Medicaid Financial Eligibility in Pathways Based on Old Age or Disability in 2022: Findings from a 50-State Survey

Medicaid is an important source of health and long-term care coverage for seniors and people with disabilities. As of 2019, there were 8.5 million Medicaid enrollees ages 65 or older and another 10.0 million enrollees for whom eligibility is based on disability. Other people with disabilities qualify for Medicaid solely based on their low income. The Medicaid pathways in which eligibility is based on old age or disability are known as “non-MAGI” pathways because they do not use the Modified Adjusted Gross Income (MAGI) financial methodology that applies to pathways for pregnant people, parents, and children with low incomes. In addition to considering old age/disability status and income, many non-MAGI pathways also have asset limits. The fact that most non-MAGI pathways are optional results in substantial state variation.

The non-MAGI pathways include people receiving Supplemental Security Income (SSI) benefits, which all states that choose to participate in Medicaid must cover, and an array of additional groups that can be covered at state option (Figure 1 and Appendix Table 1). In addition to SSI enrollees, the main non-MAGI pathways to full Medicaid eligibility include state options to expand coverage to working people with disabilities; Katie Beckett children with significant disabilities living at home; medically needy seniors and people with disabilities who “spend down” by deducting incurred medical expenses from their income; seniors and people with disabilities up to 100 percent of the federal poverty level (FPL, $1,133/month for an individual in 2022); the Family Opportunity Act buy-in for children with significant disabilities; and Section 1915 (i) which allows states to provide an independent eligibility pathway for people with functional needs that are less than an institutional level of care. Each group has different rules about income and assets, making eligibility complex. The Appendix provides detailed information about each of these pathways as well as pathways available to people who need LTSS. Some Medicaid enrollees also may have Medicare as their primary source of coverage, but there is no pathway to full Medicaid eligibility dedicated to Medicare enrollees.

This issue brief presents state-level data on Medicaid financial eligibility criteria and adoption of the major non-MAGI pathways as of July 2022. It includes mandatory and optional pathways to full Medicaid eligibility as well as state options to expand Medicaid financial eligibility for people who need long-term services and supports (LTSS) in nursing homes or other institutions or in the community. It also highlights state actions to expand non-MAGI financial eligibility that have been adopted and take effect after July 2022. The data were collected from March through May 2022 in KFF’s survey of Medicaid state eligibility officials. Overall, 50 states and the District of Columbia responded to the survey, though response rates to specific questions varied. Responses were supplemented with publicly available information where available. The Appendix tables contain detailed state-level data. A related brief presents a snapshot of non-MAGI enrollment during the COVID-19 public health emergency (PHE) and anticipated changes after the PHE ends as well as key state enrollment and renewal policies as of July 2022 and state plans for resuming normal eligibility and enrollment operations after the PHE ends.

Medicaid Eligibility Based on Old Age or Disability

SSI enrollees are the only non-MAGI pathway that states must cover in their Medicaid programs. Not all people with disabilities qualify for SSI due to the program’s low income and asset limits and stringent definition of disability. The SSI federal benefit rate is equivalent to 74% FPL ($841/month for an individual and $1,261/month for a couple in 2022), and assets are limited to $2,000 for an individual and $3,000 for a couple. (Appendix Table 2).

Among the optional non-MAGI pathways, nearly all states (49 of 51) adopt the buy-in for working people with disabilities (Figure 2 and Appendix Table 3). The median income limit for this pathway is 250% FPL ($2,832/month for an individual in 2022), and the median asset limit is $10,000 for an individual. Two states (MA, WA) cover working people with disabilities without an income or asset limit. One other state (MN) does not apply an income limit, and five other states (AZ, AR, CO, DC, WY) do not apply an asset limit. Additionally, 12 states have income limits above 250% FPL, ranging from 275% FPL in Delaware to 552% FPL in Connecticut, and a dozen states have asset limits above $10,000, ranging from $12,000 in Iowa to $25,000 in Illinois. Medicaid is an important source of coverage for services that support the ability of people with disabilities to work, such as personal care, prescription drugs, and assistive technology. Eliminating or increasing income and asset limits enables people with disabilities to retain access to these services while also accepting pay raises as they advance in their careers and accruing savings for retirement.

Forty-four states adopt the Katie Beckett state plan option to cover children with significant disabilities living in the community or provide coverage through a comparable waiver (Figure 3 and Appendix Table 1). Eighteen of these states adopt the Katie Beckett state plan option, 22 states offer a waiver that covers a comparable population, and four states cover some children through the state plan option and others through a waiver. Waivers allow states to restrict coverage compared to what is available through the state plan option, such as by capping enrollment.

