Medicaid: How to Qualify, How to Enroll, and What it Covers

If you are going through a financial crisis and have growing problems with debt or your income has been reduced (through the loss of a job or a cutback in hours), the last thing you need are substantial medical expenses.

Unfortunately, medical care is one of the first things avoid when they’re already dealing with financial problems.

The good news is that there is help available through Medicaid, a federally-funded program, run by your state to provide healthcare coverage to people with low income and few assets.

What is Medicaid?

Medicaid was created as part of the federal Social Security Amendments of 1965 to help states assist citizens whose incomes and resources were insufficient to meet their medical costs. A portion of worker’s FICA deductions pay for medicaid.

Medicaid now serves as the nation’s primary source of health insurance coverage for low-income populations. According to a 2015 poll by the Kaiser Family Foundation, two-thirds of Americans said they were either covered by Medicaid or had a family member or friend that was covered.

Medicaid meets the medical needs of 74 million people, nearly 1 in 5 Americans. It covers 4 in 10 American children, along with assisting on nearly half of the country’s childbirths and two-thirds of people in nursing homes.

In 2015, more than $545-billion was spent on Medicaid — 63% of that total in federal money and the remainder from the states.

Medicaid recipients must be U.S. citizens or legal permanent residents. Generally, that population includes low-income adults, their children and people with certain disabilities.

States are not required to participate (but all have since 1982, when Arizona was the last to join). Each state must comply with Federal Medicaid laws while establishing eligibility standards and the types of services it will cover.

A separate part of Medicaid covers long-term nursing home care, while some programs cover long-term in-home personal care. In some states, a Medicaid-related program can cover some of the costs of assisted living.

Following the Great Recession of 2007 and its aftermath, Medicaid added 10-million new program recipients. Under the Affordable Care Act, 11-million people were added to the program. Expanded Medicaid eligibility began in 2014, widening the network to people with income up to 138% of the poverty level qualified for coverage ($26,951 annual income for a family of three), including adults without dependent children.

But the U.S. Supreme Court ruled that the federal government must make participation in the expanded Medicaid program voluntary. Thirty-one states and District of Columbia agreed to the expanded deal, where the federal government paid 100% of the costs, while having it taper to 90% by 2020.

More than half of the nation’s uninsured live in states that didn’t accept the expanded Medicaid plan (including Alabama, Florida, Georgia, Kansas, Louisiana, Mississippi and Texas). In non-expansion states, the typical Medicaid recipient is a working parent at 44% of the poverty level. Medicaid is one of many programs that provides financial relief to single parents.

Meanwhile, some of the non-expansion states have authorized financial requirements that made it more difficult to access coverage. For example, nearly 25% of Wisconsin Medicaid patients were dropped after the state government imposed premiums of 3% of household income.

How to Qualify for Medicaid

Two variables determine Medicaid eligibility: income and assets. Here is how they factor in the qualifying process.

Income

The permitted levels vary by state, but if your income is below the eligibility standard for the federal government’s Supplemental Security Income (SSI) program, you qualify for Medicaid.

The SSI figure is about $700 per month in what is referred to as “counted’’ income, but a significant portion of the actual income may not be counted. Rule of thumb: You should apply for Medicaid if your actual income is up to $1,500 per month.

If either spouse in a married couple applies for Medicaid, the income of both spouses is counted when deciding eligibility. If free housing, regular meals or bill assistance is provided to the Medicaid applicant from family or friends, those benefits could be deemed as income.

On the flip side, Medicaid can be available for people whose income is higher than the state’s eligibility level. If they have regular medical expenses that aren’t covered by another program or insurance, they could be considered “medically needy.’’

Assets

Medicaid applicants are generally permitted $2,000 ($3,000 for a couple) in cash, savings or other assets. Applicants are allowed to give away or transfer any assets in order to qualify for medical coverage.

But those asset transfers generally come with a caveat, especially in the case of nursing home coverage. Under the Deficit Reduction Act of 2005, there’s a five-year “look-back period,’’ meaning any transfers or gifts made by the Medicaid applicant during the preceding five years could result in penalties.

For example, if a person gifted $60,000 within the five-year time frame and the average monthly cost of a nursing home was $6,000, the $6,000 figure would be divided into $60,000 for a total of 10. That means the applicant would not be eligible for Medicaid for 10 months.

All transfers during the five-year “look-back’’ period are totaled and the applicant is ineligible for a period of time, even if they drop below the asset level ($2,000 in most states).

Obviously, the worst-case scenario would be for an elderly person to gift and transfer assets, leaving them with little to no money, but still being ineligible for Medicaid.

Exempt assets include:

• A house that the applicant lives in.
• An automobile (usually limited to fair-market resale value of around $5,000).
• Personal property and household goods for regular daily use (usually limited to a fair-market resale value).
• Wedding and engagement rings.
• Life insurance with a total face value (cash surrender) of up to $1,500 and term life insurance with no cash surrender value.
• Funeral and burial fund of up to $1,500, plus a burial space.

