal contributions to each state are based on a state’s
willingness to finance covered medical services and a matching formula. The
Centers for Medicare and Medicaid Services (CMS), within the U.S. Department of
Health and Human Services (HHS), is responsible for federal oversight of the
program. In FY2003, preliminary federal and state spending on Medicaid reached
$275.5 billion, exceeding Medicare payments, net of premiums, by over $15 billion.
Medicaid coverage for non-elderly, non-disabled adults and children is provided
to people who qualify through a number of pathways, some of which are required
under federal law, others are optional for states. State programs are required to
provide coverage to families based on welfare program rules in effect in 1996.
Coverage for children goes beyond those often very low financial criteria through a
combination of other mandatory and optional pathways. Low income pregnant
women can also receive Medicaid coverage through both mandatory and optional
pathways. In addition, a number of other optional pathways exist for special groups
of people who are not considered disabled because they do not have a disability as
defined under the Supplemental Security Income (SSI) program rules. Some of those
groups include, for example, certain women with breast or cervical cancer, uninsured
individuals diagnosed with tuberculosis, people who become impoverished by their
medical costs, and certain immigrants.
Variation across the state-based programs is the rule. Income eligibility levels
and services covered vary, and the method for, and amount of, reimbursement for
services differ from state to state. Medicaid is targeted to individuals with low-
income, but not all of the poor are eligible, and not all of those who are covered are
poor. For Medicaid-covered children and families, primary and acute care is often
delivered through managed care organizations, while elderly enrollees and those with
disabilities more often obtain such care on a fee-for-service basis. In recent years,
more and more states have implemented a variety of major program changes using
special waiver authority.
This report describes federal Medicaid eligibility rules for children and adults
but does not address eligibility pathways for individuals qualifying on the basis of
having a disability or for persons who are age 65 and over. This report is one of a
number of CRS reports on Medicaid and will be updated periodically. Other reports
!CRS Report RL32977, Medicaid: Dual Eligibles;
!CRS Report RL32644, Medicaid Reimbursement Policy;
!CRS Report RL32277, How Medicaid Works: Program Basics; and
!CRS Report RL31413, Medicaid: Eligibility for the Aged and Disabled.

Eligibility in General...............................................1
Medicaid Coverage for Families......................................3
Family Coverage under Section 1931..............................4
Counting Income..........................................7
Counting Assets...........................................9
Other Eligibility Rules for Families Qualifying under Section 1931..10
Enrollment ..............................................10
Transitional Medical Assistance.................................12
Other AFDC-Related Groups....................................13
Recipients of adoption assistance and foster care who are under
age 18 and eligible for Title IV-E of the Social Security Act...13
Former foster care recipients who are ages 18, 19, or 20..........13
“Ribicoff” children........................................13
Poverty-related Pregnant Women and Children.........................14
Targeted Low-income Children..............................16
Special Eligibility Rules for Families, Pregnant Women
and/or Children..........................................17
Deeming of Parent’s Income................................17
Waiving Asset Requirements................................17
Presumptive Eligibility....................................19
Continuous Eligibility.....................................20
Medically Needy.................................................22
Individuals Qualifying Under Section 1115 Demonstration Waivers.........23
Other Eligibility Pathways for Individuals Without Disabilities.............25
Women with Breast and Cervical Cancer..........................25
Persons with Tuberculosis......................................25
COBRA Continuation Beneficiaries..............................25
Emergency Services for Illegal Aliens.............................26
General Eligibility Principles and Requirements.........................26
Wide Variation in State Programs................................26
Retroactive Eligibility.........................................27
Citizenship ..................................................28
Eligibility Verification.....................................28
Residence ...................................................29
Homelessness ................................................29
Rules for Medicaid Benefits....................................29
Amount, duration, and scope................................29
Statewideness ............................................30
Comparability ...........................................30
Current Eligibility Issues...........................................30

Efforts to Reduce the Enrollment Gap.........................32
The Impact of the Economy on Enrollment.........................35
Changing Nature of Medicaid Enrollment..........................36
List of Tables
Table 1. Major Medicaid Eligibility Pathways for Adults and Children.......2
Table 2. AFDC 1996 Income Standard, Section 1931 Income Ceiling in 2002,
and Higher Thresholds Applicable to Families All
as a Percentage of Poverty.......................................5
Table 3. Income Disregards and Redetermination Periods
for Family Coverage Under Section 1931 in 2002....................8
Table 4. Enrollment of Section 1931 Adults and Children by State, FY2002..11
Table 5. Poverty-Related Pregnant Women and Child Pathways............14
Table 6. Maximum Eligibility Thresholds for Pregnant Women
and Children as a Percentage of Poverty, by State, July 2004...........15
Table 7. States That Waive Asset Tests As of December 2002.............18
Table 8. States with Expanded Eligibility under Medicaid
Section 1115 Waivers.........................................24
Table 9. Findings on Medicaid Take-up Rates (Expressed
as Percentages of Eligibles) Among Children and Adults..............32
Table 10. Outreach and Enrollment Provisions Included
in Major Federal Laws Since 1986...............................33

Medicaid Eligibility for Adults and Children
Eligibility in General
Federal Medicaid law defines over 50 distinct population groups as being
potentially eligible for states’ programs. Some groups are mandatory, meaning that
federal law requires all states and the District of Columbia that participate in
Medicaid to cover them. Other groups are optional; that is, federal law allows states
to choose to cover them.1 Categories of eligible populations are found primarily in
Section 1902(a)(10) of the Social Security Act. Prior to the 1980s, Medicaid
eligibility was limited to poor families with dependent children, poor elderly and2
individuals with disabilities receiving Supplemental Security Income, (these groups
are known as Medicaid’s traditional “categorical” groups) and the “medically needy”;
almost all pathways were tied to the receipt of welfare payments. But beginning in
the 1980s, additional eligibility pathways were added to the Medicaid statute to
provide for the coverage of additional low-income children and pregnant women as
well as other elderly and individuals with disabilities. Most recently, states were
given options to provide Medicaid to additional select groups including certain
women with breast or cervical cancer, uninsured individuals with tuberculosis, and
working individuals with disabilities. Not all groups of Medicaid beneficiaries
receive the same set of benefits. To understand more about the benefits offered under
Medicaid see CRS Report RL32277, How Medicaid Works: Program Basics, by
Herz, et al.
Medicaid programs have few federally required coverage groups for adults who
do not have a disability. Groups that states must cover are: very low-income adults
in families meeting welfare program rules in effect in 1996, and temporarily, those3
whose earnings rise above those levels due to increased work income; and pregnant
women with income at or below 133% of the federal poverty level. The mandatory
routes to Medicaid are more numerous for children. All children whose families

1All 50 states and the District of Columbia have Medicaid programs. In addition, five
commonwealths and territories have Medicaid programs, although those programs do not
operate under the same set of rules for eligibility and benefits as the states and D.C. In
addition, territories’ programs are funded through matching payments up to a ceiling.
2The SSI program provides monthly cash welfare benefits to individuals who are aged, blind
or disabled and whose income and resources fall below certain thresholds. Federal
Medicaid law requires states to provide Medicaid to most individuals who receive SSI
benefits. For more information on the SSI program see CRS Report 94-486 EPW,
Supplemental Security Income (SSI): A Fact Sheet, by April Grady.
3“Transitional medical assistance” is more fully described later in this report.

have income below the federal poverty level (FPL)4 must be covered. But younger
children, and in some states, older children are covered at much higher income levels
through both optional coverage groups and through other mechanisms that make the
programs more generous. Table 1 summarizes the major Medicaid pathways for
adults and children excluding those based on disability status. Each of those
pathways is described in more detail in the pages to follow.
Medicaid eligibility is a two-tiered process. To qualify, first individuals must
be a member of one of Medicaid’s “categorical” groups. The major categorical
groups include members of families with children; aged, blind or disabled
individuals; and pregnant women. There are a number of additional optional
coverage pathways. Once it is determined that an individual meets the categorical
restrictions, financial tests are applied. Each eligibility pathway includes its own
income and resource restrictions. The specific limitations that apply to each
eligibility group are set through a combination of federal parameters and state
definitions. Consequently, those standards vary considerably among states.
Table 1. Major Medicaid Eligibility Pathways for Adults and
Mandatory coverageOptional coverage
Low-income children:
— Infants under age 1 with family income — Infants under age one with familyincome over 133% FPL up to 185%
< or = 133% FPLFPL
— Children ages 1-5 with family income < — Targeted low-income uninsured
or = 133% FPLchildren
— Children ages 6-18 with family income — Ribicoff children
< or = 100% FPL
— Section 1931 children (in very low- — Medically needy
income families)
— Children in welfare-to-work families — Independent foster care adolescents
— Title IV-E foster care children
— Title IV-E adoption assistance children
Pregnant women:
— Those with family income < or = 133% — Pregnant women with family
FPLincome over 133% FPL up to 185%
— Medically needy
Low-income adults:
— Adults in families with children eligible — Medically needy adults in families
under Section 1931
— Adults in welfare-to-work families

4The federal poverty guidelines are issued each year in the Federal Register by the
Department of Health and Human Services (HHS). For 2005, the guidelines set the federal
poverty level at $16,090 for a family of three in the contiguous 48 states.

Mandatory coverageOptional coverage
— None — COBRA continuation beneficiaries
— Certain women diagnosed with
breast and cervical cancer
— Certain individuals with
— Individuals qualifying under
research and demonstration waivers
— Certain immigrants
Sources: Title XIX of the Social Security Act (P.L. 74-271) and Medicaid Eligibility for Families
and Children, Kaiser Commission on Medicaid and the Uninsured, Sept. 1998, by A. Schneider, K.
Fennel, and P. Long.
Medicaid Coverage for Families
Low-income families can qualify for Medicaid coverage through four major
pathways all of which are described below in more detail. The first two pathways —
Section 1931 coverage and transitional medical assistance — are explicitly for
families. The remaining two pathways — medically needy coverage and coverage
under Section 1115 research and demonstration waivers — can be applied by states
to other groups in addition to families. In addition, there are several other pathways
covering smaller groups of mostly children. They are described below in the section
“Other AFDC-Related Groups.” The four major pathways for families include:
!Section 1931 of the Medicaid statute covers families whose income and
resources are low enough to have qualified for cash welfare payments under
the former Aid to Families with Dependent Children (AFDC) program rules;
!Transitional medical assistance (TMA), extends coverage, on a time-limited
basis, to families that would otherwise lose Medicaid due to increased
earnings or other income;
!The optional medically needy program covers families and/or individuals
whose income is just above the Section 1931 thresholds, or whose medical
expenses, when subtracted from income, impoverish them5; and
!Demonstration projects conducted by states and approved under Section

1115(c) of the Social Security Act6 cover some families and/or individuals.

5The medically needy pathway is also an important coverage group for the elderly and
people with disabilities. For more information on coverage under medically needy for the
elderly and people with disabilities, see CRS Report RL31413, Medicaid: Eligibility for the
Aged and Disabled, by Julie Stone.
6Section 1115(c) of the Social Security Act provides authority for states to waive a number
of provisions of Medicaid statute for the purpose of conducting research and
demonstrations, as long as those projects are consistent with the purpose of Title XIX. In
many states, this authority has been used to undertake major program changes rather than
to conduct time limited demonstrations for research purposes.

