Medicaid and the elderly.

De Nardi, Mariacristina ; French, Eric ; Jones, John Bailey 等

Introduction and summary

Expenditures on medical care by Medicaid and Medicare, America's two main public health insurance programs, are large and growing rapidly. Although Medicare is the main provider of medical care for the elderly and disabled, it does not cover all medical costs. In particular, it covers only a limited amount of long-term care expenses (for example, nursing home expenses). The principal public provider of long-term care is Medicaid, a means-tested program for the impoverished. Medicaid now assists 70 percent of nursing home residents (1) and helps the elderly poor pay for other medical services as well. In 2009, Medicaid spent over $75 billion on 5.3 million elderly beneficiaries. (2)

An important feature of Medicaid is that it provides insurance against catastrophic medical expenses by providing a minimum floor of consumption for households. Although Medicaid is available only to "poor" households, middle-income households with high medical expenses usually qualify for assistance also. Given the ongoing growth in medical expenditures, Medicaid coverage in old age is thus becoming as much of a program for the middle class as for the poor (Brown and Finkelstein, 2008).

Another important feature of Medicaid is that it is asset and income tested; in contrast, almost all seniors qualify for Medicare. This implies that Medicaid affects households' saving decisions, not only by reducing the level and risk of their medical expenses, but also by encouraging them to consume their wealth and income more quickly in order to qualify for aid (Hubbard, Skinner, and Zeldes, 1995). Although Medicaid covers poor people of all ages, this article focuses on Medicaid's coverage for the elderly.

Many recent proposals for reforming Medicaid could have significant effects on the financial burdens of the elderly, on the medical expense risk that they face, and on their saving decisions. Moreover, Medicaid is a large and growing component of the federal budget. The share of total federal, state, and local government expenditures absorbed by Medicaid rose from less than 2 percent in 1970 to almost 7 percent in 2009, (3) and it is expected to increase even more in the future. Controlling the cost of Medicaid is an important component in correcting the federal government's longterm fiscal imbalance.

In this article, we describe the Medicaid rules for the elderly and discuss their economic implications. We focus on the rules for single (that is, never married, divorced, or widowed) individuals to avoid the additional complications involved in considering couples. The main difference between singles and couples is that the income and asset limits for Medicaid eligibility are higher for couples.

Medicaid is administered jointly by the federal and state governments, but each state has significant flexibility on the details of implementation; hence, there is large variation across states in income and asset eligibility and in coverage. This variation may well provide elderly people in different states with different saving incentives, and it might even encourage them to move from one state to another. We focus on finding the features common to all states, and identifying the most salient state-level differences.

Overview of the Medicaid program

Medicaid and Medicare were created by the Social Security Act Amendments of 1965. Although the program was initially intended to cover the population on welfare (for example, recipients of Aid to Families with Dependent Children, AFDC, or Supplemental Security Income, SSI), over time legislation has expanded coverage to non-welfare recipients overwhelmed by their medical costs. Box 1 provides a chronology of important Medicaid-related legislation for the elderly. Two key themes emerge from box 1. First, Medicaid has increased the number of services provided over time. Second, Medicaid has attempted to limit the abuse of the system by using increasingly stringent and comprehensive asset tests to determine eligibility.

For our purposes, it is useful to divide elderly Medicaid recipients into three groups: 1) the categorically needy, whose low income and assets qualify them for Medicaid. This group includes those who qualify for SSI, as well as "dual eligibles," whose Medicare deductibles and co-pays are covered by Medicaid; 2) the institutionalized medically needy, who qualify for Medicaid because their financial resources do not cover their nursing home expenses; and 3) the noninstitutionalized medically needy, who qualify for Medicaid because their financial resources cannot cover catastrophic noninstitutional medical expenses. Each group faces a different set of asset and income tests. Figure 1 presents data on Medicaid enrollment and expenditures. In 2008, Medicaid spent roughly $75 billion (4) on 5.3 million beneficiaries aged 65 and older (data from the Center for Medicare and Medicaid Services). These data provide information on the number of people and expenditures in the different groups. Of those aged 65 and older, SSI recipients account for 40 percent of all beneficiaries and 27 percent of all Medicaid expenditures. "Dual eligibles" represent 29 percent of all beneficiaries and 9 percent of all Medicaid expenditures and are the second-largest group of Medicaid beneficiaries. "Medically needy" individuals represent 10 percent of all beneficiaries and 23 percent of all expenditures. "Others," a category largely made up of those with catastrophic medical expenses who are not technically "medically needy," represent 29 percent of all beneficiaries and 41 percent of all expenses. Although the Center for Medicare and Medicaid Services technically refers to "others" as categorically needy, a large share of this group are what we will refer to as medically needy, because their circumstances (catastrophic medical expenses) are more like those of the strictly medically needy than those of the other categorically needy groups.

The categorically needy: SSI beneficiaries

In most states, SSI recipients qualify for Medicaid as categorically needy recipients. Under the Social Security Act Amendments establishing SSI in 1972, states were mandated to provide elderly SSI recipients with Medicaid benefits. The law exempted states that in 1972 were using Medicaid eligibility criteria stricter than the newly enacted SSI criteria (Gruber, 2000). The 11 states that had the more restrictive rules for Medicaid are referred to as 209(b) states (Gardner and Gilleskie, 2009).

SSI pays monthly benefits to people with limited incomes and wealth who are disabled, blind, or aged 65 years and older. There is a (maximum) monthly SSI benefit that is paid for by the federal government. States can supplement this benefit. Figure 2 plots the federally provided monthly SSI benefit from 1975 to 2010. Table 1 shows the state-level supplements for all states that have offered a supplement over the sample period. In contrast to the federal benefit, which in real terms has been constant, the state supplements have varied greatly over time as well as across states.

To qualify for SSI, individuals must pass both an income test and an asset test. In non-209(b) states, the income test is based on the combined federal and state maximum monthly benefit. Individuals with no income receive this maximum monthly benefit if they pass the asset test. Otherwise, each individual's "countable income" is deducted from the maximum to produce a net benefit. In most states, individuals receiving any benefit, no matter how small, are categorically eligible for Medicaid. This implies that the implicit marginal tax rate for the threshold dollar of countable income--the incremental dollar that pushes the individual over the income threshold--is extremely high, because that last dollar of income eliminates the individual's Medicaid coverage.

BOX 1
Medicaid time line

Social Security Act Amendments of 1965

* Medicaid program enacted.

* Medicare program for the elderly
also started.

Social Security Act Amendments of 1972

* Enacted Supplemental
Security Income (SSI) program for elderly and disabled, replacing
state-level programs that served the elderly and disabled.

* Required states to extend Medicaid to SSI recipients or to elderly
and disabled meeting that state's 1972 requirements.

Omnibus Reconciliation Act of 1981

* Section 1915(c) home- and community-based waiver program launched.
This program allows people with serious health problems to obtain
home-based care instead of nursing home care.

Tax Equity and Fiscal Responsibility Act of 1982

* Allowed states to make institutionalized individuals pay for
Medicaid services if they owned a home and did not plan to return to
that home.

