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. Additional resources on Medicaid are available here. Also see Facts & Statistics for eligibility and program rules by state.
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.
To qualify for Medicaid, children must meet certain eligibility rules. These include:
|Medicaid programs must cover children under age 19 up to 133 percent of the federal poverty level (FPL).|
|States must cover children up to 18 years of age. States have the option to cover 19 and 20 year olds.|
|Children do not have to be uninsured to obtain Medicaid coverage but can use Medicaid as a “wrap around” to fill gaps in private insurance coverage.|
|Medicaid covers citizens and certain legal immigrants, most at state option.|
|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.|
|States have some discretion in requiring families to provide documentation of some eligibility requirements. These requirements have changed, however, as a result of health reform, which requires a move to electronic verification as able.|
Parents and Adults
|States must provide coverage to pregnant women with family incomes below 133 percent of FPL and parents with incomes below states’ July 1996 welfare eligibility levels. Coverage for adults below 133 percent FPL is optional for states under the new health law as described below.|
The federal government matches state spending on Medicaid on an open-ended basis to help states respond to the health care needs of their residents. The federal matching rate can range from 50 percent to 74 percent, depending on a state’s per capita income. States with higher per capita incomes have a lower federal matching rate.
Initially, the federal government will finance the full cost of covering newly-eligible adult Medicaid beneficiaries under the Affordable Care Act (see below) through 2016. The reimbursement rate will drop to 95 percent in 2017 and then to 90 percent in 2020 and beyond. Through the 2009 reauthorization of CHIP (CHIPRA), states have also received performance bonuses for successful efforts to make it easier for families to enroll and renew Medicaid coverage and reaching more eligible but uninsured children. Between 2009 and 2013, 27 states received more than $1 billion in CHIPRA bonus payments for successfully enrolling eligible children in Medicaid. The CHIPRA performance bonus provision expired in 2013.
States must provide children with a comprehensive benefits package, known as Early, Periodic, Screening, Diagnosis, and Treatment (EPSDT); 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.
Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) is the cornerstone of social policy to optimize child development for millions of poor children in the U.S. ESPDT is required under Medicaid law for children and young adults up to age 21. 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 in Medicaid’s EPSDT program 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, as indicated by the chart below.
States may not impose cost sharing for many children enrolled in Medicaid, some exceptions. More flexibility exists to charge premiums and co-payments to children at higher income levels. States cannot count money raised through premiums or cost sharing as state dollars for the purposes of meeting the federal matching requirements.
Research has shown that premiums in Medicaid and CHIP depress enrollment because of the financial burden they impose on families, potentially increasing the number of uninsured children.
The Affordable Care Act’s (ACA) Medicaid Expansion for Adults
Many adults—particularly those who are not parents, disabled, pregnant or elderly—have historically been excluded from Medicaid. Under the ACA, Medicaid eligibility would cover all adults to a national minimum of 133 percent FPL. Federal law and regulations set guidelines for how states operate their Medicaid and CHIP programs.
In June 2012, the Supreme Court ruled that the Affordable Care Act was constitutional with one exception – HHS’ authority to enforce the Act’s mandatory expansion of Medicaid coverage benefits. This feature of the Act extends Medicaid coverage to adults with incomes less than 133 percent of the FPL, equivalent to $15,521 for a single person or $26,321 for a three-person family in 2014.
States now have a choice as to whether to extend Medicaid coverage to these low-income adults. Twenty-four states currently do not offer Medicaid coverage to low-income adults ages 19 through 64, including millions of parents. Increasing coverage among parents is expected to improve their own health status while promoting the well-being of their children and protecting the financial security of their families. Uninsured parents have more difficulty accessing needed care, potentially compromising their ability to work, support their families, and care for their children
According to the Urban Institute, the 24 states not expanding Medicaid are leaving 6.7 million people uninsured in 2016 and $423.6 billion on the table in federal Medicaid funds from 2013-2022.