Family Coverage under Section 1931
Medicaid’s Section 1931 preserves Medicaid entitlement for individuals who
meet the requirements of the former AFDC programs that were in effect before
welfare reform. This eligibility pathway was created as part of the reforms in 1996.
Before 1996, all recipients of the AFDC program were automatically eligible for
Medicaid coverage. The 1996 reforms replaced the AFDC program with a new
program, Temporary Assistance for Needy Families (TANF). At the same time, the
Section 1931 coverage group was established within Medicaid to ensure that low-
income families would not lose Medicaid as a result of the reforms of the cash
assistance programs.
Under Section 1931, states must ensure that, at a minimum, income and
resources standards and methodologies for low-income families are no more
restrictive than those in effect in 1988. Specifically, Section 1931 allows states to (1)
reduce income standards below those in effect in 1996, but they cannot be lower than
those used on May 1, 1988; (2) increase income and resource standards for any
period after 1996, but by no more than the percentage increase in the Consumer Price
Index (CPI) for the same period; and (3) use less restrictive methods for counting
income and resources than those in effect on July 16, 1996. This last provision
affords states the flexibility to make family coverage under Section 1931 more
generous by disregarding various amounts of income or types of assets when
compared against the 1996 standards.
The AFDC program in place in 1996 was similar to Medicaid in that states
administered the program under broad federal guidelines. States determined
eligibility and benefit levels based on “need standards,” “payment standards,” and
“maximum payments.” A number of the rules for counting income and resources for
the former AFDC program remain in effect in many states today for determining
eligibility for Medicaid under Section 1931. Some of those welfare program rules
!When determining financial eligibility, states were required to compare the
family’s income to a gross income limit set at 185% of the states’ chosen need
!States were to disregard certain amounts of income: a standard allowance of
$90 per month, the first $30 of earnings during the first 12 months of
enrollment, and one-third of remaining earning during the first four months
of enrollment;
!When counting resources, states were required to compare the value of all
resources against a federal upper limit of $1,000; and
!States were to exclude the family’s home and the equity value of a car up to
$1,500 (or a lower state limit).
Table 2 displays the income standards used to determine financial eligibility for
families under Section 1931 expressed as a percentage of 2002 poverty levels
(Column 3). These percentages are compared with the percentages used for AFDC
eligibility in 1996 in Column 2 — these percentages serve as the floor for states
under the provisions of Section 1931. In addition, the maximum percentages
available to families through other eligibility pathways (“higher threshold for

families”) are shown in Column 4. Most states have extended the generosity of
Medicaid’s coverage of families since 1996, often using the 1931 pathway. Some
states use other means to extend Medicaid’s coverage for families.
There are a few caveats that must be considered in evaluating the information
in Table 2. Most states use a complex combination of counting and disregarding
various forms of income. Putting those amounts together to determine a single
income standard relative to poverty can introduce some error. This difference may
result in percentages in two columns that are close to each other, but actually reflect
the same standards. For example in Alabama, the AFDC standard relative to poverty
was calculated to be at 15% in 1996. Currently CRS calculates the 1931 standard to
be at approximately 20% of poverty. This five percentage point difference may not
reflect policy changes in the state of Alabama increasing the level of generosity of the
program, but rather may be due to calculating errors introduced because of the
complexity of states’ income counting rules.
Table 2. AFDC 1996 Income Standard, Section 1931 Income
Ceiling in 2002, and Higher Thresholds Applicable to Families
All as a Percentage of Povertya
(by state)
State1996 AFDCeligibility threshold1931 standardbHigher thresholdfor familiesc
Alabama 15% 20%
Alaska 68% 82%d
Arizona 32% n/a 100%
Arkansas 19% 20%
California 56% 71%
Co lo rado 39% 41%
Co nnecticut 59% 107%
Delaware 31% 82% 100%
District of Columbia39%200%
Florid a 28% 57%
Georgia 26% 41%
Hawaii 57% 52% 100%
Idaho 29% 29%
I llino is 3 5 % 3 5 %
Indiana 27% 30%
Iowa 39% 113%
Kansas 40% 39%
K e nt uc ky 2 4 % 4 9 %
Lo uisiana 18% 21%
Maine 39% 152%
Maryland 34% 38%d
M a ssa c huse t t s 5 2 % n/ a 133%e
Michigan 42%-45% 69%
Minneso ta 49% 49% 200%
Mississippi 11% 37%
Missouri27%77%Certain adults infamilies to 100%
Montana 39% 88%
Nebraska 34% 36%
Nevada 32% 87%
New Hampshire51%57%

State1996 AFDCeligibility threshold1931 standardbHigher thresholdfor familiesc
New Jersey39%133%
New Mexico36%82%e
New York53%-65%No response100%
North Carolina25%60%
North Dakota40%40%
Ohio 32% 100%
Oklahoma 28% 185%
Oregon43%No response100%
P e nnsyl va ni a 3 9 % 6 7 %
Rhode Island51%185%185%
South Carolina18%58%
South Dakota40%64%
T ennessee 17% 88% 100%
T exas 17% 32%
Utah 39% 54%
Vermont 60% 84% 185%
Virginia 33% 29%
Washington 50% 87%
West Virginia23%43%
Wisconsin48%103%185% to 200%
Wyoming 33% 63%
Sources: CRS tabulations of 1996 AFDC income thresholds as a percentage of 2002 poverty levels
based on data from Table 8-12, 1996 Green Book: Background Material and Data on Programs
Within the Jurisdiction of the Committee on Ways and Means, WMCP 104-14
Section 1931 income levels as a percentage of 2002 poverty levels from CRS tabulations of data
compiled based on a 50-state survey of state eligibility practices conducted by George Washington
University Center for Health Services Research and Policy for CRS.
Higher threshholds from CMS-11024-03,
[]; and States that Have Expanded Family
Co verage,
[, Families USA].
No tes:
a. For AFDC and Section 1931 columns, CRS tabulated states income ceilings as a percentage of
2002 poverty levels for a family of three. For the higher thresholds in Column 4, CRS relied
on other sources for the eligibility thresholds. In those states with higher thresholds, the
eligibility threshold is generally defined as a percentage of poverty rather than an income level,
so it would not automatically change year to year. Therefore comparisons to AFDC and Section
1931 columns can be made.
b. Effective income ceiling for 1931 eligibility calculated with income disregards at 12 months after
enrollment; and earnings disregards for one adult per three-person family unit.
c. Coverage under these higher income thresholds are authorized under research and demonstration
waiver projects defined in Section 1115 of the Social Security Act.
d. In Arizona and Massachusetts, Section 1931 eligibility is subsumed under the research and
demonstration waiver eligibility groups.
e. Michigan and New York reported different income standards for different counties.
After a family is initially determined to be eligible for Medicaid, states may
conduct re-determinations at intervals that are no longer than 12 months. Unless
families report rising income or earnings to state agencies, they would remain eligible
until the next re-determination. Most states conduct re-determinations for Section

1931-eligible families at 12-month intervals; a smaller number of states use shorter
periods for re-determining eligibility. (See Table 3 for re-determination periods.)
Counting Income. The Medicaid program is often criticized for being
administratively complex and having confusing rules. The income eligibility rules
for families qualifying under Section 1931 contribute to that impression. As
described above, states have limited flexibility to reduce or increase income
standards but they have considerably more flexibility in the way that countable
income is defined. By excluding certain types of income from their definitions of
countable income, states can effectively raise the generosity of the eligibility pathway
without explicitly raising the income standards.
States are required to disregard certain amounts and types of income when
determining eligibility, because those “income disregards” were part of the income
counting methods in place in 1996. In almost all states, that means that the first $50
of child support payments is “disregarded” or not counted for the purpose of
determining Medicaid eligibility. In addition, certain portions of a family’s earned
income is not counted and the portion is disregarded in decreasing amounts over
time. During the first four months of employment, $120 plus one-third of remaining
earnings per month are not counted. After four months of enrollment, $120 per
month of earnings are disregarded. Finally, after a family is on the program for 12
months, $90 of earnings per month are disregarded. The earned income disregards
are intended to lessen the immediate impact of the transition to work. Many states
also disregard a child care allowance of $175 per month per child over age two and
$200 per month for children under age two.
In addition to these minimum income disregards, many states have used the
additional flexibility to define countable income to make this pathway considerably
more generous than under the former AFDC program rules. Table 3 shows the
earned income disregards and the redetermination periods for Section 1931 families
in 2002. In 2002, 18 states used more generous earned income disregards than the
“90+30+one-third” rules in place under 1996 and described above. A survey
conducted by the Center on Budget and Policies Priorities found that almost all states
liberalized their standards by implementing either more generous earned income
disregards or by eliminating various income and assets rules. The Center also found
that no states are known to have reduced income standards below those in effect in


7M. Broaddus, S. Blaney, A. Dude, J. Guyer, L. Ku, J. Peterson, Expanding Family
Coverage: State Medicaid Eligibility Policies for Working Families in the Year 2000, Center
on Budget and Policy Priorities, Dec. 31, 2001.

Table 3. Income Disregards and Redetermination Periods for
Family Coverage Under Section 1931 in 2002
StateEarned income disregardsRedeterminationperiod
Alabama$90+$30+1/3 of remaining earnings12 months
Alaska$906 months
$90+$30+1/3 of remaining earnings for
Arizonathose under 36% of poverty level;
otherwise, $9012 months
Arkansas20% of earnings12 months
California$9012 months
Colorado$9012 months
ConnecticutAll income up to 100% of FPL plus $90.12 months
Delaware$90+$30+1/3 of remaining earnings12 months
District of Columbia012 months
Florida$90 per employed individual/ $110 plus50% of remaining earnings for families.6-12 months
Georgia$90+$30+1/3 of remaining earnings6 months
Hawaii$30 and 1/3 of remaining earnings12 months
Idaho$30 and 1/3 of remaining earnings12 months
Illinois$90+$30+1/3 of remaining earnings12 months
Indiana$9012 months
Iowa20% plus 50% of remainder12 months
Kansas$90+40% of remaining earned income12 months
Kentucky$90+$30+1/3 of remaining earnings12 months
Louisiana$9012 months
MaineAll income up to 150% FPL plus $90earnings12 months
Maryland012 months
Massachusetts06-12 months
Michigan$200 +20%12 months
Minnesota012 months
Mississippi9012 months
Missouri$90+$30+1/3 of remaining earnings12 months
Montana$200 + 25% of remaining earnings12 monthsa
Nebraska20% of earnings6 months
NevadaFirst three months of earnings12 months
New Hampshire20% of earnings12 months
New Jersey$90 per individual12 months
New Mexico$125+50% of remaining earnings12 months
New York $9012 months
North Carolina27.5% of earnings12 months
North Dakota$180 or 27% of earnings plus 50% ofremainder12 months
Ohio$250 plus 50% of remainder6 months
Oklahoma$1206 months
OregonNo responseNo response
Pennsylvania50% of earnings or $90+$30+1/3 ofremaining earnings12 months
Rhode IslandDisregard all income up to 185% plus $9012 months
South Carolina50% during first four months of enrollment,thereafter $10012 months
South Dakota012 months
Tennessee$1506 months
Texas$1206 months

StateEarned income disregardsRedeterminationperiod
Utah$90+$30+1/3 of remaining earnings6-12 months
Vermont$150 +25% of remainder6-12 months
Virginia$9012 months
Washington50% of earnings12 months
West Virginia$90 per worker12 monthsb
Wisconsin$9012 months
Wyoming$200 per workers,$400 married couple12 months
Source: CRS compilation of a 50-state survey of state eligibility practices conducted by George
Washington University Center for Health Services Research and Policy for CRS.
No tes:
a. Effective November 1, 2003.
b. On July 1, 2003 changes to six months.
Contributing to the seeming impenetrability of the Medicaid rules, many states
continue to count income using 1996 welfare program rules in addition to their new,
more generous income counting methods. A fictional example of this is the case of
State A. State A has a new income counting rule under Section 1931 that disregards
all income between the former AFDC level and 100% of the federal poverty level.
But State A continues to apply the “$90+$30+one-third” rule from the former AFDC
program along with the new rule that allows considerably greater amounts of income
to be disregarded for the purposes of determining eligibility under Section 1931.
This illogical combination of income counting methods is conducted simply because
it allows the state to prove to CMS that the Section 1931 eligibility pathway is
meeting the statutory purpose of ensuring that anyone who would have qualified for
the former AFDC program is still able to obtain Medicaid. The generosity of the new
rules would most assuredly include at least those qualifying under the old and less
generous rules; nonetheless, some states are hesitant to abandon those calculations
for fear of being found to be out of compliance with requirements that ensure that
those who were eligible under 1996 welfare program rules would be eligible under
Section 1931.
A second example of how the rules of Section 1931 contribute to administrative
complexity without clearly benefitting recipients is the fact that states generally
conduct re-determinations for this population on an annual basis — so disregards
intended for use after four and nine months of enrollment are rarely used — except
when an enrollee self-reports an income change, triggering a redetermination before

12 months has elapsed.

