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Kids and Health Care: Medicaid

If you don't make enough money to pay for health insurance for a managed care program for your kids -- and you live in the U.S. -- you can get coverage for them through Medicaid or related government programs.

Title XIX of the Social Security Act, also known as Medicaid, provides medical assistance for low-income individuals and families. The Act became law in 1965. Title XIX provides both mandatory and optional requirements states must follow in terms of establishing eligibility standards; the amount, duration and scope of services; and program administration.

Medicaid is a jointly funded, federal/state health insurance program that covers approximately 36 million low-income individuals, including families with children and people with specific illnesses or disabilities. It is the largest program providing medical and health-related services to America's poorest families and individuals.

The program offers a minimum set of services including hospital and doctor services. Additionally, state agencies have the option of adding any or all of 31 services -- including prescription drugs, hospice care and personal care services.

The federal government and the states share the costs of financing Medicaid through tax revenue. In 1995, Medicaid expenditures for health care amounted to $152 billion; the Feds paid $86 billion and states paid $66 billion. The details of Medicaid vary from state to state because each state: administers its own program; establishes its own eligibility standards; decides the type, amount, scope and duration of services; and sets the rates of payment for services. States may also require recipients to pay nominal deductibles, co-insurance or copayments for certain services.

State Medicaid programs must provide a broad range of services, including inpatient and outpatient hospital services, physician services, nursing facility coverage and more. Both fee-for-service arrangements and managed care plans are used to deliver Medicaid services.

Within federal guidelines, each state sets its own income and asset (or resource) eligibility criteria. For example, a person who is eligible for Medicaid in one state is not necessarily eligible in another. Some states also have a "medically needy" program, in which Medicaid eligibility is extended to higher-income people who have high medical costs.

Medicaid is means tested: eligibility is based on the ability to pay for health care. That ability is measured by income and assets (or resources). In determining a family's eligibility for Medicaid, its finances (all income and assets) are scrutinized. The eligibility question is: Does this person have the means to pay for health care on his or her own?

At one time, Medicaid required you to liquidate virtually all of your assets -- including savings, investments, bank accounts, real estate and even some forms of cash-value life insurance -- in order to qualify for coverage. In 1993, Congress relaxed those requirements to allow surviving spouses and children with certain illnesses or disabilities to keep more of the family's assets. Now, in some cases, a family can keep a home, a car, up to about $75,000 in assets and $1,900 in monthly income...and still qualify for Medicaid coverage.

(Each application is reviewed to make sure an applicant family genuinely qualifies; and, if your family has more money, it will be reviewed more closely. Playing legal games to "hide" assets isn't a good idea. Federal law sets criminal penalties for transferring assets for the sole purpose of qualifying for Medicaid; the penalties include fines of up to $25,000 and imprisonment for up to five years.)

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