How to Enroll In Medicaid

To contact a local office of your state’s Medicaid or Children’s Health Insurance Program (CHIP), go to the federal government’s benefits.gov Web site and choose your state. That will take you to a page with contact information for local offices and contact information for your state’s Medicaid program.

When you fill out an application through the Health Insurance Marketplace, you will be contacted about your eligibility. You will also learn if you qualify for an individual insurance plan.

The Centers for Medicare and Medicaid Services (CMS) can be reached by telephone through regional offices.

• Medicaid National Provider Identifier: 800-465-3203.
• CMS Atlanta Regional Office (covers Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee): 404-562-7150.
• CMS Boston Regional Office (covers Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, Vermont): 617-565-1188.
• CMS Chicago Regional Office (covers Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin): 312-886-6432.
• CMS Dallas Regional Office (covers Arkansas, Louisiana, New Mexico, Oklahoma, Texas): 214-767-6427.
• CMS Denver Regional Office (covers Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming): 303-844-2111.
• CMS Kansas City Regional Office (covers Iowa, Kansas, Missouri, Nebraska): 816-426-5233.
• CMS New York Regional Office (covers New Jersey, New York, Puerto Rico, Virgin Islands): 212-616-2200.
• CMS Philadelphia Regional Office (covers District of Columbia, Delaware, Maryland, Pennsylvania, Virginia, West Virginia): 800-392-8896.
• CMS San Francisco Regional Office (covers American Samoa, Arizona, California, Guam, Hawaii, Nevada): 415-744-3628.
• CMS Seattle Regional Office (covers Alaska, Idaho, Oregon, Washington): 206-615-2306.

Medicaid Benefits

Each state’s Medicaid program covers basic medical care (which does not require a co-payment to Medicaid or the health care provider) and it includes:

• Inpatient hospital care
• Inpatient short-term skilled nursing or rehabilitation facility care
• Doctor services
• Outpatient hospital or clinic care
• Laboratory and X-ray services
• Short-term home healthcare (provided by a home healthcare agency)
• Ambulance service
• Prescription drugs (for people not covered by Medicare)

Some Medicaid programs offer optional medical services, which usually includes a small co-payment. It might include:

• Eye examinations and glasses
• Hearing tests and hearing aids
• Dental care
• Preventive screenings
• Physical therapy (beyond Medicare)
• Non-emergency transportation to and from medical treatment
• Non-Medicare-covered prescription drugs and some nonprescription drugs, including certain vitamins
• Chiropractic

Where is Medicaid Accepted?

Not everywhere. Be sure to check if your doctor or other provider participates in Medicaid. Why is it not universally accepted? One reason could be that Medicaid doesn’t reimburse doctors and other healthcare providers at the same rate as private insurance.

Many enrollees are in a Medicaid managed care plan, such as an HMO. It has restrictions on the doctors and other providers you can use, but there’s no monthly premium or other co-payments. Some states offer a choice of the Medicaid managed care plans in addition to regular plans.

What is Medicaid “Spend Down”?

There’s a way to receive Medicaid benefits even if the normal stipulations aren’t met, usually in cases where there are severe medical hardships.

If your family’s assets qualify for Medicaid, but your income is over your state’s Medicaid limit, there’s a “spend-down’’ or “share of cost’’ provision that is similar to a deductible under a typical health insurance policy.

Basically, if your medical bills add up to more than the amount by which your income exceeds the Medicaid limit, you can still qualify. Some states have expanded Medicaid to cover all people below certain income levels.

Even if you don’t think you are at the prescribed income level, you should apply for Medicaid and CHIP. Each state has coverage options that could work for you, especially if you have children, are pregnant or have a disability.

Advantages and Disadvantages of Medicaid

Medicaid’s first advantage is obvious. Since it caters to the low-income bracket, people are provided healthcare coverage when they would otherwise have none.

Medical practitioners who accept Medicaid patients are guaranteed a steady stream of customers, since states provide members with a list of participating physicians.

Those doctors are guaranteed they will receive payment from the government and some states also offer reward incentives for participation.

But there are Medicaid disadvantages, too.

There are limitations on some treatments and some procedures, perhaps deemed unnecessary or experimental. Medicaid reimbursements typically require between 37 and 155 days, which could cripple smaller medical practices that need cash for operating costs.

There are also instances of Medicaid discrimination, especially in nursing homes, where there have been reports of elderly people being transferred to a less desirable setting after switching from private pay to Medicaid.

Some state governments have complained about the methods of federal fund matching, stating that wealthier states get more money than poorer states with greater needs.