Counting Assets. Under Section 1931, states can apply an assets test, as long
as it is no more restrictive than the test in effect in 1996. States can also, under rule
number three above, use “less restrictive” methods for counting assets. This has been
interpreted in some states and by CMS as allowing for no assets test for the Section
1931 eligibility pathway. Dropping assets tests has a number of major benefits for
states and for enrollees. It simplifies the onerous eligibility determination process
considerably. In addition, it removes a significant barrier to access to health care for
people at the bottom of the income scale. In 2002, 19 states had no assets tests for

Section 1931 families. Other states had liberalized their assets rules. Only 10 states8
imposed a stringent assets standard. In those states in 2002, families with $1,000 or
more in assets were unable to qualify for Medicaid.
Other Eligibility Rules for Families Qualifying under Section 1931.
A number of other eligibility rules are applicable for families seeking Medicaid under
Section1931. Some remain as vestiges of the AFDC program ended almost 10 years
!Gross income standard. About half of the states report imposing a gross
income standard. This is an income test that is applied before any income is
disregarded or alternative methodologies for counting income are used. It is
the sum of the total countable gross monthly earned income of all family
members and the total countable monthly unearned income of family
members. The family is able to proceed to the eligibility determination
process only if its gross income is, at most, a certain percentage of the selected
standard, often between 133% and 185% of the federal poverty level.
!100-hour work rule. Many states continue to require that employed parents
in two-parent families work fewer than 100-hours per month to qualify under
Section 1931. This “100-hour rule” was originally established by the
Secretary as a standard for determining whether a family meets the
“deprivation requirement” for the former AFDC program. In order for a
family to qualify for assistance under the old program’s rules, its children had
to be deprived of parental support or care due to the death, absence,
incapacity, or unemployment of a parent. Two-parent families generally
qualified only under the “unemployment” criterion which was narrowly
defined in the AFDC regulations. Forty one states responding to the CRS-
funded survey confirmed that they continue to impose a 100-hour limit on
work hours for working families. The rule remains popular even though
regulations posted by CMS in 1998 (then called the Health Care Financing
Administration — HCFA) removed this 100-hour limitation. The regulation
allows states to adopt more flexible definitions of unemployment, to align
their TANF, foster care, and Medicaid programs, and to simplify
administration. Under the revised rule, states are not allowed to define
unemployment in any way that is more restrictive than the definition of
unemployment that existed when the rule was first published.
Certain individuals qualifying under the Section 1931 pathway may be denied
Medicaid coverage if they refuse to cooperate with states’ TANF work requirements.
States are permitted to deny Medicaid benefits to nonpregnant adults and heads of
households who lose TANF benefits because of refusal to work, but must continue
to provide Medicaid coverage to their children.
Enrollment. In 2002, about 10.6 million family members were reported by
states to have qualified for Medicaid through the Section 1931 pathway. That
included about 3.6 million adults and 7.1 million children. Section 1931 eligibles as

8Alabama, Arkansas, Georgia, Idaho, Indiana, Kentucky, New Hampshire, Virginia,
Washington, and West Virginia.

a percentage of program eligibles ranged from a high of 37% in Delaware to under
1% in Virginia. It is not known how many children qualifying through more
generous pathways as well as under Section 1931 are reported here or elsewhere.
Table 4 shows the number of children, adults and total individuals enrolled in
Medicaid who qualify under Section 1931 as reported by states for FY 2002. It also
provides total program enrollment and the percentage of total program enrollment
that Section 1931 comprises for comparison purposes.
Table 4. Enrollment of Section 1931 Adults and Children by
State, FY2002
SectionTotal SectionTotalSection 1931enrollees as a
StateSection1931 adults19311931 familyMedicaidpercentage of total
children me mb e r s enrollment Medicaid
Alaska 15,330 18,881 34,211 121,400 28.2%
Alabama 24,858 75,501 24,858 845,125 11.9%
Arkansas 19,941 36,920 56,861 608,017 9.4%
Arizona 162,614 206,739 369,353 1,053,602 35.1%
California 986,487 2,051,417 3,037,904 9,336,447 32.5%
Co lo rado 57,104 82,011 139,115 438,670 31.7%
Co nnecticut 17,267 50,483 67,750 487,989 13.9%
District of
Co lumb ia 24,678 36,043 60,721 151,340 40.1%
Delaware 16,775 37,672 54,447 147,197 37.0%
Florid a 211,497 434,520 646,017 2,691,502 24.0%
Georgia 105,621 203,814 309,435 1,459,631 21.2%
Hawaii 25,564 49,930 75,494 195,684 38.6%
Iowa 43,190 64,576 107,766 358,708 30.0%
Idaho 304 1,354 1,658 196,406 1.0%
Illinois 23,171 96,346 119,517 2,076,146 5.8%
Indiana 98,220 158,973 257,193 881,942 29.2%
Kansas 26,093 40,246 66,339 305,110 21.7%
Kentucky 51,042 93,009 144,051 769,826 18.7%
Lo uisiana 59,433 99,583 159,016 990,286 16.1%
Massachusetts 48,957 98,358 147,315 1,204,312 12.2%
Maryland 31,603 72,139 103,742 752,065 13.8%
Maine 23,710 14,757 38,467 346,449 11.1%
Michigan 61,541 153,552 215,093 1,527,627 14.1%
Minneso ta 51,480 99,634 151,114 680,627 22.2%
Misso uri 206,860 376,404 583,264 1,098,525 53.1%
Mississippi 53,691 106,477 160,168 707,986 22.6%
Montana 10,858 19,616 30,474 106,229 28.7%
North Carolina164,298215,422379,7201,389,45527.3%
North Dakota10,22317,70727,93071,6193.9%
Nebraska 13,247 27,530 40,777 266,245 15.3%
New Hampshire5,83412,30518,139115,51715.7%
New Jersey55,809141,689197,498982,67620.1%
New Mexico44,47882,075126,553462,87827.3%
Nevada 13,488 33,253 46,741 203,251 23.0%
New York169,645451,287620,9324,139,89815.0%
Ohio 44,739 150,938 195,677 1,754,379 11.2%
Oklaho ma 4,375 13,393 17,768 677,788 2.6%
Oregon 26,279 57,128 83,407 637,140 13.1%
Pennsylvania 111,362 262,996 374,358 1,710,999 21.9%

SectionTotal SectionTotalSection 1931enrollees as a
StateSection1931 adults19311931 familyMedicaidpercentage of total
children me mb e r s enrollment Medicaid
Rhode Island15,66232,65748,319204,78923.6%
South Carolina71,622103,922175,544895,86319.6%
South Dakota9,62216,39726,019113,92522.8%
T ennessee 48,458 147,170 195,628 1,700,384 11.5%
T exas 136,145 312,586 448,731 3,202,171 14.0%
Utah 25,889 41,989 67,878 233,156 29.1%
Virginia 502 1,177 1,679 727,784 <1%
Vermont 5 ,339 11,296 16,635 156,958 10.6%
Washington 39,902 83,951 123,853 1,104,813 11.2%
Wisconsin 51,917 103,685 155,602 776,638 20.0%
West Virginia38,31361638,929362,26410.8%
Wyoming 5 ,514 7,551 13,065 69,802 18.7%
National total3,570,5517,107,67510,602,72551,499,24021.0%
Source: CRS tabulation of Medicaid MSIS data. Downloaded from the Center for Medicare and
Medicaid (CMS) MSIS Datamart on August 3, 2005.
Note: Includes annual unduplicated eligibles reported as “receiving cash.
Transitional Medical Assistance
Transitional medical assistance (TMA) was established prior to the 1996 welfare
reforms to address the concern that individuals receiving AFDC payments would be
discouraged from seeking work or would turn down work opportunities for fear of
losing Medicaid. The TMA provisions require states to continue providing Medicaid
to members of families who would otherwise have lost such assistance due to
increased work hours, increased earnings of the caretaker relative, or the loss of one
of the time-limited earned income disregards.
There are several TMA requirements in statute today. The TMA provision that
is currently in effect requires states to provide an additional six months of Medicaid
coverage to families who were receiving Medicaid under Section 1931 in at least
three of the last six months should income rise for any of the above reasons. In
addition, states are required to extend Medicaid coverage for a second six months to
families who were covered during the entire first six-month TMA period, and whose
earnings are below 185% of poverty. These TMA provisions are due to sunset at the
end of September 2005, although this date has been repeatedly extended. If these
provisions were to expire, separate TMA provisions would become effective. Under
the older and permanent TMA provisions, Medicaid would be required to be
extended for families who would otherwise lose coverage due to the above reasons,
for a period of four months. Families eligible for this four-month extension must
have been receiving Medicaid under Section 1931 in at least three of the preceding
six months.9

9For more information about TMA, see CRS Report RL31698, Transitional Medical
Assistance (TMA) Under Medicaid, by April Grady.