Omnibus Reconciliation Act of 1986

* Allowed states to pay for Medicare premiums for Medicare
beneficiaries with incomes below the poverty level (qualified
Medicare beneficiaries, QMBs).

Omnibus Reconciliation Act of 1990

* Allowed states to cover Medicare premiums for Medicare
beneficiaries with incomes between 100 and 120 percent of the
poverty level (specified low income beneficiaries, SLMBs).

Omnibus Reconciliation Act of 1993

* Tightened prohibitions against transfer of assets in order to
qualify for Medicaid nursing home coverage. Instituted a three-year
look-back period. Required recovery of nursing home expenses from
beneficiary estates.

Deficit Reduction Act of 2005

* Increased cost sharing (for example, increased copayments for
certain drugs) and reduced certain benefits.

* Extended the look-back period for assessing transfers from three
to five years.

* Imposed an upper bound on the amount of home equity excluded from
asset tests.

Sources: For 1965-93, Kaiser Commission on Medicaid and the
Uninsured (2002); for 2005, Kaiser Commission on Medicaid and the
Uninsured (2006).

The conversion of actual income into countable income depends on whether the income is earned or unearned. Earned income consists of financial or inkind income from wages, self-employment (net), and sheltered workshops (5) Each dollar of earned income in excess of $65 counts as 50 cents of countable income. Unearned income includes Social Security benefits, worker or veteran compensation, annuities, rent, and interest from assets. Each dollar of unearned income counts as one dollar of countable income. In addition, the first $20 of income, earned or unearned, is disregarded; the amount varies slightly across states. By way of example, in 2010 the maximum federal benefit for single, aged SSI recipients was $674. To qualify for SSI, an individual must have had less than $674 x 2 + $65 + $20 = $1,433 of earned income or $674 + $20 = $694 in unearned income. Finally, several types of income, most notably food stamps, are excluded from the income test. (6)

The income standards used by the 209(b) states do not have to follow this formula, although some do. The law only requires that the states impose criteria no stricter than those in effect in 1972 (House Ways and Means Committee, 2004).

[FIGURE 2 OMITTED]

The asset test is more straightforward. Individuals with assets at or below the state-specific threshold qualify. Individuals with assets above the threshold do not qualify. This implies that the implicit marginal tax rate for the threshold dollar of assets is extremely high, as that last dollar of assets eliminates the individual's SSI and Medicaid benefits. Such a penalty provides a strong disincentive to saving and encourages people to spend down their assets until they fall below the threshold.

The asset threshold varies across states, with a modal value of $2,000. It is also the case, however, that many important categories of wealth are exempt, including one's principal residence. Box 2 lists assets that are excluded for elderly individuals.

Table 2 shows the current income and asset thresholds for each state. The 209(b) states appear at the bottom of the table. The only common factor across 209(b) states is that individuals have to apply for Medicaid separately from their SSI benefit application. Although some of the 209(b) states impose tighter income or asset restrictions for Medicaid, SSI eligibility implies Medicaid eligibility in most of these states.

The categorically needy: Dual eligibles

"Dual eligibles" are individuals who are enrolled in Medicaid and have Medicaid pay their Medicare premiums. Medicare covers basic health services, including physicians and hospital care, for the elderly. Medicare Part B, which covers outpatient services such as doctor visits, costs $96.40 per month. As a dual eligible, an aged individual can get Medicaid to cover Medicare premiums and services that Medicare does not cover. Depending on their income, dual eligibles can qualify as Qualified Medicare Beneficiaries (QMBs), Specified Low-Income Medicare Beneficiaries (SLMBs), or Qualified Individuals (QIs)-QMBs are assisted with Medicare Part B premiums and co-payments. In most states, the QMB income limit is 100 percent of the federal poverty level ($903 for single elderly people), and the asset limit is $6,600. However, nine states (including New York) do not impose any asset limits, and a subset of these states also provide more generous income limits and disregard amounts. SLMBs are elderly individuals with income between 100 percent and 120 percent of the federal poverty level. SLMBs are assisted with premiums only. QIs are individuals with income between 120 percent and 135 percent of the poverty level who, depending on funding availability, may receive assistance with Medicare Part B premiums (Kaiser Commission on Medicaid and the Uninsured, 2010a and 2010b). Table 3 shows the asset and income limits for QMBs, SLMBs, and QIs.

The medically needy

Individuals with income or assets above the categorically needy limits may nonetheless not have enough resources to cover their medical expenses. Under the medically needy provisions, Medicaid pays part of these expenses. The implementation of medically needy coverage, however, varies greatly across states and types of medical care. The types of care covered under these arrangements include institutional (long-term) care, as well as home- and community-based service (HCBS) care.

As pointed out earlier, the term "medically needy" has both a loose and a strict definition. The loose definition we use refers to all programs for receiving Medicaid due to catastrophic medical expenses. However, in formal Medicaid language, the term "Medically Needy" refers to just one of several mechanisms for coping with unaffordable medical expenses. As a rule, we will use the lowercase term "medically needy" to refer to the loose definition, and the uppercase term "Medically Needy" to refer to the formal program.

BOX 2
Assets excluded from the SSI asset test

1. The home you live in and the land it is on, regardless of value.

2. Property that you use in trade (gas station, beauty parlor, etc.).

3. Personal property used for work (tools, equipment, etc.).

4. Household goods and personal effects.

5. Wedding and engagement rings.

6. Burial funds (up to $1,500).

7. Term life insurance policies (regardless of face value) and whole
life insurance policies (with face value up to $1,500).

8. One vehicle (regardless of value).

9. Retroactive SSI or social security benefits for up to nine months
after you receive them (includes payments received in installments).

10. Grants, scholarships, fellowships, or gifts set aside to pay
educational expenses for up to nine months after you receive them.

11. Some property may be partially excluded, such as the property used
to produce goods or services needed for daily life, and nonbusiness
property that produces income, such as rented land, real estate,
or equipment.

Source: Social Security Administration (200%).

Figure 3 presents a diagram of how individuals may qualify for medically needy coverage under the various provisions. In addition to having different mechanics, the provisions impose different asset and income thresholds. For example, Medicaid imposes more generous asset limits for noninstitutional care. We discuss these provisions below.

The institutionalized medically needy

We begin by looking at provisions for institutional (that is, nursing home) care. (7) If an institutionalized elderly individual's monthly income is within 300 percent of the SSI limit, then she qualifies for Medicaid (Gruber, 2000) in 39 states, plus the District of Columbia, through the expanded nursing home provision. Virtually all of the person's income will still be applied toward the cost of care, and the individual will get an allowance. If an institutionalized person's income is greater than 300 percent of the SSI limit, but still insufficient to cover her medical expenses, she may qualify for Medicaid through one of two mechanisms. The first option is to use the formal Medically Needy provision, which can be used for any sort of medical expense, to cover institutional care. The individual will have a "spend-down" period that lasts until her net income--income less medical expenses--falls below the Medically Needy threshold. After qualifying as medically needy, the person still has to direct most of her income to pay for her care. She can keep only a small amount as a personal allowance, while Medicaid uses the rest to keep the individual at the institution (Gruber, 2000).

