The last two years have witnessed a profound transformation of the American welfare system. A booming national economy combined with innovative state policies and investments have helped millions of low-income Americans make the transition from dependency to work and self-sufficiency and resulted in steadily declining welfare caseloads. An essential pillar of family self-sufficiency is the ability to obtain and keep health insurance coverage.
Until recently, many low-income families obtained health insurance through their eligibility for cash assistance programs. Under the old Aid to Families with Dependent Children (AFDC) program, poor families automatically received Medicaid coverage when they qualified for cash assistance. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 replaced AFDC with a new state-run Temporary Assistance for Needy Families (TANF) program and ended the automatic link between eligibility for cash assistance and eligibility for Medicaid.
To preserve Medicaid coverage for low-income families with children, the welfare reform law created a new Medicaid eligibility category. Under the new "Section 1931" group, families who would have qualified for Medicaid under a state's AFDC program are generally eligible for Medicaid now, regardless of whether they receive TANF assistance. The law also made available to states $500 million in enhanced matching funds to support the systems changes and outreach necessary to address the effects of "delinking" Medicaid from welfare.
Beyond preserving Medicaid eligibility as it was prior to welfare reform, new
options have been created. Specifically, Congress provided states with broad flexibility under Section 1931 to expand Medicaid to cover more low-income families at their option. Also, as a result of regulations published in August 1998, states can expand coverage to more two-parent working families through Section 1931. Finally, seeking to extend free or affordable health coverage to uninsured children in low-income families, President Clinton and Congress created the Children's Health
Insurance Program (CHIP).
The dramatic changes in welfare laws and policies, and the challenges and opportunities they continue to present, require that states establish new strategies and procedures to ensure that as many children and families as possible retain or obtain health care coverage under Medicaid or CHIP. To achieve this result, we need to find new ways to reach children and families with these health programs—outside as well as through the welfare system. This guide serves three major purposes:
- First, it assists state policymakers and others in understanding what the Medicaid statute and regulations require of states in terms of Medicaid eligibility, enrollment, redetermination, notice and appeal rights, and other program and policy areas. These requirements apply generally in Medicaid, and also specifically to Medicaid applications and eligibility determinations in the welfare context — that is, when families seek or leave TANF assistance. The guide includes information on the ways in which states can work within the statute to strengthen their outreach efforts, simplify their application processes, and broaden Medicaid coverage to reach low-income families with children, independent of TANF.
- Second, it discusses the Medicaid requirements and options that apply in three common scenarios: 1) when families seek TANF assistance; 2) when families leave TANF assistance; and 3) when families have no contact with the TANF program.
- Third, it points the reader to the various sources of funding that are available to states to pay for outreach, training, and other activities to help states bring their systems into compliance with the law and increase health insurance coverage for low-income families with children.