Other AFDC-Related Groups
While the AFDC program no longer exists, a number of Medicaid eligibility
groups remain tied to states’ former AFDC rules.
Recipients of adoption assistance and foster care who are under
age 18 and eligible for Title IV-E of the Social Security Act. States are
required to provide Medicaid to recipients of adoption assistance and foster care
assistance who are under age 18 and enrolled under Title IV-E of the Social Security
Former foster care recipients who are ages 18, 19, or 20. In 1999,
states were given the option to continue to provide Medicaid coverage to children
who were aging out of the federal, Title IV-E foster care system. Responding to a
survey on eligibility rules in place in 2003, 30 states and the District of Columbia
indicated that they include such former foster children as Medicaid eligible. An
additional eight states reported covering all children under age 21 through other10
pathways, so foster children would be covered via this broader pathway.
“Ribicoff” children. States have the option to provide Medicaid coverage to
“reasonable” categories of children who meet the former welfare program’s financial
criteria but do not qualify as a “dependent child.” The Ribicoff pathway, named for
the former Senator who sponsored legislation authorizing this group, applies to
children under age 21 who do not meet the dependency requirement, often because
they do not live with their families.
In the past, this pathway had been used for children residing in institutions or
in state-based foster care or adoption assistance programs. But today, most of those
children can qualify under other poverty-level eligibility pathways, since those
pathways do not include a family dependency requirement. Ribicoff, as a result, has
little meaning for most children under the age of 19.
For children who are 19 or 20 or are inpatients in psychiatric facilities, on the
other hand, Ribicoff may still be a valuable pathway to Medicaid. Older children
cannot qualify under the other poverty-level groups because those pathways define
eligible children to be under the age of 19. Institutionalized children who are in
families with income that exceeds the poverty level ceilings also cannot qualify as
poverty-level children because their parent’s income is deemed to be available to
children under those pathways. Under Ribicoff, on the other hand, parental income
is not considered to apply to children who do not reside in their parents’ homes.

10Oregon did not respond to any survey questions, West Virginia and Vermont did not
respond to this particular section of the survey. Connecticut, Delaware, Georgia, Indiana,
Kentucky, Maine, Oklahoma, Pennsylvania, South Carolina all reported that these children
are not covered. (CRS compilation of a 50-state survey of state eligibility practices
conducted by George Washington University Center for Health Services Research and

Forty-five states responded affirmatively to a question in the CRS survey about
whether their Medicaid programs include any categories of Ribicoff children.11
Poverty-related Pregnant Women and Children
Between 1986 and 1991, Congress gradually extended Medicaid to additional
groups of pregnant women and children (see Table 5). Under these provisions, states
are required to cover pregnant women with family incomes equal to or below 133%
of the federal poverty income guidelines.12 Coverage for pregnant women qualifying
through this pathway is limited to services related to pregnancy and complications
of the pregnancy and extends to 60 days after pregnancy.
States are required to cover all children under age six (or alternately under age
seven or eight) who are in families with income equal to or below 133% of the
federal poverty level. In addition, states must cover all children in families with
income equal to or below 100% of poverty. This requirement has been phased-in
since July 1, 1991 and was fully implemented in 2002. All poverty-related children
receive full Medicaid coverage.
States have the option to go beyond the above mandatory groups to include
pregnant women and infants under one year of age whose family income is over
133% up to 185% of the FPL. In 2002, 36 states and the District of Columbia
extended coverage to some or all pregnant women and infants in this category.
Table 5. Poverty-Related Pregnant Women and Child Pathways
States required to coverState can choose to cover
Pregnant womenFamily income equal toor below 133% FPLFamily income no morethan 185% FPL
Infants < age 1Family income equal toor below 133% FPLFamily income no morethan 185% FPL
Children < age 6, 7, or 8Family income equal toor below 133% FPLNone*
Children < age 19Family income equal toor below 100% FPLNone*
Source: Congressional Research Service
* While the federal statute only explicitly allows childrens coverage up to 133% for children under
age 6, and 100% of poverty for children under age 19, many states have extended coverage well
beyond these income levels through the use of income disregards.

11Oregon did not respond to any survey questions, West Virginia did not respond to this
particular section of the survey. Oklahoma reported that these children are not covered.
Hawaii, Arizona and Tennessee cover these children through other pathways. (CRS survey
of state eligibility practices conducted by George Washington University Center for Health
Services Research and Policy.)
12100% of FPL is equal to $16,090 and 133% of FPL is equal to $21,400 for a family of
three in 2005.

As with the Section 1931 eligibility pathway, states have the ability to apply
more generous income and assets disregards and methodologies to extend coverage
beyond the statutory ceilings for poverty-related pregnant women and children.
Many states have chosen to do so for some or all of their poverty-related groups of
children and pregnant women. (see Table 7 for more information on assets tests.)
A small but growing body of research supports the conclusion that when entire
families have insurance coverage, the children experience health benefits such as13
increased access and use of health care services. Nonetheless, policy makers at both
the federal and state levels have met with less opposition when extending coverage
to children in families and less success for coverage proposals for entire families.
This reflects a consensus that children’s health care is an important priority but no
such consensus exists with respect to coverage for adults.
Table 6. Maximum Eligibility Thresholds for Pregnant Women
and Children as a Percentage of Poverty, by State, July 2004
StatePregnantwomenInfantsChildren ages1 to 5Children ages6-18
Alabama 175% 133% 133% 100%
Alaska 175% 175% 175% 175%
Arizona 133% 140% 133% 100%
Arkansas 200% 200% 200% 200%
California 200% 200% 133% 100%
Co lo rado 133% 133% 133% 100%
Co nnecticut 185% 185% 185% 185%
Delaware 200% 200% 133% 100%
District of Columbia200%200%200%200%
Florid a 185% 200% 133% 100%a
Geo r gia 200% 200% 133% 100%
Hawaii 185% 200% 200% 200%
Idaho 133% 150% 150% 150%a
I llino is 200% 200% 133% 133%
Indiana 150% 150% 150% 150%
Iowa 200% 200% 133% 133%
Kansas 150% 150% 133% 100%
Kentucky 185% 185% 150% 150%
Lo uisiana 200% 200% 200% 200%a
Maine 200% 185% 150% 150%
Maryland 250% 200% 200% 200%
Massachusetts 200% 200% 150% 150%
Michigan 185%185%150%150%
Minneso ta 275% 280% 275% 275%
Mississippi 185% 185% 133% 100%

13K.L. Hanson, “Is Insurance Enough? The Link between Parents’ and Children’s Health
Care Use Revisited,” Inquiry, vol. 35, no. 3, 1998, pp. 294-302; L. Ku, M, Broaddus, The
Importance of Family-Based Insurance Expansions: New Research Findings about State
Health Reforms, Center on Budget and Policy Priorities, Sept. 2000; A. Davidoff, L. Dubay,
G. Kenney, A. Yemane, “The Effect of Parents’ Insurance Coverage on Access to Care for
Low-income Children,” Inquiry, vol. 40, no. 3, 2003, fall, pp. 254-68; S. Guendelman, M.
Pearl, “Children’s Ability to Access and Use Health Care,” Health Affairs, Mar.-Apr., vol.

23 no. 2, 2004, pp. 235-44.

StatePregnantwomenInfantsChildren ages1 to 5Children ages6-18
Misso uri 185% 300% 300% 300%
Montana 133% 133% 133% 100%
Nebraska 185% 185% 185% 185%
Nevada 133% 133% 133% 100%
New Hampshire185%300%185%185%a
New Jersey200%200%133%133%
New Mexico185%235%235%235%
New York200%200%133%100%
North Carolina185%185%133%100%
North Dakota133%133%133%100%
Ohio 150% 200% 200% 200%
Oklahoma 185% 185% 185% 185%
Oregon 185% 133% 133% 100%
Pennsylvania 185% 185% 133% 100%
Rhode Island250%250%250%250%
South Carolina185%185%150%150%
South Dakota133%140%140%140%b
Tennessee 185%185/100%133/100%100/100%
T exas 185% 185% 133% 100%
Utah133%133%133%100% c
Vermo nt 200% 300% 300% 300%
Virginia 133% 133% 133% 133%
Washington 185% 200% 200% 200%
West Virginia150%150%133%100%
Wisconsin 185% 185% 185% 185%
Wyoming 133% 133% 133% 100%
Source: Donna Cohen Ross and Laura Cox, Beneath the Surface: Barriers Threaten to Slow Progress
on Expanding Health Coverage of Children and Families, Center on Budget and Policy Priorities for
the Kaiser Commission on Medicaid and the Uninsured, Oct. 2004.
a. Illinois and Maine cover infants in families with income at or below 200% of the federal poverty
level (FPL) who are born to mothers enrolled in Medicaid. Illinois covers infants not born to
Medicaid enrolled mothers in families with income at or below 133% of the FPL. Maine covers
infants not born to Medicaid enrolled mothers in families with income at or below 185% of the
FPL. Georgia covers infants in families with income at or below 235% FPL who are born to
mothers enrolled in Medicaid. Georgia covers infants not born to Medicaid enrolled mothers
in families with income at or below 185% of the FPL. New Jersey covers infants in families
with income at or below 200% FPL who are born to mothers enrolled in Medicaid. New Jersey
covers infants not born to Medicaid enrolled mothers in families with income at or below 185%
b. In Tennessee, the first number represents the income eligibility guidelines underregular
Medicaid. The second number represents the income eligibility guideline for new applicants
to the TennCare waiver program. Enrollment is closed to some but not all children covered
under the state’s waiver.
c. In Vermont, Medicaid covers uninsured children in families with income at or below 225% FPL;
and underinsured children up to 300% FPL.
Targeted Low-income Children. Section 4911 of the Balanced Budget Act
of 1997 (BBA 1997, P.L. 105-33) established an additional Medicaid coverage group
for low-income children.14 Targeted low-income children are those who are not

14This provision establishes a Medicaid coverage group that is parallel to the group of
children eligible for health coverage under another provision of BBA 97, the State
Children’s Health Insurance Program (SCHIP) (Section 4901). The two provisions allowed

otherwise eligible for Medicaid, are not covered under a group health plan or other
insurance, and are living in families with income that is either: (1) above the state’s
Medicaid financial eligibility standard in effect in June 1997, but less than 200% of
the FPL; or (2) in states with Medicaid income levels for children already at or above
200% of the poverty level as of June 1997, within 50 percentage points over this
income standard. States can either establish a specific coverage pathway for such
targeted low-income children or they can build upon other existing Medicaid
coverage groups for children. In August 2004, 33 states reported covering targeted
low-income children under Medicaid.15
Special Eligibility Rules for Families, Pregnant Women
And/or Children
A number of special eligibility procedural rules and options apply to individuals
qualifying under the above eligibility groups. Many of the provisions were
developed for the purpose of streamlining Medicaid’s eligibility and redetermination
processes, to help improve coverage and health outcomes among pregnant women
and newborns, and to better reach low-income children.
Deeming of Parent’s Income. When determining whether an individual
meets the financial eligibility rules for Medicaid, only the income of a spouse, or a
parent of a dependent child under age 21 counts. The income, as well as other
financial characteristics, of parents are “deemed” available to their children, but only
if the children share the household. Regulations require that the income and
resources of both parents with whom a child resides must be considered, regardless
of whether or not both parents contribute toward that child’s care.
Waiving Asset Requirements. States can choose to waive asset tests for
families of certain women qualifying on the basis of pregnancy, infants, and children
under age 19. The tests can be waived for all individuals in those groups whether the
pregnant woman or child is in a mandatory coverage group or an optional coverage
group. States may not, however, waive the asset tests for family members who are16
eligible under Section 1931, or for “qualified” pregnant women or children. As of
December 2003, 48 states reported having waived the asset test for one or more
groups of pregnant women or children.

states to choose, after the passage of BBA 97, to either extend Medicaid for targeted low-
income children, to create a new SCHIP program for those children, or coordinate both
programs to cover the target population.
15Two states, Arkansas and New York had not yet submitted enrollment data. All other
states reported covering such children under separate SCHIP programs. At Centers for
Medicare and Medicaid Services, see
[ ht t p: / / s chi p/ e nr ol l ment / 2004eve r 2qt .pdf ] .
16“Qualified” pregnant women are women who meet the income and resources to qualify for
the former AFDC program and would be eligible if her child had been born and was living
with her. Qualified children are those under age 19 who meet the income and resource
requirements of the former AFDC program without regard to any other former AFDC
program eligibility requirements.