The second mechanism for receiving institutional care is to use a Qualified Income or Miller trust. Income deposited in these trusts is excluded from the Medicaid tests. The individual deposits enough income in a trust to fall below the 300 percent limit and qualify for expanded nursing home coverage. Once the individual passes away, the state receives any money remaining in the trust, up to the amount that Medicaid has paid on the individual's behalf (8) (Weschler, 2005).

Of the 39 states offering enhanced nursing home coverage, 25 also offer Medically Needy coverage. The remaining 15 states are required by federal law to allow applicants to use Miller trusts. Four of the states that provide medically needy coverage permit Miller trusts as well (Stone, 2002).

Of the 11 states not offering expanded nursing home coverage, nine offer Medically Needy coverage. The difference between these states and the states offering expanded nursing home coverage is that individuals in these states are not automatically eligible for Medicaid nursing home care if their incomes are below 300 percent of the SSI level. However, given that most individuals in nursing homes incur medical expenses far greater than 300 percent of the SSI level, there is little practical difference in Medicaid eligibility across the different states. All individuals with incomes below 300 percent of the SSI level in either type of state will deplete all their resources and will be eligible for Medicaid nursing home care through the Medically Needy program. The remaining two states, Indiana and Missouri, lack both provisions. However, Indiana and Missouri are both 209(b) states. To reduce the hardships that SSI beneficiaries may face in 209(b) states, federal rules require these states to allow individuals to spend down to the states' income and asset limits for Medicaid. (9) The rules thus mandate that 209(b) states offer the equivalent of a Medically Needy program, even if the states do not formally offer the Medically Needy option (Carpenter, 2000). Four 209(b) states--Indiana, Missouri, Ohio, and Oklahoma--offer a spend-down provision in accordance with this mandate. With this provision in place, institutionalized individuals in every state have at least one way to qualify for Medicaid if they are destitute and institutionalized. (10)

[FIGURE 3 OMITTED]

Table 4 shows the provisions offered in each state and the associated income and asset limits. In most states, the Medically Needy income limits (income less medical expenses) are stricter than the income limits for the categorically needy.

Medicaid's ability to recover assets from the estate

The asset limits presented in table 4 are similar to the asset limits for the categorically needy presented in table 2. There are two key distinctions between the two sets of asset tests, both relating to their treatment of housing. First, the Medicaid asset test for the categorically needy excludes the individual's principal residence, whereas the Deficit Reduction Act of 2005 stipulates that the Medicaid asset test for the medically needy places limits on the amount of home equity that is excluded. Although there are limits on the amount of home equity that can be excluded, the second-to-last column of table 4 shows that these limits are quite generous. (11) Second, and more importantly, houses owned by institutionalized individuals who do not plan to return to that house no longer serve as principal residences. (12) Therefore, the home equity of that individual is no longer excluded from the asset test. More precisely, the U.S. Department of Health and Human Services (2005c, p. 2) states that an individual's house is included in the asset test when he "has no living spouse or dependents and moves into a nursing home or other medical institution on a permanent basis without the intent to return, transfers the home for less than fair market value, or dies." An essential part of the definition is "the intent to return" provision, designed to exempt individuals whose stays at the institution are temporary. In most states, the intent to return is based on the beliefs of the institutionalized individual, with no reference to the individual's underlying medical condition. Only the 209(b) states are allowed to use more objective criteria, such as a professional medical diagnosis or the duration of stay, to assess the likelihood that the individual might return to his home. A mechanism that is available to non-209(b) states is to restrict the institutionalized individual's income allowance so much that the individual can no longer cover property taxes and maintenance costs, forcing her to sell her home. However, individuals may be able to resist such "squeezes" by using reverse mortgages to fund taxes and maintenance (U.S. Department of Health and Human Services, 2005c).

Once an individual dies, his home ceases to be protected. The Omnibus Reconciliation Act of 1993 requires states to seek from beneficiary estates reimbursement for long-term care, both in-house and institutional, and services provided concurrently with long-term care. However, states cannot pursue homes occupied by the beneficiary's spouse or dependents (U.S. Department of Health and Human Services, 2005d). Furthermore, because the state may be one of many claimants to the estate, and given the general complexity of estate law--which in a few states explicitly protects estates from Medicaid claims--Medicaid collects relatively little money from estates. (13) In 2004, estate recoveries equaled 0.8 percent of Medicaid spending on nursing homes, with the most successful state, Oregon, recovering 5.8 percent of its nursing home expenditures (U.S. Department of Health and Human Services, 2005a). Table 5 provides information on asset recovery practices and outcomes.

One device states use to enhance their recovery prospects is to place liens on their beneficiaries' assets. The Tax Equity and Fiscal Responsibility Act (TERFA) of 1982 allows states to place liens on the homes of permanently institutionalized Medicaid beneficiaries. After the beneficiary dies, states may also place "post-death" liens on her estate (U.S. Department of Health and Human Services, 2005b).

TERFA liens can help states protect themselves from abuses of the "intent to return" provision. While the intent to return is generally based on the subjective opinion of the beneficiary himself, TERFA liens may be established on the basis of objective criteria (U.S. Department of Health and Human Services, 2005b). Table 6 (p. 30) summarizes the criteria states use.

TERFA liens also protect states if a beneficiary attempts to transfer the house to a third party (for example, a child) prior to applying for Medicaid. The Deficit Reduction Act of 2005 extended Medicaid's "look-back" period from the three years preceding application to five years. Transfers made during the look-back period are subject to Medicaid review. If the applicant is found to have made a net transfer, that is, sold some of his assets at prices below their fair market value, his eligibility will be delayed (ElderLawNet, Inc., 2011).

The degree to which elderly individuals transfer their assets in order to become eligible for Medicaid has been the subject of several studies. These studies find that the elderly transfer little if any of their money to their heirs for the purpose of making themselves eligible for Medicaid. Thus, extending the look-back period past five years or more aggressive pursuit of transferred assets is unlikely to defray much of Medicaid's expenses. Norton (1995) argues that elderly individuals are more likely to receive transfers in an attempt to avoid Medicaid. In contrast, Bassett (2007) finds that "the self-assessed probability of entering a nursing home is a significant determinant of making an asset transfer." Bassett estimates that in 1993 there were about $1 billion "Medicaid-induced" asset transfers, equaling about 3 percent of total Medicaid expenditures. Many of the people making the transfers, however, did not receive Medicaid long-term care benefits, implying a smaller final cost to Medicaid. Waidmann and Liu (2006) study asset transfers over the period 1995 to 2004. They conclude that "even the most aggressive pursuit of transferred assets would recover only about 1 percent of total Medicaid spending for long-term care." Reviewing the literature, O'Brien (2005) concludes that the evidence "do[es] not support the claim that asset transfers are widespread or costly to Medicaid." In summary, the evidence is mixed whether the elderly give or receive transfers to affect their Medicaid eligibility. However, there is a clear consensus that these transfers are small relative to the size of Medicaid transfers.