Help for Children

Michelle Singletary writes a syndicated financial column for the Washington Post, dispensing nuggets of common sense that work well for the middle class. She reacted strongly when the Trump Administration wanted to roll back Medicaid benefits as part of an overall cost-cutting measure.

“I preach and teach about personal financial responsibility,’’ Singletary wrote. “Yet I’m the beneficiary of an entitlement program that recognizes the humanity in providing access to affordable health care to the less fortunate.’’

Referring to her grandmother, Singletary wrote, “Big Mama, the granddaughter of slaves, worked hard all her life. If she could have avoided getting medical assistance, she would have. But I spent my childhood on Medicaid and I’m so grateful that there was a safety net for my siblings and me.’’

Singletary’s story is more than an anecdotal instance that prompts an emotional response.

According to Joan Alker, a professor at the Georgetown University McCourt School of Public Policy and Executive Director of the Central for Children and Families, the scenario laid out by Singletary is backed by a growing body of research.

“Children make up about half of those enrolled in Medicaid,’’ Alker said. “Research shows that investing in children’s health through Medicaid provides a very strong investment.

“Children covered by Medicaid are more likely to graduate from high school, attend college and grow up to be healthier adults who earn higher wages than those who grow up uninsured. Given the important role Medicaid plays in the lives of children, I would like to see this coverage strengthened to ensure that future generations have every opportunity possible to reach their full potential.’’

Outside of Medicaid, there are other government programs that provide assistance for children and even children with special needs.

Fighting for Benefits

Benjamin D. Sommers, an associate professor of Health Policy and Economics at Harvard University’s T.H. Chan School of Public Health, said he’s encouraged at the Medicaid gains realized under the Affordable Care Act, but discouraged that 19 states rejected Medicaid expansion.

“That means that millions of low-income Americans in those states don’t qualify for Medicaid,’’ Sommers said. “Before the ACA, if you were poor but didn’t have a disability or a child living at home, you couldn’t get Medicaid in most states no matter how poor you were. The ACA changed that — but only in the 31 states (that offer expanded Medicaid).’’

The non-expansion states point to economic factors, but Sommers said research indicates that expanded Medicaid makes sense in the long term.

“Numerous studies have shown when people gain coverage in Medicaid, it significantly improves access to needed medical care, protects them against financial disaster, and leads to improved well-being,’’ Sommers said. “Some of our research has shown that when states expand Medicaid, people live longer, too.’’

Alker said the number of families reporting difficulty paying medical bills decreased by almost 30% after expanded Medicaid coverage was offered.

“Medicaid basically provides health insurance for people who can’t afford it,’’ Alker said. “We tend to think of this as a health issue, but it’s also an economic one.

“It protects families from financial insecurity and even bankruptcy as a result of the high costs of health care. Medicaid allows families to get the care they need at a price they can afford. Medicaid gives families the peace of mind that they can support their children’s healthy development without worrying about unpaid medical bills piling up on their kitchen table.’’

Dan Hawkins, senior vice president of public policy and research for the National Association of Community Health Centers, said it’s vital to continue and expand Medicaid’s reach.

“Medicaid is today the last and only affordable source of health insurance for poor and low-income Americans,’’ Hawkins said. “Even Obamacare private insurance plans can’t match it.’’

Hawkins pointed to two major factors. He said Medicaid covers a broader range of services, “including those most likely to be needed by this population, such as medical dental, behavioral health, transportation and rehabilitation.’’

He said it has a small out-of-pocket cost-sharing requirement. “Many studies over the years have found that, for the lowest-income patients, almost any deductible or co-pay creates a real barrier to care and reduces care use even when care is necessary.’’

Hawkins said mainstream private insurance often restores’ a function, such as regaining the ability to walk, to swallow food or liquids or to return to work. Medicaid often covers services that are needed to develop a function, such as “infants and children developing the same functions when they’ve never had them before.’’

One of every six Medicaid patients are served by health centers, Hawkins’ specialty.

“Medicaid works most closely with safety net providers (such as health centers), who are best attuned to meet their needs and serve them most effectively,’’ Hawkins said. “Now, with the Zika problem and the Opioid crisis having their greatest effects on low-income communities, Medicaid is nimble enough to begin paying for this type of care much faster than private carriers.’’

Difference between Medicaid and Medicare

The programs sound similar and are often confused. But you should know the difference between Medicaid and Medicare.

• Medicaid is for people with low income and limited assets (other than a home).
• Medicare is for almost everyone age 65 or older. It can also go to someone with a long-term disability, regardless of their income or assets.

Some financially distressed senior citizens qualify for Medicaid and Medicare. If Medicare doesn’t cover some costs — such as premiums, deductibles, co-payments and some prescription drugs — Medicaid could pick up the difference. For those enrolled in Medicare Part D (prescription drugs), Medicaid could cover some medicines not included in that plan.