Table 7. States That Waive Asset Tests As of December 2002
StatePregnant womenPoverty level childrenOptional children
Alabama X X X
Ar izo na X X N /A
Arkansas X
Califo r ni a X X X a
Delaware X X X
DC X X a X b
Flo r id a X X X
Hawa ii X X N/A
I llino is X X X
Indiana X X X
Iowa XX
Kansas X X X
Lo ui s i a n a X X X
Maine X X X
Maryland X X X
M a ssa c huse t t s X X X
Michigan X X X
M i nne so t a X X X
M i sso ur i X X X
Neb r aska X X X
New HampshireXX
New JerseyXXX
New MexicoXXX
New YorkXX
North CarolinaXX
North DakotaXXX
Oklaho ma X X N/A
Orego n N/R N /R N/R
P e nnsyl va ni a X X X
Rhode IslandXXX
South CarolinaXXX
South Dakota XX
T e nne sse e X X N / A

StatePregnant womenPoverty level childrenOptional children
Vermo nt X X X
Vir ginia X X X c
W a shi ngt o n X X X
West VirginiaXX
W i sc o nsin X X X
Wyoming X X X
Source: CRS compilation of a 50-state survey of state eligibility practices conducted by George
Washington University Center for Health Services Research and Policy.
Notes: N/A — Not applicable. In these states, either optional groups of children have not been
covered, or coverage for children that would otherwise fall into these groups has been achieved
through other program expansions, such as through waiver programs.
N/R — Not Reported
a. Asset test applied to certain sub-groups of individuals in this category.
b. Asset teston books,” but rarely applied.
c. Asset test dropped after date of completion for survey.
Presumptive Eligibility. In some states certain new applicants can receive
Medicaid coverage of ambulatory (non-institutional or inpatient) services while
waiting for their applications for coverage to be processed by the Medicaid agency.
States can choose to offer presumptive eligibility to pregnant women, children and
to women qualifying under the breast and cervical cancer treatment pathway. (See
description of this coverage group on page 20.)
Presumptive Eligibility for Pregnant Women. The purpose of the
presumptive eligibility provision for pregnant women is to ensure that prenatal care
is not delayed because a woman does not have a Medicaid card during the time it
takes for a state to process an ordinary Medicaid application and make a final
eligibility determination. Certain providers of care may make an interim
determination, on the basis of preliminary information, that a pregnant woman
seeking treatment may be financially eligible for Medicaid benefits. Providers
permitted to make this determination include individual practitioners, clinics
participating in a number of federally funded health-related programs or in state
perinatal care programs, and Indian Health Service facilities. The provider must
notify the Medicaid agency of the presumptive eligibility determination within five
days, and must inform the woman that she is required to make a formal application
for Medicaid by the last day of the month following the month in which the
determination of presumptive eligibility was made.
Once the provider has established tentative eligibility, the woman may receive
ambulatory prenatal care. If the woman fails to apply for Medicaid, her presumptive
eligibility ends the last day of the month after the month she is determined
presumptively eligible. If she applies for Medicaid, her presumptive eligibility period
continues until the day on which the state makes a final eligibility determination.
Even if the state should ultimately determine that the woman is not eligible, payment
will still be made to the provider for services rendered during the presumptive
eligibility period.

Payments made on behalf of applicants who are later found to be ineligible for
the program are not counted as erroneous payments for the purposes of meeting
administrative oversight thresholds.
Presumptive Eligibility for Children and Women with Breast or
Cervical Cancer. Similarly, states can also choose to provide coverage for care
and services offered under the state plan for medical assistance during a presumptive
eligibility period for children under age 19 and for women who are eligible under the
pathway specific to certain breast or cervical cancer patients (described below). The
presumptive eligibility is the same as for pregnant women, although the care and
services go beyond ambulatory care to include all Medicaid services offered under
the state program.
States can determine which providers are to make determinations of
presumptive eligibility for women with breast and cervical cancer. States can also
determine which providers may make presumptive eligibility determinations for
children, but in this case regulations offer additional guidance on the choice of
providers. They must be providers that are:
!eligible to furnish health care items and services covered under the approved
plan and to receive payments under the plan;
!authorized to determine eligibility of a child to participate in Head Start;
!authorized to determine eligibility of a child to receive child care services
under the Child Care and Development Block Grant Act of 1990;
!authorized to determine eligibility of an infant or child to receive assistance
under the special nutrition program for women, infants, and children (WIC);
!authorized to determine eligibility of a child for medical assistance under the
Medicaid State plan, or the State Children’s Health Insurance Program; or
!an elementary or secondary school as defined under the Elementary and
Secondary Education Act of 1965 or is operated or supported by the Bureau
of Indian Affairs;
!a state or tribal child support enforcement agency;
!an organization that provides emergency food and shelter under a grant under
the Stewart B. McKinney Homeless Assistance Act; or
!a state or tribal office or entity involved in enrollment in the program under
Part A of Title IV, Title XIX, or Title XXI of the Social Security Act; or
!authorized to determine eligibility for any assistance or benefits provided
under any program of public or assisted housing that receives federal funds;
!any other entity the state identifies, as approved by the Secretary of the
Department of Health and Human Services (DHHS).
As of December 2003, presumptive eligibility was available for women
qualifying on the basis of pregnancy in 33 states. Fewer states reported presumptive
eligibility for children in 2003; 11 offered presumptive eligibility to children under
one year, and only nine offered presumptive eligibility to older children.
Continuous Eligibility. Continuous eligibility occurs when states provide
Medicaid coverage to an individual for a stated amount of time even if the family
income of that person rises to levels that would otherwise disqualify them from such
coverage. States are required to provide continuous eligibility to individuals

qualifying through certain eligibility pathways, and are given the option of providing
continuous eligibility to individuals qualifying through other eligibility pathways.
Continuous eligibility provides for more stable coverage for both the enrollees and
for their service providers despite what may be frequent fluctuations in incomes.
Continuous Eligibility for Pregnant Women. States are required to
continue Medicaid coverage for pregnant women who would otherwise lose
eligibility because of a change in family income through the pregnancy and post-
partum period. The post-partum period is defined as ending on the last day of the
month during which the 60th day after the end of the pregnancy falls. Medicaid law
requires continuous eligibility for pregnant women and infants regardless of changes
in income. That is, a child born to a woman receiving medical assistance remains
eligible for medical assistance for one year or up to one year of age so long as the
child is a member of the woman’s household and the woman remains (or would
remain if pregnant) eligible for medical assistance.
Continuous Eligibility for Children. States have the option to provide
poverty level children with a continuous eligibility period of no more than 12
months. The continuous eligibility period begins when the child is determined or
redetermined to be eligible for coverage but is not available to children who are
presumptively eligible during the presumptive eligibility period. Thirty states
responded to CRS’ eligibility survey that their Medicaid program offered some
continuous eligibility period to children under age one in 2002. All but four states
reported that infants’ coverage is continued for a full 12 months. Several states
reported offering the continuous eligibility period only to infants born to mothers
who are enrolled in the program. Similar to presumptive eligibility, fewer states offer
continuous coverage to older children. Twenty-two states offered continuous
eligibility to some older groups of poverty level children.
Guaranteed Enrollment for Beneficiaries Enrolled in Managed Care
Organizations. A related provision allows states the option of guaranteeing that
Medicaid recipients enrolled in certain managed care organizations (MCOs) retain
eligibility for the Medicaid services provided by the MCO even if the enrollee
otherwise loses Medicaid eligibility. This “guaranteed enrollment period” is not
limited to non-disabled adults or children and was not intended to improve access to
Medicaid services for low-income children and pregnant women. Rather, its purpose
was to improve Medicaid programs’ attractiveness to MCOs that might otherwise be
concerned that income fluctuations of Medicaid’s population would lead to unstable
and unpredictable funding. Guaranteed enrollment periods may be provided for a
period not to exceed six months.
If a recipient loses Medicaid eligibility during a minimum guaranteed
enrollment period, he/she is entitled to coverage (through the end of the enrollment
period) only for services furnished or arranged by the MCO with which he or she is

Medically Needy
States may extend Medicaid coverage to persons who are members of one or
more of the broad categories of Medicaid covered groups (i.e., the aged, disabled,
pregnant women or families with children), but do not meet the applicable income
or resource requirements for eligibility. States have the option to establish
“medically needy” coverage for those individuals whose income, and in some cases
resources, are close to, but somewhat higher than, those for the above coverage
groups. Most importantly, though, states are allowed to deduct medical expenses
from countable income of applicants when determining financial eligibility for the
medically needy program. In other words, individuals are allowed to “spend down”17
to eligibility through the medically needy pathway. This makes medically needy
programs important to individuals or families experiencing a medical crisis or whose
routine medical costs are high relative to their modest income. In 2003, 35 states and
the District of Columbia18 covered the medically needy.
Any state that opts to include medically needy coverage for any group is
required to extend that coverage to children under age 18, pregnant women, certain
newborns, and certain protected persons who are blind or disabled and were eligible
as of 1973. Other groups can be included as well, including the elderly and
individuals with disabilities and children who under age 21, 20, or 19 and caretaker
relatives of eligible children. States are also allowed to create “reasonable”
categories of children to be eligible as medically needy, such as children under age

19 who are full-time students.

States that offer medically needy coverage can set a single income standard,
called the medically needy income limit (MNIL) at any level up to 1331/3% of the
maximum payment amount that could have been made to the same size family or
individual under the states’ former AFDC plan. The MNIL can be raised or lowered
in accordance with the welfare reform provisions described above as they relate to
Section 1931 family coverage. If raised, they can rise by no more than the annual
increase in the consumer price index, or if lowered, they cannot fall below those in
effect in May 1988. Methodologies for calculating income and resources must be the
same as those used for the most closely related cash assistance program (for example,
for low-income families the methodologies of the former AFDC program would be
used, and for aged and disabled, the methodologies of the SSI program would be

17Individuals may also “spend-down” to become eligible for Medicaid under a pathway
expressly for individuals with disabilities known as the “209(b)” pathways. For more
information about eligibility for people with disabilities under “209(b), see CRS Report
RL31413, Medicaid: Eligibility for the Aged and Disabled, by Julie Stone
18These include: Alaska, Arkansas, California, Connecticut, District of Columbia, Florida,
Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Hampshire, New Jersey,
New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island,
Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.
All states except Texas cover aged and disabled medically needy groups.

