Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. State 209(b) Option

10/29/2010

Medicaid for the “Aged, Blind, and Disabled” had historically always been linked to receipt of cash assistance benefits. When SSI replaced state-only programs of aid for elderly persons and persons with disabilities, it was expected to lead to large increases in the numbers of SSI beneficiaries. The 209(b) option was enacted along with SSI in 1972 to enable states to avoid similarly large increases in Medicaid enrollment and costs.

Many Medicaid eligibility rules in 209(b) states follow SSI. But states may choose, instead, to use some or all of the more restrictive Medicaid rules in effect in their state on January 1, 1972, shortly before SSI was enacted. Eleven states have retained at least some of their pre-SSI rules on countable income or resources, and some use more stringent criteria for determining blindness or disability.

To counterbalance the potential negative effects of the 209(b) option on SSI beneficiaries, Federal rules require 209(b) states to allow any residents who are elderly, blind, or have disabilities--including those with too much income for SSI--to spend down to the state’s Medicaid income standard if their expenses for medical and remedial services so erode their income that their “net” remaining income would be less than a standard set by the state. This requirement creates a medically needy-like program for this population, even in states that have not chosen specifically to cover the medically needy as an option. Spend-down rules for 209(b) states are virtually identical to spend-down rules for the Medicaid medically needy category (discussed below).

Medicaid Protection for Certain Former SSI Beneficiaries

Federal law requires all states, including 209(b) states, to provide Medicaid to former SSI beneficiaries who would, but for increases in their Social Security benefits, continue to be eligible for SSI. Congress passed this provision to ensure that Social Security increases, intended to improve people’s lives, did not instead harm this group by causing them to lose Medicaid as well as SSI. Most of the individuals affected have incomes just marginally above the income levels at which they might qualify for SSI/Medicaid combined benefits. In fact, many people who could qualify for Medicaid under these provisions do not apply for the program, most likely because they are not aware of them. Improved understanding of these protections could possibly increase Medicaid enrollment of this group.

Former SSI Beneficiary Groups with Medicaid Protection

  • People who lost SSI when they received automatic cost-of-living adjustments (COLAs) in Social Security (sometimes nicknamed “Pickle people” after Congressman Pickle, one of the sponsors of the original COLA legislation).

  • Adult children with disabilities who lose SSI because they become entitled to Social Security benefits based on a parent’s Social Security entitlement.

  • Individuals ages 60–64 who lose SSI due to receipt of Social Security benefits for widows and widowers with disabilities.

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