The noninstitutionalized medically needy

The structure of Medicaid coverage for noninstitutionalized medically needy individuals is similar to that for those in institutions. Individuals with specific needs, such as home health care, can qualify under provisions tailored to those needs. Individuals not qualifying under these limited provisions can qualify under the general medically needy provision, if their state offers it.

Individuals needing long-term care can often substitute home-based care for care at a nursing home or another institution. To promote the use of home-based care, states can utilize 1915(c) home- and community-based service care (HCBS) waivers, which give them additional flexibility in how they provide these services (Carpenter, 2000). Services that can be offered under an HCBS waiver range from traditional medical services, such as dental care and skilled nursing services, to nonmedical services, such as case management and environment modification.

In most states, the income test used for 1915(c) waivers is the same as the one used for expanded nursing home coverage, namely 300 percent of the SSI limit. Other states (for example, California) impose more stringent tests. As Table 4 shows, many states (including Arizona) allow the use of Miller trusts. As with the expanded nursing home program, beneficiaries are expected to direct their income toward the cost of their expenses. The income allowances, however, vary greatly across states (Walker and Accius, 2010).

The asset limits for 1915(c) applicants are the ones for the categorically needy (Stone, 2002). Housing is excluded from the asset test, but the Omnibus Reconciliation Act of 1993 requires states to pursue estates to recover the cost of long-term care. On the other hand, states do not have to pursue these costs if they decide it would not be cost-effective (U.S. Department of Health and Human Services, 2005d). Given the limited success of state cost recovery efforts in general, such efforts are unlikely to play a large role in the case at hand.

Some states limit access by requiring 1915(c) beneficiaries to exhibit difficulties in performing at least three "activities of daily living" (bathing, dressing, grooming, and so on); functional eligibility for nursing homes requires only two. Most states impose limits on how much they spend per year for home and community-based service care. Furthermore, states are free to choose how many applications to approve. They are also free to limit the number of waivers. (14) Many states have more individuals in need of waivers than open "slots," and thus operate waiting lists (Kaiser Commission on Medicaid and the Uninsured, 2009). Table 7 summarizes the 1915(c) HCBS waiver programs offered by each state.

In addition to utilizing 1915(c) waivers, states can provide HBCS services under two other provisions: the federally mandated home health benefit provided by all states; and the optional personal care benefit, which in 2006 was provided by 31 states. In 2006, the two programs incurred 34 percent of total HCBS expenditures and assisted 61 percent of the HCBS beneficiaries. Most states screened applicants to these programs with the income and asset tests for categorically needy recipients. There is variation in the financial eligibility limits states require to get this benefit. Some states keep it at the 300 percent level, but others restrict it further. Many states also provide a medically needy spend-down option (Kaiser Commission on Medicaid and the Uninsured, 2009).

The noninstitutionalized medically needy: Other pathways

For individuals unable to qualify under any of the preceding pathways, the Medically Needy provision provides an important "last chance" opportunity to qualify for Medicaid (Crowley, 2003). The income and asset levels for the noninstitutionalized Medically Needy applicants are the same as the ones for institutionalized individuals presented in table 4. Similarly, noninstitutionalized individuals with high incomes end up paying most if not all of their medical expenses before they receive aid.

Because the income limits for the Medically Needy provision are usually stricter than the limits for the "income needy" (for example, the SSI recipients, dual eligibles, and certain HCBS beneficiaries), noninstitutionalized individuals also face a possible discontinuity in coverage. In consequence, the penalty to being Medically Needy rather than income needy may be significant.

By way of example, consider two individuals in Pennsylvania. Both individuals require health care costing $500 per month. The first individual has a monthly income of $900 per month, which in Pennsylvania allows him to qualify as categorically needy (table 2). This person pays nothing for medical care. The second individual has a monthly income of $1,100 and does not qualify as categorically needy. Deducting medical expenses leaves her with a net income of $600, which is above Pennsylvania's Medically Needy net income limit (table 4). In short, receiving an additional $200 of income costs the second person $500 of Medicaid benefits. The quantitative importance of these discontinuities is of course an empirical matter, depending both on the formal provisions and their practical application by Medicaid administrators.

Discussion

In a number of recent studies, the joint effect of Medicaid and public assistance programs such as SSI is modeled as a consumption floor: If an individual is not able to cover her medical expenses and purchase a minimal amount of consumption, the government will cover the difference (Hubbard, Skinner, and Zeldes, 1995; Palumbo, 1999; De Nardi, French, and Jones, 2010; French and Jones, 2011). Is this a reasonable approximation of the Medicaid system?

Our review suggests that the effective consumption floor provided by Medicaid varies greatly by income and asset levels, as well as medical conditions. Individuals in nursing homes are given much smaller allowances, and are more likely to forfeit the value of their house, than noninstitutionalized individuals. This distinction has been recognized by Brown and Finkelstein (2008), among others. The extent to which institutionalized individuals must surrender their homes depends on a number of factors, including the interpretation of the intent to return, the willingness of the state to impose liens, and the effectiveness of estate recovery, all of which vary across states.

We also find the potential for discontinuities in coverage. Medicaid recipients can be placed in two groups. The first group is the income needy, who receive benefits because they have low incomes. Income-needy individuals include those receiving expanded nursing home coverage, many recipients of HCBS services, and dual eligibles, as well as the categorically needy. The second group is the expenditure needy, who receive benefits because their medical expenses are large relative to their income. This group includes individuals utilizing Miller trusts, as well as the Medically Needy. In some cases, the net income (income less medical expenses) limits for the medically needy are stricter than the income limits for the income needy. This raises the possibility that the income needy receive more generous coverage. We believe that the scope for such unequal treatment is greatest for noninstitutionalized individuals.

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U.S. Department of Health and Human Services, Office of Assistant Secretary for Policy and Evaluation, 2005a, "Medicaid estate recovery collections," Medicaid Eligibility for Long-Term Care Benefits series, policy brief, Washington, DC, No. 6, September.

--, 2005b, "Medicaid liens," Medicaid Eligibility for Long-Term Care Benefits series, policy brief, Washington, DC, No. 4, April.

--, 2005c, "Medicaid treatment of the home: Determining eligibility and repayment for long-term care," Medicaid Eligibility for Long-Term Care Benefits series, policy brief, Washington, DC, No. 2, April.

--, 2005d, "Medicaid estate recovery," Medicaid Eligibility for Long-Term Care Benefits series, policy brief, Washington, DC, No. 1, April.

U.S. House of Representatives, House Ways and Means Committee, 2004, Green Book 2004: Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means, March 2004, Washington, DC: U.S. Government Printing Office, March.

Waidmann, Timothy, and Korbin Liu, 2006, "Asset transfer and nursing home use: Empirical evidence and policy significance," Kaiser Commission on Medicaid and the Uninsured, issue paper, No. 7487, April.

Walker, Lina, and Jean Aeolus, 2010, "Access to long-term services and supports: A 50-state survey of Medicaid financial eligibility," Insight on the Issues, AARP Public Policy Institute, No. I-44, September.