More than three in five states (34 of 51) adopt the medically needy pathway (Figure 4 and Appendix Table 4). Two of these states (TN, TX) offer medically needy coverage only for pregnant people and children and do not extend this coverage to seniors and people with disabilities. The median income limit (after deducting incurred medical expenses) medically needy seniors and people with disabilities is tied to cash assistance limits and is less than 50% FPL,¹ and the median asset limit is $2,000 for an individual. As of June 2022, five states cover medically needy seniors and people with disabilities up to or above 100% FPL (DC, IL, UT, VT, WI). A dozen states have medically needy asset limits above the SSI limit, ranging from $2,400 in PA to $16,800 in NY. Over 80% of the states that cover medically needy seniors and people with disabilities (27 of 32) opt to include nursing home services in the benefit package offered to these enrollees, making this pathway another means of accessing long-term institutional care.

Less than half of states (22 of 51) opt to expand coverage for seniors and people with disabilities beyond federal SSI limits, up to the federal poverty level (Figure 5 and Appendix Table 2). Nearly all states electing this pathway adopt the federal maximum of 100% FPL. Notably, California is the first state to increase the income limit in this pathway to 138% FPL (($1,563 per month) for an individual in 2022, by using income disregards, effective December 2020), at the same level as ACA expansion adults. Most states apply the SSI asset limit of $2,000 for an individual. As of June 2022, AZ has no asset limit for this pathway, and 11 other states set the asset limit above the SSI level, ranging from $3000 in MN to $16,800 in NY.

Eight states adopt the Family Opportunity Act (FOA) state plan option to provide buy-in coverage to children with significant disabilities or provide comparable coverage through a waiver (Appendix Table 1). Four of these states elect the state plan option, three offer a waiver, and one offers both the state plan option and a waiver. Three states (CO, IA, KY) provide coverage up to the federal maximum of 300% FPL, while four states (LA, NJ, ND, TX) adopt a lower income limit for this pathway. Notably, unlike Katie Beckett waivers which typically involve enrollment caps or other limitations compared to coverage available under the state plan option, Massachusetts’ FOA-like waiver does not have an enrollment cap or an income limit and therefore expands coverage beyond what the state plan option would provide.² Most (5 of 8) states with the FOA option or a comparable waiver choose to charge premiums. The exceptions are Iowa, Kentucky, and New Jersey. Colorado charges premiums of $70 per month beginning at 134% FPL, Texas charges $50 per month beginning at 151% FPL, North Dakota charges 5% of gross family income beginning at 200% FPL, and Louisiana charges $15 per month beginning at 201% FPL. In Massachusetts’ FOA-like waiver, sliding scale premiums apply to children in families with income over 150% FPL, beginning at $12 per month.

Five states adopt the Section 1915 (i) state plan option to expand eligibility to people with functional needs that are less than an institutional level of care (Appendix Table 5).³ Indiana was the first state to use Section 1915 (i) as an independent pathway to Medicaid eligibility. It began doing so in 2014 for adults with behavioral health conditions up to 150% FPL ($1,699 per month for an individual in 2022), and in 2019, it adopted another Section 1915 (i) eligibility pathway for adults with certain mental health diagnoses up to 150% FPL.⁴ Since 2017, Ohio has used Section 1915 (i) to provide Medicaid eligibility to adults with certain mental health or physical disabilities up to 150% FPL.⁵ In 2019, Maryland began using Section 1915 (i) to provide Medicaid eligibility to children with mental illness up to 150% FPL.⁶ Beginning in 2021, Alabama uses Section 1915 (i) to provide Medicaid eligibility to adults with intellectual disabilities up to 150% FPL,⁷ and Connecticut uses Section 1915 (i) to provide Medicaid eligibility for adults with complex health conditions and risk factors who have been homeless and would otherwise be eligible for an HCBS waiver, up to 300% SSI ($2,523 per month for an individual in 2022).⁸ There is no asset limit for Section 1915 (i) eligibility, similar to the MAGI pathways.

States Expanding Financial Eligibility after July 2022

At least five states have new financial eligibility expansions in non-MAGI pathways that take effect after July 2022. These changes include the following:

• As of January 2023, New York will join California (noted above) as the second state to increase the income limit for seniors and people with disabilities to 138% FPL, the same limit as for MAGI populations. New York’s non-MAGI asset limits also will increase by about 50% as of January 2023 (from $16,800 to $28,134 for an individual and from $24,600 to $37,908 for a couple).
• California is eliminating asset limits in its pathway for seniors and people with disabilities up to 138% FPL (joining AZ) as well as its working people with disabilities buy-in pathway (joining AZ, AR, CO, DE, DC, MA, WA, WY), placing access to coverage on the same financial terms as MAGI pathways which do not have an asset limit. This change will be phased in by increasing the asset limit to $130,000 for an individual, and an additional $65,000 for each additional family member up to 10 people, as of July 1, 2022. The asset limit will be entirely eliminated as of January 1, 2024.

