Medicaid

(Provisions contained in Titles I and IV)

Comprehensive Medicaid reform was not included in the welfare reform bill. Several important changes were made, however, with respect to categorical eligibility for Medicaid based on receipt of welfare and the eligibility of immigrants for Medicaid.

Eligibility Link to Welfare. Under current law, persons eligible for assistance under Title IV-A (AFDC) are automatically entitled to coverage under the state’s Medicaid program. The conference report severs this automatic link and amends Title XIX to say that any reference in Title XIX to eligibility under Title IV-A shall mean the state’s AFDC state plan as it existed on July 16, 1996. A state can modify those "frozen" plans in three ways:

• It can lower its income standards, but not below the level applicable under its AFDC state plan as of May 1, 1988.
• It may increase income or resource standards and medically needy income levels by an amount not to exceed the consumer price index.
• It may use income and resource methodologies that are less restrictive than the methodologies used under the state plan as of July 16, 1996.

Transitional Medicaid

• Retains existing Medicaid law regarding transitional assistance. Families losing eligibility for cash assistance due to increased child support will receive 4 months of transitional Medicaid; those losing cash assistance due to increased earnings will receive 12 months.
• Transitional assistance provisions, due to sunset in 1998, are extended to 2001.
• States will have the option to terminate medical assistance for persons denied cash assistance because of refusal to work; pregnant women and minor children are, however, protected.

Waivers. A state with a waiver of certain Title IV-A provisions in place or approved by HHS on or before July 1, 1997, will have the option to continue to operate under that waiver with regard to eligibility for medical assistance.

Administrative Costs. The bill allows HHS to increase the federal share of administrative costs associated with the implementation of the new eligibility rules, up to a total federal expenditure of $500 million over four years.

Services for Aliens.

• A state will have the option, as of January 1, 1997, of denying Medicaid coverage to persons who are legal residents but not citizens.
• New immigrants will be automatically barred for five years after entry. After that, the state may offer Medicaid coverage but will have to apply deeming provisions. There are certain exceptions for persons who have worked for 40 quarters in covered employment or who have served in the military.
• Legal immigrants who will be losing SSI benefits also will lose Medicaid coverage. Accordingly, aged, blind, and disabled immigrants will not be categorically eligible for Medicaid. Thus, if a state wanted to extend Medicaid coverage to these individuals, they would have to do so through optional eligibility categories.
• No state may deny coverage of emergency medical services to either illegal or legal aliens.

Effective Date These changes have the same effective date as the Title IV-A provisions—not later than July 1, 1997, and earlier at state option.

For further information on Medicaid issues, click here to reach the web site of the National Association of State Medicaid Directors .