For healthy children or other members of families without significant medical
costs, the medically needy program has been all but overtaken by some of the other
eligibility pathways. Coverage for families under Section 1931, waiver programs,
and poverty-level child coverage often extend beyond those allowable ceilings for
medically needy coverage. The medically needy pathway, however, remains an
important part of the program for the elderly and individuals with disabilities who
may have high medical and long-term care expenses. For more on eligibility rules
for medically needy elderly and individuals with disabilities, see CRS Report
RL31413, Medicaid: Eligibility for the Aged and Disabled, by Julie Stone.
Individuals Qualifying Under Section 1115
Demonstration Waivers
States are able to experiment with new approaches for providing health care
coverage by conducting demonstrations that promote the objectives of the Medicaid
program using research and demonstration waivers authorized by Section 1115 of the
Social Security Act. Section 1115 allows the Secretary of HHS to waive a number
of Medicaid rules — including many of the federal rules relating to Medicaid
eligibility and benefits.19 The Health Insurance Flexibility and Accountability
(HIFA) Initiative is an explicit effort of HHS to encourage states to seek Section
1115 waivers to extend Medicaid and SCHIP to the uninsured, with a particular
emphasis on statewide approaches that maximize private health insurance coverage
options and target populations with incomes below 200% FPL. A number of states
have used such waivers to enact broad-based, and sometimes statewide, health
reforms although demonstrations under Section 1115 need not be statewide.
Many of the demonstrations extend comprehensive health insurance coverage
to individuals who would not otherwise be eligible for Medicaid. As of September
2003, CMS reports 18 states and the District of Columbia have used the waiver
demonstration authority to expand coverage opportunities statewide.20 Not all of
those states, however, have current approval to operate those programs. Some waiver
approvals have expired and other states have chosen to discontinue their
demonstrations. Table 7 provides additional detail on the states with comprehensive
demonstrations as reported by CMS in 2003.

19See also the discussion of Section 1115 waivers below.
20They include Arizona, Arkansas, Delaware, Hawaii, Illinois, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, New York, Oklahoma, Oregon, Rhode Island, Tennessee,
Utah, Vermont, and Wisconsin. Medicaid At-a-Glance, 2003, Publication number CMS-


Table 8. States with Expanded Eligibility under Medicaid
Section 1115 Waivers
(as of 2003)
Extended eligibility groupsWaiver expired ordemonstration discontinued
AZAll individuals under 100% FPL; children under200% FPL
ARChildren under 200%
DEAll individuals under 100% FPLExpired December 2003
DCAll adults ages 50 to 64 under 50% FPL
All individuals under 100% FPL, certain
HIchildren and adults with income under 300%
ILParents of SCHIP children with income under185% FPL
MDChildren with income under 200% FPL.
Pregnant women and infants with income under

200% FPL; children 1-18 under 150% FPL;

MAparents under 133% FPL; other disabled
individuals and long-term unemployed
MIChildless adults with income under 35% FPL
Parents and caretaker adults with income under
MN200% FPL; children and pregnant women under


MOChildren under 300% FPL; certain post-partumwomen and parents transitioning off TANF
NYAdults under 100% FPL; children under 150%FPL
OKNot clear how eligibility was extended beyondcurrent lawExpired December 2003
All individuals under 100% FPL; uninsured
ORchildren under 200% FPL; certain adults under
170% and 200% FPL
RIFamilies under 185% FPL
Uninsured children under 200% FPL; uninsuredTask force developing plans to
TNadults under 100% FPL; certain uninsurablesignificantly reduce scope or
indivi duals discontinue
UTAdults with income under 150% FPL; certainhigh risk pregnant women.
Uninsured adults under 150% FPL; parents and
VTcaretaker relatives under 185% FPL; under-Expired December 2003
insured children between 225% and 300% FPL.
WIChildren under age 19, under 200% FPL;parents under 200% FPL
Source: U.S. Department of Health and Human Services, Centers for Medicare and Medicaid
Services, State Waiver Programs and Demonstrations, CMS-11024-03, at
[ h t t p : / / www. c m s . h h s . g o v / m e d i c a i d / wa i v e r s / wa i v e r ma p . a s p ] .

Other Eligibility Pathways for Individuals Without
In recent years, some new groups have been added to Medicaid that move the
program further away from its traditional links to cash assistance programs. Two
new pathways were added to Medicaid for individuals with specific medical
diagnoses — for low-income women diagnosed with breast and cervical cancer, and
for people with tuberculosis. In addition, Medicaid is available to individuals or
families qualifying for continued employer-based coverage under the Consolidated
Omnibus Budget Reconciliation Act (COBRA) and to unauthorized aliens seeking
medical treatment in emergency rooms.21
Women with Breast and Cervical Cancer
Woman who are eligible for Medicaid under this optional coverage group are
those who are identified as needing treatment for breast or cervical cancer (including
precancerous conditions) through the Center for Disease Control’s National Breast
and Cervical Cancer Early Detection Program (NBCCEDP). Women who qualify
must be under age 65, uninsured, and otherwise not eligible for Medicaid. Benefits
are limited to the period in which the beneficiary requires breast or cervical cancer
treatment. States’ spending for the benefits is matched at an enhanced federal22
matching rate. As of 2004, all states and the District of Columbia have chosen to
cover women who meet these requirements.23
Persons with Tuberculosis
States may choose to offer Medicaid to people with tuberculosis (TB) who are
uninsured. Individuals qualifying under this pathway are entitled only to those24
services related to the treatment of tuberculosis. In 2003, 13 states and the District
of Columbia covered such persons with TB.
COBRA Continuation Beneficiaries
States have the option of providing a limited benefit to certain individuals who
are entitled to continue health insurance offered by former employers under the

21Legally immigrating aliens participating in Medicaid do so through the standard pathways
described throughout this document, although some limitations may apply. Those rules are
discussed on page 28.
22States receive federal matching money for most Medicaid services at an average rate of
57%. The enhanced matching rate for services for women qualifying through this pathway
is equivalent to the matching rate provided under the SCHIP program. It is calculated to be
the basic Medicaid FMAP increased by 30% of the difference between the state’s basic
Medicaid FMAP and 100% with a minimum of 65% and a maximum of 85%.
23Personal communication, CMS Office of Legislation, Dec. 21, 2004.
24These include California, Florida, Louisiana, Minnesota, New York, Ohio, Oklahoma,
Oregon, Rhode Island, Utah, Washington, Wisconsin, and Wyoming (CMS Publication,

provisions of the Consolidated Omnibus Budget Reconciliation Act of 1984
(COBRA). That Act requires employers with 20 or more employees to continue to
offer health insurance benefits to employees who would otherwise lose the coverage
due to a change in their work status. The Medicaid option allows states to pay the
former employees’ premiums but only under the following circumstances:
!The employee or family member worked for a firm with 75 or more
!The premium payment is “cost effective” i.e., the premium paid for the
employer based coverage is below the amount Medicaid would have otherwise
spent on Medicaid services for the individual;
!The employee entitled to elect COBRA coverage is in a family with income
that does not exceed 100% of FPL; and
!The individual or family’s resources do not exceed twice the SSI resource
limit. (The SSI resource limit is $2,000 for an individual and $3,000 for a
Emergency Services for Illegal Aliens
A states’s Medicaid plan is required to cover treatment for emergency
conditions for illegal aliens and for persons in lawful temporary resident status who
otherwise meet the program’s eligibility criteria.25 An emergency medical condition
is defined as a “medical condition (including emergency labor and delivery)
manifesting itself by acute symptoms of sufficient severity including severe pain)
such that the absence of immediate medical attention could reasonably be expected
to result in placing the patient’s health in serious jeopardy, serious impairment to
bodily functions, or serious dysfunction of any bodily organ or part.”26 Coverage
provided to these individuals, on the other hand, may exclude organ transplants.
General Eligibility Principles and Requirements
Wide Variation in State Programs
Federal requirements and options combine with state choices and definitions to
ensure wide variation in the characteristics of state Medicaid programs. This
variation across state programs makes generalizations about Medicaid eligibility
policies difficult.
Federal law describes more than 50 eligibility pathways. Some of those
pathways describe mandatory coverage groups; others are optional for states. Some
of those coverage groups defined in federal law are described precisely, such as
women diagnosed with breast or cervical cancer identified through the Center for
Disease Control’s National Breast and Cervical Cancer Early Detection Program.

25Persons legally residing in the U.S. would qualify for Medicaid through general Medicaid
eligibility pathways as described in this report, with some restrictions. See a discussion of
those restrictions on page 27.
26Section 1903(v)(3) of the Social Security Act.

Other pathways are only generally described with the specifics left to states’
Where federal law identifies optional coverage groups, states have a great deal
of flexibility in defining and specifying the pathways they choose to implement as
described above. For example, federal law provides an option for states to cover
children who are between the ages of six and eight and whose family income is
between 100% and 133% of the federal poverty level (FPL). States can choose any
combination of income level and age within those parameters. Another example is
an eligibility pathway referred to as Ribicoff children. This pathway allows states to
identify “reasonable classifications” of children whose income is very low and who
do not otherwise qualify under welfare-related pathways. Under that category, states
can define one, two, 10, or any number of classes of children to be offered Medicaid
coverage. Most states cover multiple classifications of Ribicoff children.
For almost all Medicaid eligibility groups, mandatory and optional alike, federal
law also leaves the precise definitions of financial eligibility criteria — countable
income and resources — up to states. States can define what counts as income and
resources for most coverage groups. A few exceptions to this rule include
individuals eligible for Medicaid because of receipt of SSI payments, or through SSI-
related eligibility pathways. For those individuals, definitions of income and
resources come directly from SSI statute and regulations. A few other eligibility
pathways place limits on states’ ability to define income and resources. For example,
a Medicaid regulation pertaining to optional families and children prohibits states
from using any requirements for determining eligibility that are more restrictive than
those used under the state AFDC plan (that existed in 1996). Similarly, states cannot
use more restrictive definitions for optional aged, blind, and disabled individuals,
than those used under SSI.27 And in the Medicaid tradition, there are exceptions to
those rules as well.
All of this variation contributes to the overwhelming level of diversity and
complexity of the states’ Medicaid programs. Many people have said that if you
know one Medicaid program, you know one Medicaid program. This is because
every rule or definition that applies in one state could be quite different in another.
This immense variation also makes reforming the Medicaid program exceedingly
difficult. A minor federal law change could have multiple ripple effects in each state.
Retroactive Eligibility
Under federal law, persons who are determined to be eligible for Medicaid must
be provided with coverage for any care and services under the plan during the three
months before he or she made application if that person would have been eligible for
such assistance during that time. States are directed to determine if applicants have
unpaid bills during the three calendar months before application and to pay for those
services that are included in the state’s Medicaid plan.

2742 CFR Section 435.01.

Medicaid programs are required to cover all U.S. citizens who meet the states’
financial and categorical restrictions. States are also required to cover certain groups
of legal permanent resident immigrants. Those groups are:
!refugees for the first seven years after entry into the United States;
!asylees for the first seven years after asylum is granted;
!certain other individuals whose deportation is being withheld for humanitarian
reasons under the provisions of the Immigration and Nationality Act28, for
seven years after the deportation is first withheld;
!lawful permanent aliens after they have been credited with 40 quarters of
coverage under Social Security; and
!immigrants who are honorably discharged U.S. military veterans, active duty
military personnel, and their spouses and unmarried dependent children who
otherwise meet the state’s financial eligibility criteria.
For all other aliens lawfully admitted for permanent residence or permanently
residing in the U.S. under color of law (e.g., certain aliens admitted pursuant to the
discretionary authority of the Attorney General), states have the option to provide
Medicaid coverage once any applicable waiting period has been met. Waiting
periods of five years are applied to legal immigrants arriving in the United States
after August 22, 199629 and to legal immigrants already residing in the country as of
that date who become disabled in the future.
All Medicaid applicants are required to declare in writing, under penalty of
perjury, that they are a citizen or national of the U.S., or an alien in a satisfactory
immigration status. In addition, states are required to verify with the Bureau of
Citizenship, the immigration status of all aliens applying for Medicaid through the
Systematic Alien Verification for Eligibility (SAVE) system. This requirement does
not apply to aliens seeking treatment for emergency medical conditions.
Eligibility Verification. States are required to have an income and eligibility
verification system in administering Medicaid. States are required to request and
make use of Internal Revenue Service (IRS) unearned income and quarterly wage
information. The Omnibus Budget Reconciliation Act of 1986 clarified that the use
of such information be targeted toward the most productive cases, and did not require
states to use the information to verify the eligibility of all beneficiaries (e.g., states
can verify samples of beneficiaries.)