Three other states are adopting changes that take effect July 1, 2022:

• Connecticut is increasing its income limit for seniors and people with disabilities up to about 100% FPL.⁹
• Maryland is eliminating the income limit for the working people with disabilities buy-in. With this change, Maryland is establishing premiums up to 7.5% of monthly income for those with income over 600% FPL.
• Minnesota is increasing its income limit for medically needy seniors and people with disabilities to 100% FPL.

State Options to Expand Medicaid LTSS Eligibility

Most states adopt the special income rule to expand financial eligibility for people who need Medicaid LTSS up to 300% SSI ($2,523 per month for an individual in 2022, Appendix Table 6). Specifically, 40 states adopt the special income rule for institutional LTSS, while 41 states do so for HCBS. Two states (MA, WV) adopt the special income rule only for HCBS, while one state (NH) does so only for institutional LTSS. All states electing the special income rule set financial eligibility at 300% SSI, except Delaware, which uses 250% SSI. Most states electing the special income rule apply the SSI asset limit of $2,000. A minority of states adopt an asset limit above the SSI level, ranging from $2,500 in Maryland and New Hampshire to $4,000 in the District of Columbia, Mississippi, and Rhode Island.  Additionally, Pennsylvania applies a $6,000 disregard to the $2,000 asset limit, making the effective asset limit $8,000.

Most states allow individuals to establish eligibility for Medicaid LTSS by using certain types of trusts (Appendix Table 7). Specifically, 46 states allow individuals with certain types of trusts to qualify for institutional LTSS, while 47 states do so for HCBS waiver eligibility. North Dakota allows trusts only for institutional LTSS eligibility, while the District of Columbia and New York do so only for HCBS eligibility.

Nearly three-quarters of states (37 of 51) limit home equity to the federal minimum of $636,000 for individuals seeking Medicaid LTSS eligibility (Appendix Table 7). Eleven other states adopt the federal maximum of $955,000, while two states use $750,000 (ID, WI). California is the only state that does not place a limit on home equity for an individual’s principal residence. Effective July 9, 2022, Washington increased its home equity limit from the federal minimum of $636,000 to the federal maximum of $955,000.

Medicaid LTSS Post-Eligibility Treatment of Income

The median personal needs allowance for a Medicaid enrollee residing in an institution is $50 per month (Appendix Table 8). This amount ranges from $30/month, the federal minimum, in three states (AL, NC, SC) to $200/month in Alaska.

The median maintenance needs allowance for a Medicaid enrollee receiving HCBS is $2,523 per month (Appendix Table 8). This amount ranges from $72/month in Washington, to $2,523 (the amount reported by most states). Nine states reported amounts that vary by waiver program, while six states do not have a maintenance needs allowance.

Spousal Impoverishment Rules

The median monthly community spouse needs allowance is $3,435 (Appendix Table 8). Thirteen states adopt the federal minimum ($2,178), while 21 states adopt the federal maximum ($3,435).

The median community spouse asset limit is $137,400 (Appendix Table 8). Two states adopt the federal minimum ($27,480), while 28 states adopt the federal maximum ($137,400).

State Plans to Retain Emergency Authorities Post-PHE

Though many states adopted policies to expand or streamline Medicaid eligibility and enrollment for non-MAGI groups using emergency authorities, very few reported plans to continue these policies after the PHE ends. A variety of Medicaid emergency authorities are available to states during the COVID-19 public health emergency (PHE), and states have used these authorities to adopt temporary policy changes that expand Medicaid financial eligibility in non-MAGI pathways, such as expanding income and/or asset limits and reducing or eliminating premiums. States have the option to continue many policies adopted under when they return to normal operations, and CMS guidance encourages states to consider retaining policy changes that expand access to HCBS.

The only policy change adopted using emergency authorities that a few states are planning to or may retain after the PHE ends is reducing or eliminating premiums. These include three states (CA, IL, NH) out of the 20 that reported adopting this policy. California waived premiums during the PHE and passed legislation to eliminate premiums for the working people with disabilities pathway effective July 1, 2022. New Hampshire also eliminated premiums during the PHE, pursuant to a governor’s emergency order, and has legislation pending that would continue this policy change.

Looking Ahead

Medicaid remains an essential, and often the sole, source of medical and LTSS coverage for many seniors and nonelderly adults and children with disabilities. Aside from the core group of SSI enrollees, pathways to full Medicaid eligibility based on old age or disability are provided at state option, which results in substantial variation among states. Additionally, the income limits associated with the non-MAGI pathways vary among states but generally remain low. However, a notable minority of states are adopting non-MAGI financial eligibility expansions, including some that adopt the same financial eligibility limits that apply to MAGI populations (138% FPL and no asset test). States’ choices about which pathways to cover are an important baseline from which to monitor seniors and people with disabilities’ access to coverage, including LTSS.