Weschler, Kathy, 2005, "A qualified income trust: Keep your Medicaid eligibility," MDA/ALS Newsmagazine, Vol. 10, No. 3, April.

NOTES

(1) Figure is taken from the Kaiser Family Foundation (2010).

(2) Figures are taken from the 2010 Medicaid Actuarial Report (Office of the Actuary, Centers for Medicare and Medicaid Services, 2010) for those who are "aged." Data from the Medicaid Statistical Information System show that over 0.6 million disabled people are also aged 65 and older.

(3) Figures are taken from the US. Bureau of Economic Analysis, 2011, tables 3.1 and 3.12.

(4) Data from the Medicaid Statistical Information System (MSIS) cited in figure 1 show $68.3 billion, but these data do not include certain payments such as Medicare premiums paid for dual eligibles. For this reason, the MSIS data likely understate dual eligibles" share of total expenditures. Also, the MSIS categories are slightly different from those in figure 1. However, virtually all "cash recipients" over age 65 are those receiving SSI and virtually all "poverty related" individuals over age 65 are dual eligibles.

(5) Sheltered workshops are organizations that provide employment to people with disabilities (Sheltered Workshops. Inc, 2011).

(6) In addition to food stamps, the exempt categories include income that is set aside toward an approved plan for achieving self support (used by the blind and disabled to pay off educational or vocational costs), and certain types of assistance for home energy needs.

(7) The remainder of this section utilizes overviews by Stone (2002), Walker and Accius (2010), and the Kaiser Commission on Medicaid and the Uninsured (2010).

(8) Prior to the passage of the Omnibus Budget Reconciliation Act in 1993, it was acceptable to place extra income in a self-created discretionary fired to acquire Medicaid coverage. Since 1993, apart from limited trusts such as the Miller or Qualified Income trusts, most discretionary trust funds are treated as countable income or assets and may restrict people from obtaining Medicaid (see Goldfarb, 2005).

(9) The mandate is in the 2000 House Bill 1111, Section 11.445, which specifies that an individual eligible for or receiving nursing home care must be given the opportunity to have those Medicaid dollars follow them to the community and to choose the personal care option in the community that best meets their needs (Niesz, 2002).

(10) This raises the possibility of a discontinuity in coverage. An individual whose income is $1 above the categorically needy limit may need to spend a considerable amount to qualify under the Medically Needy provision. However, in practice the discontinuity in coverage is unimportant in most cases because institutionalized Medicaid recipients must spend almost all of their income on their care. The median cost of nursing home care was $5,550 per month in 2010. Whether an individual's income is slightly more or less than 300 percent of the SSI limit ($674 x 3 = $2,022), Medicaid will still provide a nursing home, but all of their income must be put toward the cost of the nursing home.

(11) If a spouse or dependent resides in the house, the equity limits do not apply (ElderLawNet, Inc., 2011).

(12) The inclusion of housing in the asset tests for institutionalized individuals applies to the categorically needy as well as the medically needy. Most categorically needy individuals, however, do not hold significant housing equity (U.S. Department of Health and Human Services, 2005c).

(13) States do not have to pursue an estate if they determine pursuit would not be cost-effective. The definition of "cost-effective," not surprisingly, varies across states (U.S. Department of Health and Human Services, 2005d).

(14) For example, New Hampshire and Michigan limit 1915(c) waivers for the aged to those who are also disabled. Only two states, Arizona and Vermont, do not offer HCBS waivers, and Arizona offers a similar program.

Mariacristina De Nardi is a senior economist and research advisor; Eric French is a senior economist and research advisor; and Angshuman Gooptu is an associate economist in the Economic Research Department of the Federal Reserve Bank of Chicago. John Bailey Jones is an associate professor of economics at the University at Albany, State University of New York, and a consultant to the Federal Reserve Bank of Chicago. The authors thank Daisy Chen, John Klemm, and representatives of Medicaid offices in Florida, Alabama, Indiana, Wisconsin, and Ohio, who helped verify the facts in this paper, and a referee and Richard Porter for comments.

Economic Perspectives is published by the Economic Research Department of the Federal Reserve Bank of Chicago. The views expressed are the authors' and do not necessarily reflect the views of the Federal Reserve Bank of Chicago or the Federal Reserve System.

Charles L. Evans, President ; Daniel G. Sullivan, Executive Vice President and Director of Research; Spencer Krane, Senior Vice President and Economic Advisor; David Marshall, Senior Vice President, financial markets group; Daniel Aaronson, Vice President, microeconomic policy research; Jonas D. M. Fisher, Vice President, macroeconomic policy research; Richard Heckinger, Vice President, markets team; Anna L. Paulson, Vice President, finance team; William A. Testa, Vice President, regional programs, Richard D. Porter, Vice President and Economics Editor; Helen Koshy and Han Y. Choi, Editors; Rita Molloy and Julia Baker, Production Editors; Sheila A. Mangler, Editorial Assistant.

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TABLE 1
State SSI supplements (in 2010 dollars) for aged individuals
living independently (selected -years, 1975-2009)

State 1975 1980 1985 1990 1996 2002 2009

Alaska 575 622 529 552 503 439 588
California 409 482 363 407 217 249 233
Colorado 109 146 118 90 78 45 25
Connecticut 0 270 286 611 0 245 171
District of 0 40 30 25 7 0 233
 Columbia
Hawaii 69 40 10 8 7 6 370
Idaho 255 196 158 122 51 63 27
Illinois (a) NA NA NA NA NA NA NA
Maine 41 26 20 17 14 12 233
Massachusetts 450 363 261 215 175 156 233
Michigan 49 64 55 50 19 17 233
Minnesota 126 90 71 125 113 98 233
Nebraska 271 199 140 63 17 10 233
Nevada 223 124 73 60 50 44 37
New Hampshire 49 122 55 45 38 33 41
New Jersey 97 61 63 52 43 38 233
New York 247 167 124 144 120 105 95
Oklahoma 109 209 122 107 75 64 45
Oregon 69 32 4 3 3 2 2
Pennsylvania 81 85 65 53 38 33 233
Rhode Island 126 111 109 107 89 78 233
South Dakota 0 40 30 25 21 18 15
Utah 0 26 20 10 0 0 233
Vermont 117 109 107 105 65 72 246
Washington 146 114 77 47 35 32 47
Wisconsin 284 265 203 172 117 102 85
Wyoming 0 53 41 33 14 12 25

(a) Illinois supplements are determined on a case-by-case basis.

Notes: Converted to 2010 dollars using Consumer Price Index data
from Haver Analytics. NA indicates not applicable.

Sources: For 1975-2002, U.S. House of Representatives, House Ways
and Means Committee (2004); for 2009, Social Security
Administration (2009b).