28 For more information on immigrant eligibility for Medicaid see Appendix A of CRS
Report RL31114, Noncitizen Eligibility for Major Federal Public Assistance Programs:
Policies and Legislation, by R. Wasem.
29At publication, all states except for Colorado and Wyoming have opted to cover this group,
referred to as “optional qualified aliens.” Press reports suggest that Colorado may
re-institute coverage for this group.

State Medicaid agencies must provide Medicaid coverage to otherwise eligible
residents of the state, including residents who are temporarily absent from the state.
An individual is generally considered a resident of a state if he or she is living in it
with the intention of remaining there permanently or indefinitely. Eligibility may not
be denied because an individual has not resided in the state for a specified period or
because the individual is temporarily absent from the state. A state is also prohibited
from denying coverage to an individual who satisfied the residency rules but who did
not establish residence in the state before entering a medical institution.
A state is required to reimburse providers for services provided to its residents
in another state under the following circumstances:
!Medical services are needed because of a medical emergency;
!Medicaid services are needed and the beneficiary’s health would be
endangered if he or she were required to travel to their state of residence;
!The state determines, on the basis of medical advice, that the needed medical
services or necessary supplementary resources are more readily available in
another state; or
!It is general practice for beneficiaries in a particular locality to use medical
resources in another state.
Homelessness does not automatically qualify an individual for Medicaid. A
homeless person must still meet his or her state program’s eligibility criteria.
However, a state may not exclude from coverage any otherwise eligible individual
who resides in the state, regardless of whether or not the residence is maintained
permanently or at a fixed address. States are required to establish a method of
making eligibility cards available to eligible individuals who do not reside in a
permanent dwelling or do not have a permanent home or mailing address.
Rules for Medicaid Benefits
There are a number of general rules that apply to the benefits offered under state
programs. Although the rules are primarily about benefits, they are important to
consider for a complete understanding of Medicaid eligibility. This is because these
rules contribute to states complaints about the inflexibility of the Medicaid program.
In addition, it is often the effect of these rules on state programs that have encouraged
the proliferation of waivers and experimentation in providing health benefits to
selected Medicaid enrollees in different ways. The requirements are often waived as
a part of the research and demonstration waivers described above.
Amount, duration, and scope. Each covered service must be sufficient in
amount, duration, and scope to reasonably achieve its purpose. The state may not
arbitrarily deny or reduce the amount, duration, or scope of services solely because
of the type of illness or condition. The state may place appropriate limits on a service
based on such criteria as medical necessity.

Statewideness. Generally, a state plan must be in effect throughout an entire
state; that is, the amount, duration, and scope of services covered must be the same
Comparability. The comparability rule requires that the benefits offered be
the same for all individuals qualifying within each eligibility pathway. This rule is
often a major source of states’ concerns regarding inflexibility. It prohibits states
from changing the benefits offered to individuals within one pathway as their family
income rises. It also prohibits states from offering some groups trimmed down
benefit packages.
Current Eligibility Issues
Medicaid eligibility rules and policies raise a number of issues that generate
both debate about the program as well as many questions for legislators. A first issue
relates to achieving the optimum amount of program enrollment among those who
are eligible. Ensuring that people who are eligible for Medicaid enroll is important
to those involved in Medicaid policy issues for a number of reasons. Reaching full
enrollment is a way to minimize the number of people who are uninsured without
requiring additional programs or changing current program rules.
A second important issue is how to account for the counter-cyclical impact of
the economy on Medicaid eligibility and enrollment. That is, when the economy
improves, Medicaid benefits are needed by fewer individuals. When the economy
suffers, Medicaid benefits are needed by more people. This counter-cyclical effect
is consistent with the notion that Medicaid is a safety net for people losing jobs and
financial security. Moreover, when the economy suffers, states’ revenues are
impacted as is their ability to fund the program.
A final issue, the changing nature of Medicaid enrollment, describes the recent
transformation of the program to cover new groups of individuals and to play a
greater role in addressing the needs of citizens with moderate incomes and who have
stronger ties to the workforce. These issues are discussed below.
Managing and Monitoring Enrollment
For a number of years, researchers have found that state Medicaid programs do
not enroll all of the eligible population. Most of the research related to the
“enrollment gap” has focused on low-income children and finds that between 65%
and 80% of individuals eligible for Medicaid enroll in the programs (Table 9.)
In 1998 Seldon, et al., found that children over age twelve had significantly
lower rates of enrollment, or take-up rates, than those who were younger. The
authors speculate that this could reflect continuous Medicaid coverage for some
children since birth. It may also be related to need and use of health care services.
Children under age 12 are known to have more medical encounters than those over
age 12. In addition, children who became eligible for Medicaid because they were
in families qualifying through a welfare-related pathway had higher take-up rates
than those qualifying through the poverty-level expansions. This could be because

many states automatically enroll individuals who are receiving welfare benefits into
Medicaid, but do not automatically do so for those qualifying through the poverty-
related pathways.
Other factors can play a role in the persistent enrollment gap. Unlike private
insurance, there is no open enrollment period for Medicaid coverage. Individuals do
not “lose out” on Medicaid coverage for the year if they do not enroll at the
beginning of the year. So people can enroll at any time, or whenever they find they
need medical services. There has not, however, been any systematic review or
evidence of this playing a role in the enrollment gap.
The presence of the enrollment gap raises a number of concerns. First, much
analytic evidence shows that insurance coverage leads to improved health
outcomes.30 On the other hand, with the inadequacy of available data to measure the
problem, we may never know what the true gap in enrollment is.31 The surveys that
probe insurance coverage have universally under-represented public program
enrollment. Some researchers have attempted to adjust the survey responses for this
under count, although others have not. To the extent that public program enrollment
is under-represented in the national surveys used to calculate the enrollment gaps, the
take-up rates presented in Table 9 could be too low — and the enrollment gap could
be smaller than estimated.

30B.C. Strunk, P.J. Cunningham, Trends in Americans’ Access to Needed Medical Care,
2001-2003, Center for Studying Health System Change, Aug. 2004; C. Williams, From
Coverage to Care: Exploring Links Between Health Insurance, a Usual Source of Care, and
Access, The Synthesis Project of the Robert Wood Johnson Foundation, Sept. 2002; J.D.
Kasper, T.A. Giovannini, C. Hoffman, “Gaining and Losing Health Insurance:
Strengthening the Evidence for Effects on Access to Care and Health Outcomes,” Medical
Care Research and Review, vol. 57, no. 3, pp. 298-318.
31For more information on the surveys and the public program undercount, see CRS Report
RL31275, Health Insurance: Federal Data Sources for Analyses of the Uninsured, by Chris
Peterson and Christine Devere.

Table 9. Findings on Medicaid Take-up Rates (Expressed as
Percentages of Eligibles) Among Children and Adults
(selected years)*
19961998/ 199920002002
Government Accounting Office, “Medicaid: Demographics of Nonenrolled Children
Suggest State Outreach Strategies” (GAO/HEHS-98-93, Mar. 1998)
Children, age 18 and under, eligible for77%n/an/an/a
Medicaid —
J. Holahan, L. Dubay, and G.M. Kenney, “Which Children are Still Uninsured and
Why?” (The Future of Children, vol. 13, no. 1, 2003)
Children, age 18 and under, eligible for1999
Medicaid or SCHIP and who do not have
private insurance — 66%
n/an/an/a — Eligible under welfare-related79%
— Eligible under poverty-related64%
T.M. Seldon, J.L. Hudson, J.S. Banthin, “Tracking Changes in Eligibility and Coverage
Among Children, 1996-2002” (Health Affairs, vol. 23, no. 5, Sept./Oct. 2004)
Children, age 18 and under, eligible for71.9%199873.9%79.1%
Medicaid — 72.2%
T.M. Seldon, J.S. Banthin, J.W. Cohen, “Medicaid’s Problem Children: Eligible But Not
Enrolled” (Health Affairs, vol. 17, no. 3, May/June 1998)
All children, age 18 and under, eligible70%
for Medicaidn/an/an/a
— Children ages 0-1273.2%
— Children ages 13-1859.1%
Source: Congressional Research Service.
* Excludes adults qualifying on the basis of disability status.
Efforts to Reduce the Enrollment Gap. State Medicaid agencies have
often taken the lead in efforts to reduce the enrollment gap. The aggressiveness with
which states have attempted to reduce the gap, however, has waxed and waned
depending on the budgetary conditions that states face. The additional budgetary
costs of covering people who are not currently enrolled has, at times, acted as a
barrier to aggressive outreach. During particularly difficult fiscal times, states
sometimes do the opposite of outreach; that is, they may create administrative hurdles
intended to impede enrollment or hasten disenrollment.32
The federal government has also played a major role in encouraging states to
reach out to potentially eligible individuals. A major force behind the liberalization
of Medicaid in the 1980’s allowing states to cover many more pregnant women and

32Thomas P. McCormack, “State Medicaid Eligibility Cutbacks & Exclusions — Proposed
and Recently Enacted, 2003,” Title II Community AIDS National Network, Oct. 22, 2003.

children was the realization that national infant mortality rates compared poorly with
those of other industrialized nations. The Medicaid coverage expansions for
pregnant women and children began slowly, and enrollment rates among the newly
eligible populations seemed at times stuck at about 60%.33 Since reducing infant
mortality and improving coverage among children had become an important priority,
Congress responded quickly by adding new eligibility pathways in new laws intended
to encourage states to improve outreach. Table 10 shows the major federal
legislative actions in this area.
Table 10. Outreach and Enrollment Provisions Included in
Major Federal Laws Since 1986
OBRA(P.L. 99-509) — Allowed states to make ambulatory prenatal careavailable to pregnant women for a presumptive period of

1986 eligibility.

— Established that the application of a resource test was
optional for pregnant women and infants with income below
poverty. (Subsequent modification to this section currently
allows states to choose whether or not to apply a resource
test to all poverty-related pregnant women, infants and
MCCA(P.L. 100-360) — Allowed states to continue eligibility for certain
1988pregnant women for 60 days after delivery, regardless of
changes in income that would otherwise make them
ineligible based on the financial requirements.
Family — Established Transitional Medical Assistance for families
Support(P.L. 100-485)leaving welfare who would otherwise lose Medicaid due to
Act ofincreased earnings and certain other income.
OBRA(101-508) — Made rules regarding presumptive eligibility for

1990pregnant women more generous.

— Required states to allow processing of Medicaid
applications for pregnant women and children at locations
other than welfare offices.
— Established demonstration projects for up to four states
to test the effect of eliminating categorical eligibility
requirements for individuals with family income below

150% FPL.

— Allowed states to continue eligibility for children for 12
BBA 97(105-33)months regardless of changes in family income that wouldotherwise make them ineligible based on financial
— Allowed states to offer presumptive eligibility to
No tes:
OBRA: Omnibus Budget Reconciliation Act

33“Health Insurance for Children: Many Remain Uninsured Despite Medicaid Expansion,”
GAO/HEHS-95-175, July 19, 1995; “Health Insurance for Children: Private Coverage
Continues to Deteriorate,” GAO/HEHS-96-129.

