Medicaid eligibility criteria and means testing requirements

¶ … Eligibility Rules and Agency/Program Policy

The Medicaid Program

Medicaid is a federal assistance program that is administrated at the federal level by the Centers for Medicare and Medicaid Services (CMS) and at the state level by the corresponding state agencies of the individual states. It is a program designed to assist needy individuals with medical expenses. Medicaid eligibility is quite strict and is an example of eligibility by rule and regulation as well as by means testing (Chambers & Wedel, 2005).

The program provides coverage for all of the following healthcare services for program beneficiaries: Inpatient hospital services, Outpatient hospital services, Laboratory and X-ray services including radiation therapy, Physician's services, Podiatric services, Naturopathic services, Vision care, Family planning services, Home health services, Certain chiropractic services, Health clinic services, Early Periodic Screening, Diagnosis and Treatment (EPSDT), Dental services, including orthodontia services, Maternity clinic services, Ambulatory surgical center facility services, Emergency hospital services, Hearing aids and certain hearing aid services, Mental health services, Nursing facility services, Psychiatric hospital services, Some home care services, Prescribed drugs, Medical transportation, Durable medical equipment, Home and community-based services, School-based child health care, Midwives, and Nurse practitioners, soon to be authorized as providers (CMS, 2010).

General Eligibility Issues and Concerns

Criticism of the Medicaid eligibility criteria includes the suggestion that it is unavailable to many individuals who genuinely do not have the means to pay for their necessary medical expenses. That is because its means and asset criteria are set so low that individuals who are genuinely in need must first divest themselves of their only income and assets in order to fall below the poverty level for the purposes of program eligibility. While limiting eligibility to those genuinely in need is a perfectly appropriate interest, the eligibility criteria for Medicaid are so low that they unnecessarily exclude many people for whom a very strong argument could be made to support their inclusion without requiring them to spend down their only assets first.

Stigmatization and Fairness Issues

Certainly, the Medicaid program has a legitimate interest and justification for ensuring that its resources are only spent on needy individuals. However, the extremely low maximum allowable income and asset limits present a tremendous hardship for many individuals who are, without a doubt, in legitimate need of services by any reasonable standard. The problem affects the elderly particularly harshly in connection with the need for long-term care in nursing homes necessitated by long-term untreatable illnesses such as Alzheimer's disease. With the average cost of nursing home care amounting to $5,000 or $6,000 per month (and much more in many states), many people who are hardly wealthy or even financially comfortable cannot possibly afford those services without assistance. Under Medicaid eligibility rules, an elderly couple whose combined income is barely above the minimum cost of long-term nursing home care is ineligible for Medicaid coverage unless they reduce their income and "spend down" their financial assets first.

These requirements are particularly unfair to spouses of patients who require Medicaid to pay for nursing home care because they limit the income of the spouse who is not even a program beneficiary. Meanwhile, the income maximums are so low (approximately $6,000 annually for program beneficiaries), that they inevitably result in unwelcome changes and stigmatization because they require middle class and upper middle class families to spend down and reduce their income to below the federal poverty level just to qualify for coverage. Unfortunately, those who are in the middle income realm have no other alternative since paying directly for the cost of nursing homes can absorb the bulk of their entire annual income and wipeout long-term savings very quickly.