TABLE 2
Income and asset limits (in $) for SSI Medicaid recipients, 2009

 Maximum
 SSI and federal
 Medicaid SSI benefit
 asset plus state Disregarded
State limit (b, d) supplement income

Non-209(b) states
Alabama 2,000 674 20
Alaska, 2,000 1,262 20
Arizona No limit 903 20
Arkansas 2,000 674 20
California 2,000 907 230
Colorado 2,000 699 20
Delaware 2,000 674 20
District of 4,000 907 20
 Columbia
Florida 5,000 674 20
Georgia 2,000 674 20
Idaho 2,000 701 20
Iowa 2,000 674 20
Kansas 2,000 674 20
Kentucky 2,000 674 20
Louisiana 2,000 674 20
Maine 2,000 907 75
Maryland 2,500 674 20
Massachusetts 2,000 907 20
Michigan 2,000 907 20
Mississippi 4,000 724 50
Montana 2,000 674 20
Nebraska 4,000 907 20
Nevada 2,000 711 20
New Jersey 4,000 907 20
New Mexico 2,000 674 20
New York 4,350 769 20
North Carolina 2,000 903 20
Oregon 4,000 676 20
Pennsylvania 2,000 907 20
Rhode Island 4,000 907 20
South Carolina 4,000 903 20
South Dakota 2,000 689 20
Tennessee 2,000 674 20
Texas 2,000 674 20
Utah 2,000 907 20
Vermont 2,000 920 20
Washington 2,000 721 20
West Virginia 2,000 674 20
Wisconsin 2,000 759 20
Wyoming 2,000 699 20

209(b) states
 SSI: 2,000
Connecticut Medicaid 1,600 845 278
Hawaii, 2,000 1,044 20
Illinois 2,000 674 25
 SSI: 2,000
Indiana Medicaid: 1,500 674 20
Minnesota 3,000 907 20
 SSI: 2,000
Missouri, Medicaid: 1,000 768 20
 SSI: 2,000
New Hampshire (c) Medicaid: 1,500 715 13
North Dakota 3,000 674 20
Ohio SSI: 2,000
 Medicaid: 1,500 674 20
Oklahoma 2,000 719 20
Virginia 2,000 722 20

 Monthly
 (earned)
 income
 limit for
 SSI/Medicaid
State eligibility

Non-209(b) states
Alabama 1,433
Alaska, 2,609
Arizona 1,891
Arkansas 1,433
California 2,109
Colorado 1,483
Delaware 1,433
District of 1,899
 Columbia
Florida 1,433
Georgia 1,433
Idaho 1,487
Iowa 1,433
Kansas 1,433
Kentucky 1,433
Louisiana 1,433
Maine 1,954
Maryland 1,433
Massachusetts 1,899
Michigan 1,899
Mississippi 1,563
Montana 1,433
Nebraska 1,899
Nevada 1,507
New Jersey 1,899
New Mexico 1,433
New York 1,623
North Carolina 1,891
Oregon 1,437
Pennsylvania 1,899
Rhode Island 1,899
South Carolina 1,891
South Dakota 1,463
Tennessee 1,433
Texas 1,433
Utah 1,899
Vermont 1,925
Washington 1,527
West Virginia 1,433
Wisconsin 1,603
Wyoming 1,483

209(b) states

Connecticut 2,033
Hawaii, 2,173
Illinois 1,438

Indiana 1,433
Minnesota 1,899

Missouri, 1,621

New Hampshire (c) 1,508
North Dakota 1,433
Ohio
 1,433
Oklahoma 1,523
Virginia 1,529

(a) Based on Alaska Public Assistance payments.

(b) Disabled individuals under the age of 65 face no asset
limits.

(c) individuals receiving reduced SSI benefits may not qualify
for Medicaid.

(d) In 209(b) states, SSI and Medicaid asset limits are sometimes
different.

Source: Kaiser Commission on Medicaid and the Uninsured (2010b).

TABLE 3
Income and asset limits (in $) for dual eligibles, 2010

 Monthly Monthly Monthly
 income income income Income
 limit, limit, limit, disregard
State QMBs SLMBs QIs amount

Non-209(b) states
Alabama 903 1,083 1,219 20
Alaska 1,108 1,333 1,503 20
Arizona 903 1,083 1,219 20
Arkansas 903 1,083 1,219 20
California 903 1,083 1,219 20
Colorado 903 1,083 1,219 20
Delaware 903 1,083 1,219 20
 QMB: 1,803;
District of 2,706 2,708 NA SLMB: 1,625;
 Columbia QI: NA
Florida 903 1,083 1,219 20
Georgia 903 1,083 1,219 20
Idaho 903 1,083 1,219 20
Iowa 903 1,083 1,219 20
Kansas 903 1,083 1,219 20
Kentucky 903 1,083 1,219 20
Louisiana 903 1,083 1,219 20
Maine 1,354 1,535 1,670 75
Maryland 902 1,083 1,218 20
Massachusetts 903 1,083 1,219 20
Michigan 903 1,083 1,219 20
Mississippi 903 1,083 1,219 50
Montana 903 1,083 1,219 20
Nebraska 903 1,083 1,219 20
Nevada 903 1,083 1,219 20
New Jersey 903 1,083 1,219 20
New Mexico 903 1,083 1,219 20
New York 903 1,083 1,219 20
North Carolina 903 1,083 1,219 20
Oregon 903 1,083 1,219 20
Pennsylvania 903 1,083 1,219 20
Rhode Island 903 1,083 1,219 20
South Carolina 903 1,083 1,219 20
South Dakota 903 1,083 1,219 20
Tennessee 903 1,083 1,219 20
Texas 903 1,083 1,219 20
Utah 903 1,083 1,219 20
Vermont 903 1,083 1,219 20
Washington 903 1,083 1,219 20
West Virginia 903 1,083 1,219 20
Wisconsin 903 1,083 1,219 20
Wyoming 903 1,083 1,219 20
209(b) states
 QMB: 876;
Connecticut 1,779 1,960 2,092 SLMB: 877;
 Q1: 873
Hawaii 1,039 1,246 1,402 20
Illinois 903 1,083 1,219 25
Indiana 903 1,083 1,219 20
Minnesota 903 1,083 1,219 20
Missouri 903 1,083 1,219 20
New Hampshire 903 1,083 1,219 13
North Dakota 903 1,083 1,219 20
Ohio 903 1,083 1,219 20
Oklahoma 903 1,083 1,219 20
Virginia 903 1,083 1,219 20

 Asset
State limit

Non-209(b) states
Alabama No limit
Alaska 6,600
Arizona No limit
Arkansas 6,600
California 6,600
Colorado 6,600
Delaware No limit

District of No limit
 Columbia
Florida 6,600
Georgia 6,600
Idaho 6,600
Iowa 6,600
Kansas 6,600
Kentucky 6,600
Louisiana 6,600
Maine No limit
Maryland 6,600
Massachusetts 6,600
Michigan 6,600
Mississippi No limit
Montana 6,600
Nebraska 6,600
Nevada 6,600
New Jersey 6,600
New Mexico 6,600
New York No limit
North Carolina 6,600
Oregon 6,600
Pennsylvania 6,600
Rhode Island 6,600
South Carolina 6,600
South Dakota 6,600
Tennessee 6,600
Texas 6,600
Utah 6,600
Vermont No limit
Washington 6,600
West Virginia 6,600
Wisconsin 6,600
Wyoming 6,600
209(b) states

Connecticut No limit

Hawaii 6,600
Illinois 6,600
Indiana 6,600
Minnesota 10,000
Missouri 6,600
New Hampshire 6,600
North Dakota 6,600
Ohio 6,600
Oklahoma 6,600
Virginia 6,600

Notes: OMB indicates qualified Medicare beneficiaries; SLMB
indicates specified low-income Medicare beneficiaries; and QI
indicates qualified individuals. NA indicates not applicable.

