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About Medicaid for Children and Families

Introduction

Enacted in 1965 under Title XIX of the Social Security Act, Medicaid was initially created to provide medical assistance to individuals and families receiving cash assistance. Today, Medicaid provides health coverage for millions of individuals who have no ties to cash assistance, including children in low-income families who lack access to private health insurance and on a smaller scale, their parents.

This primer provides a very general overview of the program rules relating to children. Links to more detailed information are provided in the Resources section. Also download a guide on Medicaid terms.

Structure

States administer Medicaid subject to oversight by the federal government. Federal law outlines broad requirements that all state Medicaid programs must fulfill. However, states have wide discretion regarding program dimensions such as eligibility and service delivery systems. All children and parents who apply for and qualify for Medicaid are guaranteed coverage. A state cannot cap enrollment or create a waiting list in Medicaid.

Eligibility

To qualify for Medicaid, children must meet certain eligibility rules. These include:

Income	State Medicaid programs must cover certain “mandatory” populations, including children under age 6 with family incomes below 133% of the federal poverty level (FPL) and children ages 6-18 with family incomes below 100% of the FPL (see federal poverty guidelines). States, however, have broad flexibility to expand Medicaid eligibility beyond the federal minimum standards. States can also establish an asset or resource requirement for children, but they have the option to eliminate it.
Age	States must cover children up to 18 years of age. States have the option to cover 19 and 20 year olds.
Insurance Status	Children generally do not have to be uninsured to obtain Medicaid coverage. Any private insurance an individual has is treated as a third party payer and is liable for the cost of care provided to the individual under the terms of the private plan. Medicaid "wraps around" the private insurance, providing care that otherwise would be uncovered and keeping cost sharing charges to the level allowed in Medicaid.
Citizenship/ Immigration Status	Medicaid covers citizens and certain legal immigrants. Federal funds may not be used to cover undocumented children (except for emergency or pregnancy-related services) or lawfully present immigrant children who have not been in the country for five years (with exceptions for refugees). Some states use state funding to provide coverage to legal immigrant children, no matter when they entered the country, and to children regardless of immigration status.
Renewal	Federal law generally requires states to review eligibility circumstances at least every 12 months. States can either review eligibility when financial circumstances change or they can enroll children for periods of up to 12 months, regardless of changes in income, through a continuous eligibility option.
Documentation	States have discretion in requiring families to provide documentation of income or other eligibility requirements. The only eligibility criteria that federal law requires families to document are citizenship and immigration status. States, however, are responsible for checking the accuracy of information through administrative means if it is not documented by families.
Parents and Adults	States must provide coverage to pregnant women with family incomes below 133% of the FPL and parents with incomes below states’ July 1996 welfare eligibility levels (often below 50% of the FPL). States have discretion to provide coverage to these groups above the minimums. Adults who are not disabled, pregnant, or elderly, and have no minor children generally cannot qualify for Medicaid.

See the CMS Directive page which provides details on new restrictions placed on states increasing coverage to children in families with income above 250% of the federal poverty level.

Financing

The federal government matches state spending on Medicaid on an open-ended basis. The federal matching rate can range from 50 percent to 83 percent, depending on a state’s per capita income. States with higher per capita incomes have a lower federal matching rate. See federal matching rates.

Benefits

States must provide children with a comprehensive benefit package, although for other populations they have substantial flexibility to design their benefit packages subject to certain minimum requirements. For adults, states must provide “mandatory services,” which include hospital care and physician services. States also have the option to cover additional services, such as prescription drugs. In all cases the scope of the services covered must be sufficient to generally meet the needs of enrollees.

Medicaid guarantees comprehensive services for children through Early and Periodic Screening, Diagnosis, and Treatment (EPSDT). EPSDT is intended to assure a uniform federal benefit package for children, covering screening and early intervention services to promote children’s healthy development, as well as vision, dental, and hearing services, and the diagnostic and treatment services that a child may need. The scope of benefits and the standards for accessing benefits often exceeds those that exist in the private insurance market. Nonetheless, most children in Medicaid do not require extensive services; children are by far the least expensive group covered by the program, costing, on average, $1,150 per child, compared to $1,500 per adult, $7,800 per disabled enrollee, and $6,580 per elderly enrollee. In addition, although children and their parents make up the majority of the Medicaid population, they account for less than a third of Medicaid spending.  (Congressional Budget Office, March 2008).


For more information see: Benefits That Make A Difference: Comparing Medicaid and the State Children's Health Insurance Program Federal Benefit Standards, October 2005.

Cost Sharing

States may impose cost sharing for some children enrolled in Medicaid, within federal guidelines. Except for “mandatory children” a state may impose premiums for children, with some limitations based on family income. Co-payments are also allowed, with some restrictions for children with family incomes up to 150% of the federal poverty level. States cannot count money raised through premiums or cost sharing as state dollars for the purposes of meeting the federal matching requirements.

For more information see: The Deficit Reduction Act: A Review of Key Medicaid Provisions Affecting Children and Families.

Research has shown that premiums in Medicaid and SCHIP depress enrollment because of the financial burden they impose on families, potentially increasing the number of uninsured children. For more information see:

• Increasing Premiums and Cost Sharing in Medicaid and SCHIP: Recent State Experiences, Kaiser Commission on Medicaid and the Uninsured (May 2005).
• The Effect of Increased Cost Sharing in Medicaid: A Summary of Research Findings, Center on Budget and Policy Priorities (July 7, 2005).

Resources

 

Additional resources on Medicaid are available in the Research section. Also see Facts & Statistics for eligibility and program rules by state.

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