Using Medicaid to Support Working Age Adults with Serious Mental Illnesses in the Community: A Handbook. CHAPTER 3: MEDICAID ELIGIBILITY

01/24/2005

Federal policy establishes the fundamental parameters concerning the groups of individuals that a state may serve in its Medicaid program. This chapter explains Federal requirements and options that determine Medicaid eligibility for working-age adults with serious mental illnesses.

In order to receive the mental health and other benefits that a state covers in its Medicaid program, working-age adults with serious mental illnesses must meet state eligibility criteria. Medicaid is a means-tested program; that is, eligibility depends on whether individuals’ income and resources are at or below specified threshold levels. Medicaid eligibility also hinges on whether the person meets other categorical requirements, such as disability criteria. Federal law gives states latitude to expand Medicaid eligibility for people with disabilities beyond fundamental federal mandates.

This chapter describes federal policies that affect Medicaid eligibility for working-age adults with serious mental illnesses, including the eligibility expansion options available to states. There are many intricacies to Medicaid eligibility, both in federal policy and within each state’s policies. While Medicaid eligibility criteria are described in some detail, the chapter’s main purpose is to provide an overview rather than explore every intricacy. When assessing the role that Medicaid might play in supporting working-age adults with serious mental illnesses in the community, it is important to become familiar with the state’s eligibility policies, including whether such policies might be changed to improve access.

The chapter devotes considerable attention to the interplay between Medicaid eligibility and employment. Recent changes in federal law and policy permit states to continue Medicaid eligibility for people with disabilities who work. Because employment is important for working-age adults with serious mental illnesses, these policy changes -- if adopted in a state -- can allow individuals to continue receiving Medicaid benefits when their recovery leads to employment.

At the outset, it is important to stress that the extent to which working-age adults with serious mental illnesses qualify for Medicaid is directly dependent on a state’s generic eligibility policies concerning non-elderly adults with disabilities. There are no special Medicaid eligibility groups reserved exclusively for people with serious mental illnesses. A state’s Medicaid eligibility policies may not exclude individuals with serious mental illnesses based on their diagnosis. Similarly, a state may not establish more liberal eligibility policies for individuals with serious mental illnesses than for people with other disabilities. Eligibility policy changes that might benefit individuals with serious mental illnesses must encompass all people with disabilities. The description of Medicaid eligibility that follows applies to working-age adults with serious mental illnesses insofar as they qualify for Medicaid by meeting generic disability, income and asset tests.

Some aspects of Medicaid eligibility pose special challenges for working-age adults with serious mental illnesses. Ways to identify and address these challenges are also discussed in this chapter.

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