Source: Kaiser Commission on Medicaid and the Uninsured, 2010b.

TABLE 4
Income and asset limits (in $) for institutionalized medically
needy Medicaid recipients, 2009

 Income limit
 (income less
 Asset medical
State Coverage limit expenses)

Non-209(b) states
Alabama No NA NA
Alaska No NA NA
Arizona Yes 5,000 (b) 360
Arkansas Yes 2,000 108
California Yes 2,000 600
Colorado No NA NA
Delaware No NA NA
District of Yes 4,000 577
 Columbia
Florida Yes 5,000 180
Georgia Yes 2,000 317
Idaho No NA NA
Iowa Yes 10,000 483
Kansas Yes 2,000 495
Kentucky Yes 2,000 217
 Urban: 100;
Louisiana Yes 2,000 Rural: 92
Maine Yes 2,000 903
Maryland Yes 2,500 350
Massachusetts Yes 2,000 9,035 (d)
 Region 1: 341;
 Region 2: 341;
 Region 3: 350;
 Region 4: 375;
 Region 5: 391;
Michigan Yes 2,000 Region 6: 408
Mississippi No NA NA
Montana Yes 2,000 625
Nebraska Yes 4,000 392
Nevada No NA NA
New Jersey Yes 4,000 367
New Mexico No NA NA
New York Yes 2,000 767
North Carolina Yes 2,000 242
Oregon No NA NA
Pennsylvania Yes 2,400 425
Rhode Island Yes 4,000 800
South Carolina No NA NA
South Dakota No NA NA
Tennessee Yes 2,000 241
Texas No NA NA
Utah Yes 2,000 370
 916
 (991 for
Vermont Yes 2,000 Chittenden)
Washington Yes 2,000 674
West Virginia Yes 2,000 200
Wisconsin Yes 2,000 592
Wyoming No NA NA

209(b) states
 Region A: 576;
Connecticut Yes 1,600 Regions B and C: 476
Hawaii Yes 2,000 469
Illinois Yes 2,000 903
Indiana No, NA NA
Minnesota Yes 3,000 677
Missouri No, NA NA
New Hampshire Yes 2,500 591
North Dakota Yes 3,000 750
Ohio No (e) NA NA
Oklahoma No (e) NA NA
 Group I: 281;
 Group II: 324;
Virginia (f) Yes 2,000 Group III: 421

 Expanded Income
 nursing allowed if Home
 home institutionalized equity
State coverage in 2003 limit

Non-209(b) states
Alabama Yes NA 500,000
Alaska Yes (a) NA 500,000
Arizona Yes 76.65 500,000
Arkansas Yes 40 500,000
California No 35 750,000
Colorado Yes NA 500,000
Delaware Yes (c) NA 500,000
District of No 70 750,000
 Columbia
Florida Yes 35 500,000
Georgia Yes 30 500,000
Idaho Yes NA 750,000
Iowa Yes 30 500,000
Kansas Yes 30 500,000
Kentucky Yes 40 500,000

Louisiana Yes 38 500,000
Maine Yes 40 750,000
Maryland Yes 40 500,000
Massachusetts No 60-65 750,000

Michigan Yes 60 500,000
Mississippi Yes NA 500,000
Montana Yes 40 500,000
Nebraska Yes 50 Disregarded (c)
Nevada Yes NA 500,000
New Jersey Yes 40 750,000
New Mexico Yes NA 750,000
New York No 50 750,000
North Carolina No 30 500,000
Oregon Yes NA 500,000
Pennsylvania Yes 30 500,000
Rhode Island Yes 50 500,000
South Carolina Yes NA 500,000
South Dakota Yes NA 500,000
Tennessee Yes 30 500,000
Texas Yes NA 500,000
Utah Yes 45 500,000

Vermont Yes 47.66 500,000
Washington Yes 41.62 500,000
West Virginia Yes NA 500,000
Wisconsin Yes 45 750,000
Wyoming Yes NA 500,000

209(b) states

Connecticut Yes 54 750,000
Hawaii No 30 750,000
Illinois No 30 NA
Indiana No NA 500,000
Minnesota No 69 500,000
Missouri No NA 500,000
New Hampshire Yes 50 500,000
North Dakota No 40 500,000
Ohio Yes NA 500,000
Oklahoma Yes NA 500,000

Virginia (f) Yes 30 500,000

 State-
 allowed
 Miller
State trust

Non-209(b) states
Alabama Yes
Alaska Yes
Arizona Yes
Arkansas Yes
California No
Colorado Yes
Delaware Yes
District of No
 Columbia
Florida Yes
Georgia No
Idaho Yes
Iowa Yes
Kansas No
Kentucky No

Louisiana No
Maine No
Maryland No
Massachusetts No

Michigan No
Mississippi Yes
Montana No
Nebraska No
Nevada Yes
New Jersey No
New Mexico Yes
New York No
North Carolina No
Oregon Yes
Pennsylvania No
Rhode Island No
South Carolina Yes
South Dakota Yes
Tennessee No
Texas Yes
Utah No

Vermont No
Washington No
West Virginia No
Wisconsin No
Wyoming Yes

209(b) states

Connecticut No
Hawaii No
Illinois No
Indiana No
Minnesota No
Missouri No
New Hampshire No
North Dakota No
Ohio Yes
Oklahoma Yes

Virginia (f) No

NA indicates not applicable.

(a) Income limit frozen at $1,656.

(b) Liquid asset limit-total assets, including housing, cannot
exceed $100,000.

(c) Income limit set at 250 percent, rather than 300 percent, of
SSI limit.

(d) Limit is $1,200 for those with professional care assistance.

(e) State is required to offer a spend-down provision.

(f) The state of Virginia is split into three groups, each with a
different Medically Needy income limit.

Source: Kaiser Commission on Medicaid and the Uninsured (2010b);
Miller trust information from Stone (2002).

TABLE 5
Share of Medicaid nursing home expenses
collected from estates

 Medicaid collections/
State nursing home costs (%)

Alabama 0.8
Alaska 0.0
Arizona 10.4 (a)
Arkansas 0.4
California 1.5
Colorado 1.5
Connecticut 0.8
Delaware 0.3
District of Columbia 1.0
Florida 0.6
Georgia 0.0
Hawaii 0.9
Idaho 4.5
Illinois 1.3
Indiana 1.8
Iowa 2.9
Kansas 1.4
Kentucky 0.9
Louisiana 0.0
Maine 2.5
Maryland 0.6
Massachusetts 2.0
Michigan 0.0
Minnesota 2.8
Mississippi 0.1
Missouri 1.1
Montana 1.4
Nebraska 0.3
Nevada 0.3
New Hampshire 1.6
New Jersey 0.6
New Mexico 0.0
New York 0.5
North Carolina 0.5
North Dakota 1.2
Ohio 0.5
Oklahoma 0.3
Oregon 5.8
Pennsylvania 0.1
Rhode Island 1.0
South Carolina 1.3
South Dakota 1.0
Tennessee 0.9
Texas 0.0
Utah 0.0
Vermont 0.4
Virginia 0.1
Washington 1.8
West Virginia 0.1
Wisconsin 1.8
Wyoming 2.7

(a) Results for Arizona are not comparable to those for other
states because of data issues arising from the extensive use of
prepaid managed care contracts.