MCCA: Medicare Catastrophic Coverage Act
BBA: Balanced Budget Act
The welfare program reforms of 1996 saw Medicaid participation rates dipping
again, this time among low-income families. The problem was considered to be an
unanticipated consequence of welfare reform’s success and provisions delinking
Medicaid coverage from receipt of cash welfare benefits. At the same time that
families were being lost in the transition off of AFDC, consensus was building to
extend federally-sponsored health care to cover all poor and near poor children in the
U.S. It became widely recognized that in order to achieve universal or near universal
coverage of children, Medicaid’s reach among children already eligible must be
In 1998, the States Children’s Health Insurance Program (SCHIP) was enacted.34
The program provides grants to states to extend health coverage to children in
families with low and modest income who are not eligible for Medicaid. A portion
of the SCHIP grant was identified for outreach activities and the DHHS and the
Health Care Financing Administration (HCFA, now known as the Centers for
Medicare and Medicaid Services, or CMS) encouraged outreach activities. In
addition, HCFA established the Outreach Information Clearinghouse35 which
provided outreach information and a forum for information exchange among states,
providers, schools and school districts, and children’s groups, among others. HCFA
also produced two “guides” or reports on Medicaid eligibility, enrollment and
outreach activities, identifying when practices and procedures were federally required36
and which state activities were highly successful. Finally, HCFA provided funds
for five states to conduct pilot projects to remove barriers in states’ application,37
enrollment, and renewal process.
Removing administrative barriers. Much has been written about the
complexity of the application and eligibility determination processes and how those
processes have, in the past, raised considerable barriers to enrollment for many of
Medicaid’s target populations. Applications have been notoriously long and
sometimes have questions that are difficult to understand. After the passage of
SCHIP, many states worked to ensure “transparency,” so that children making
application for either Medicaid or SCHIP were placed in the appropriate program
without having to undergo separate processes or applications. States made changes
such as reducing the number of pages of applications, minimizing documentation
requirements, and eliminating asset tests.
Nonetheless, during periods of heavily strained state budgets, erecting indirect
barriers to enrollment — such as increasing the documentation requirements,

34See CRS Report RL30473, State Children’s Health Insurance Program (SCHIP): A Brief
Overview by Elicia Herz, Bernadette Fernandez and Chris Peterson.
35[ ht t p: / / s chi p/ out r each] .
36U.S. Department of Health and Human Services, Health Care Financing Administration,
Supporting Families in Transition, Mar. 1999 and Continuing the Progress: Enrolling and
Retaining Low-Income Families and Children in Health Care Coverage, July 2001.
37States that were awarded these grant funds included Florida, Massachusetts, Ohio,
Pennsylvania, and Washington.

establishing intrusive verification procedures such as fingerprinting, or reducing the
number of days in a week or hours in a day during which applications may be
accepted — effectively restrain Medicaid program participation and thus spending.
In the recent period of strained state budgets, a number of states are reported to be
considering establishing such “red tape barriers” to deter enrollment in response to
budget pressures.38
The Impact of the Economy on Enrollment
The nation’s economic condition during any given period has a direct impact on
states’ Medicaid programs. First, when depressions or recessions occur, citizens
often lose jobs. Job loss can drive up Medicaid enrollment for two reasons: because
people lose their job-based income, and because people lose their job-based health
care coverage. The number of people qualifying on a financial basis swells at the
same time that the perceived need for Medicaid to play its safety-net role swells. The
same forces that raise the number of low-income people in need of Medicaid benefits
concomitantly reduce states’ ability to fund Medicaid. Rising joblessness reduces
states’ tax revenues.
Federal statute provides states with considerable flexibility to choose whether
to cover certain eligibility groups and to define other eligibility groups in ways that
would allow more or fewer individuals to qualify for benefits. This means that
eligibility policy could, in theory, be used as a tool to reduce Medicaid spending
when states’ budgets are tight or to extend the generosity of the program in other
times. But this much control over the program’s size and cost is often elusive for
state-level policy makers. Instead, Medicaid’s size and spending levels are largely
driven by the nation’s general economic fluctuations, the size and needs of the states’
population, and by other political concerns.
Cutting eligibility to reduce costs is difficult (but not impossible). There are
three reasons for this. Eligibility and enrollment trends are driven by economic
conditions, making the impact of any policy changes at the state level either dulled
or accentuated by the changes driven by the economy. For example, if a state
eliminated coverage for medically needy people during a time when incomes are
generally high and fewer people are qualifying for such coverage, there is less
objection. But if the eligibility pathway were eliminated during a recession — at just
the time when large numbers of individuals and families are finding their income
dipping into the range for medically needy coverage, the cutback has a considerably
stronger impact. This situation leads to the second problem with cutting eligibility
— eliminating individuals’ ability to rely on Medicaid, at exactly the time when such
need for assistance is climbing, may be politically unpopular. Many states seek to
avoid this unappealing tool for fiscal restraint by instead restricting benefits, reducing
provider payments, and/or raising copayments for services.

38D.C. Ross, L. Cox, Beneath the Surface: Barriers Threaten to Slow Progress on
Expanding Health Coverage of Children and Families, Kaiser Commission on Medicaid and
the Uninsured, Oct. 2004; T.P. McCormack, State Medicaid Eligibility Cutbacks and
Exclusions — Proposed and Recently Enacted, 2003, Title II Community AIDS National
Network, Oct. 2003.

Finally, there is a cyclical problem with reducing the size of the Medicaid
program during a recession. When states budgets are flush with revenues, improving
access to medical care for those in need is a very popular use of state funds. During
such periods, many states add eligibility coverage groups to Medicaid or modify the
definitions of existing groups to include additional people, thereby increasing the
program’s generosity. Such eligibility expansions raise the fiscal stress on the states
during the next recession.
In the late 1990’s, the nation’s economy surged, largely spurred on by the
technology stock boom. States’ revenues improved and Medicaid programs in many
states became more generous. But during the next few years, 2001 to 2003, states
were unable to keep up with the program’s rising costs. In response, states appealed
to the U.S. Congress for fiscal relief. In 2003, states received that relief with a
provision passed as part of the Jobs and Growth Tax Relief Reconciliation Act of
2003 (JGTRRA, P.L. 108-027) that temporarily raised the share of Medicaid paid
by the federal government.39
Beside fiscal relief, there are few other proposals that directly provide additional
funding for the program when the economy drives such periodic increases in
eligibility and enrollment. Such proposals would modify the federal-state funding
relationship to shift costs from states to the federal government in recessionary
periods. 40
Changing Nature of Medicaid Enrollment
Medicaid’s target populations have undergone major changes over the years.
Early in the program’s history, eligibility for Medicaid was tied to the receipt of cash
assistance. When enacted, Medicaid was offered only to families and individuals
who qualified to receive payments under two programs: the former AFDC program,
which provided cash assistance to very low-income families with children; and the
SSI program, which provides cash assistance to very low income individuals who are
aged or meet certain federally prescribed definitions of blindness or disability. The
program’s close link to cash welfare programs began to erode when Congress enacted
a series of eligibility expansions in the 1980’s targeted primarily to children and
pregnant women. These new groups were in families whose income was too high to
qualify for cash welfare payments, but was still at or near poverty.
Later, changes in Medicaid continued to move the program further from its cash
assistance roots. In 1996, the AFDC program was replaced with a program of grants
to states for various low-income assistance efforts. The TANF program was passed
as part of the Personal Responsibility and Work Opportunity Reconciliation Act of
1996 (TANF, P.L. 104-193). With this change to federal welfare policy, Medicaid’s
link to cash welfare assistance for poor families was formally broken. Instead, the

39For a more complete description of this provision and the circumstances surrounding its
passage, see CRS Report RL31773, Medicaid and the Current State Fiscal Crisis by
Christine Scott.
40For more information on financing Medicaid see CRS Report RS21262, Federal Medical
Assistance Percentage (FMAP) for Medicaid, and CRS Report RL31773, Medicaid and the
Current State Fiscal Crisis, by Christine Scott.

eligibility rules for families applying for Medicaid were liberalized to allow states the
flexibility to specify new rules, as long as states continue to provide Medicaid
coverage to individuals who would have been eligible to receive AFDC payments
under old program rules.41 The automatic eligibility for Medicaid for recipients of
SSI payments, however has remained.
Over the last decade, many states have continued to make changes that move
Medicaid programs further away from its historical coverage groups. States are able
to apply to the Secretary of HHS for waivers of certain federal Medicaid rules. These
waivers, authorized under Section 1115 of the Social Security Act, allow states to
conduct demonstrations, the goals of which must be consistent with the purpose of
the Medicaid statute. Under these demonstrations, some states have extended
coverage to higher income individuals and to individuals who otherwise do not fit
into Medicaid’s traditional categorical coverage groups (the elderly, blind and
disabled individuals, and members of families with dependent children).42
The number of approved demonstration waivers has increased over the last
decade, encouraged by both the Clinton and G.W. Bush Administrations. State
officials have identified a lack of flexibility in eligibility policies as one of the
reasons waivers have such appeal. Notwithstanding the program’s flexibility that
allows states to choose which optional groups to cover, and to define income and
resources tests and methodologies for many groups, other rules constrain states. One
program rule meant to achieve “fairness” within and across states is a predominant
issue for states. This “comparability”43 rule states that all individuals within a single
eligibility category must be offered the same set of benefits. For example, a poverty-
related child qualifying in Maryland’s Anne Arundel County must receive the same
set of Medicaid benefits as a child qualifying for Medicaid but residing in Queen
Anne’s County. This rule also prevents states from offering a particular population
a trimmed down benefits package — so for example, if a state chooses to cover all
pregnant women who are in families with income below 185% of poverty, the state
could not offer reduced benefits to those with income over 150% or charge larger co-
pays to this somewhat higher income group than charged to those below 150% of
poverty. States argue that they must, as a consequence of this rule, offer nothing to
anyone in a particular coverage group or income range, when they could otherwise
offer some additional individuals a limited set of benefits. Because of this “all or
nothing” inflexibility, some states claim they could be more generous to certain
groups than they are today.
Skeptics question whether states’ complaints about lack of “flexibility” disguise
less benevolent goals. Detractors of policies to enhance the states’ design flexibility
worry that advocates of increasing flexibility are primarily those who would prefer
to reduce Medicaid’s assistance for poor people, and are prevented from doing so
because of existing mandates and the comparability rule.

41The law includes minimum eligibility standards to ensure that families who had formerly
qualified for Medicaid through their receipt of AFDC would continue to be eligible for
coverage (Section 1931(b)).
42See CRS Report RS21054, Medicaid and SCHIP Section 1115 Research and
Demonstration Waivers, by Evelyne Baumrucker.
43General rule at Section 1902(a)(10)(B) of the Social Security Act.

Putting arguments about what flexibility means aside, Medicaid’s role as insurer
of last resort has undergone a transition from covering only those eligible for cash
assistance to having a much larger role for a broader range of low-income uninsured
individuals. The debate about Medicaid’s role is likely to intensify as private
insurance coverage continues to decline, and as aging baby boomers demand more
long-term care services that are typically not covered under private health insurance