In general, states use SSI rules in determining what is countable income and resources for Medicaid eligibility. However, states have the option to liberalize their Medicaid rules regarding countable income or assets in such a way that the eligibility limits specified in law, while still theoretically required, can be greatly exceeded.11
It is important to note that this flexibility comes with certain restrictions. First, the different counting methods must not disadvantage anyone, even if relatively more people would benefit than would be disadvantaged. Second, although a state may restrict its more liberal counting method to one or more eligibility groups, those selected must be one of those specifically defined in the part of the Medicaid law that authorizes the use of this option--for example, working persons with disabilities, poverty-related groups, or the medically needy (all of which are discussed more fully below). Thus, states are not permitted to carve out a subgroup of their own definition (e.g., one based on medical diagnosis or place of residence, such as residential care facilities).
Examples of Provisions That Can Reduce Countable Income or Resources
Third, flexibility in counting income is highly limited for medically needy eligibility groups (described below), because Federal law imposes a ceiling on medically needy income levels (133 1/3 percent of the highest amount paid to an AFDC family of the same size). States are not permitted to exceed this ceiling, which limits opportunities for states with medically needy income levels at or close to the ceiling.12
While Federal rules give states broad flexibility to expand eligibility, actual adoption of more generous alternative methods must, of course, conform to a states budget considerations and political decisions.