Sources: Probate data--Karp, Sabatino, and Wood (2005), policy
range and collections data--U.S. Department of Health and Human
Services (2005a).

TABLE 6
Decision criteria for TERFA liens

 Number of
 Length months Intent
 of stay triggering to return Physician's
State presumption presumption home declaration

Alabama Yes 3 Yes Yes
Arkansas Yes 4 Yes Yes
California Yes No No No
Connecticut Yes 6 Yes Yes
Delaware Yes 24 Yes No
Hawaii Yes 6 Yes Yes
Idaho Yes Yes No No
Illinois Yes 4 Yes No
Indiana NR Yes Yes Yes
Maryland Yes NR Yes Yes
Massachusetts Yes 6 Yes Yes
Minnesota Yes 6 Yes No
Montana Yes Yes No No
New Hampshire Yes No No No
New York Yes No No No
Oklahoma Yes 6 Yes Yes
South Dakota Yes Yes No No
West Virginia NR NR Yes No
Wyoming NR No NR NR

 Other
 third-party
State evaluation Other

Alabama No No
Arkansas No No
California No No
Connecticut Yes Yes
Delaware No No
Hawaii No No
Idaho No No
Illinois No No
Indiana Yes Yes
Maryland No Yes
Massachusetts Yes No
Minnesota No No
Montana No Yes
New Hampshire No Yes
New York No No
Oklahoma No No
South Dakota No Yes
West Virginia No Yes
Wyoming NR NR

Notes: TERFA is the Tax Equity and Fiscal Responsibility Act
of 1982. NR indicates no response.

Source: Karp, Sabatino, and Wood (2005).

TABLE 7
Eligibility criteria for Medicaid 1915(c) HCBS waivers, 2008

 Income limit
 Income limit for the aged/
 for the aged Waiting disabled
 (% of SSI list for (% of SSI
States limit) (a) the aged limit) (a)

Non-209(b) States
Alabama 300, MT
Alaska 300, MT 0
Arizona NP (d)
Arkansas 300, MT 0
California 100
Colorado 300, MT
Delaware 100, MT 0 250, MT
District of 300
 Columbia
Florida 300, MT 0 300, MT
Georgia 300, MT
Idaho 300, MT
Iowa 300, MT 0
Kansas 300 0
Kentucky 300, MT
Louisiana 300
Maine 300
Maryland 300 6,000
Massachusetts 100 0
Michigan 300
Mississippi 300, MT
Montana 100
Nebraska 100
Nevada 300, MT 343 300, MT
New Jersey 300
New Mexico 300
New York 300, MT
North Carolina 100
Oregon 300, MT
Pennsylvania 300 0
Rhode Island 300 0 300
South Carolina 300, MT
South Dakota 300, MT 0
Tennessee 300, MT
Texas 300, MT
Utah 300 0
Vermont NP
Washington 300
West Virginia 300
Wisconsin 300
Wyoming 300, MT

209(b) states
Connecticut 300
Hawaii 100
Illinois 100 0 100
Indiana 100, MT
Minnesota 300 0
Missouri 100
New Hampshire 100 0
North Dakota 100
Ohio 300, MT
Oklahoma 300, MT
Virginia 300 0 300

 Waiting Tougher
 list for functional Income
 the aged/ requirements; (b) allowed,
States disabled cost limits (in $)

Non-209(b) States
Alabama 7,094 Yes; yes UL
Alaska No; yes 1,656
Arizona
Arkansas No; yes UL
California 1,200 No; yes <2,022
Colorado 0 No; no 2,022
Delaware 0 Yes; no 1,685
District of 0 No; yes 2,022
 Columbia
Florida 12,684 Yes; yes 674
Georgia 763 Yes; no 674
Idaho 0 No; no 674 (e)
Iowa No; yes 2,022
Kansas Yes; yes 727
Kentucky 0 No; yes 694
Louisiana 8,433 No; yes 2,022
Maine 0 No; yes 1,128
Maryland No, yes 2,022
Massachusetts No; no 2,022
Michigan 3,404 No; no 2,022
Mississippi 6,000 Yes; yes UL
Montana 600 No; yes 625
Nebraska 0 No; yes 903
Nevada 0 No; no UL
New Jersey 0 No; yes 2,022
New Mexico 5,000 No; no UL
New York 0 Yes; yes 787
North Carolina 6,000 No; yes 903
Oregon 0 No; yes 1,822
Pennsylvania No; yes 2,022
Rhode Island 99 No; no 923
South Carolina 2,016 No; yes 2,022
South Dakota No; yes 694
Tennessee 350 No; yes 1,348
Texas 40,107 Yes; yes 2,022
Utah Yes; no [greater than or
 equal to] 903,
 [less than or
 equal to] 2,022

Vermont
Washington 0 No; yes [less than or
 equal to] 2,022
West Virginia 0 No; yes 674
Wisconsin 13,296 No; no [less than or
 equal to] 2,022
Wyoming 210 No; yes UL

209(b) states
Connecticut 0 No; yes 1,805
Hawaii 100 No; no 1,128
Illinois 0 No; no 674
Indiana 1,279 No; yes 2,022
Minnesota No, yes 935
Missouri 0 No; yes 1,113
New Hampshire No; no Varies
North Dakota 0 No; no 750
Ohio 1,224 No; yes 1,314
Oklahoma 0 No; yes 1,011
Virginia 0 No; no [less than or
 equal to] 2,022

(a) MT indicates that the state allowed Miller trusts in 2009-10.

(b) Individual must exhibit difficulty performing three (rather
than two) activities of daily living.

(c) Cost allowance for 2009-10. These limits may be exceeded
through the use of Miller trusts.

(d) Offers a similar program.

(e) Allowance is $1,128 for renters.

Note: HCBS is home- and community-based service care; NP
indicates not a participant; UL denotes unlimited with a Miller
trust; [less than or equal to] means at most, but the income
allowance depends on multiple factors.

Source: Kaiser Commission on Medicaid and the Uninsured (2009);
Miller trust information from Walker and Accius (2010).

FIGURE 1
Medicaid enrollment and expenditures by maintenance
assistance status in 2008, age 65+

A. Enrollment

SSI recipients 40%
Medically Needy 10%
Dual eligibles 29%
Other 21%

B. Expenditures

SSI recipients 27%
Medically Needy 23%
Dual eligibles 9%
Other 41%

Source: Centers of Medicare and Medicaid Services, Medicaid
Statistical Information System (MSIS).

Note: Table made from pie chart.