What is Medicaid and How Does it Work?

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Medicaid, a social insurance program to relieve the financial burdens of illness, was part of President’s Lyndon Johnson’s “Great Society” policy. Started in 1965, he envisioned a way to respond to the needs of elderly and low-income Americans who needed health insurance. According to the Medicaid government website:  “Medicaid is a joint federal and state program that, together with the Children’s Health Insurance Program, provides health coverage to over 72.5 million Americans, including children, pregnant women, parents, seniors and individuals with disabilities.”

How to Apply for Medicaid

Medicaid eligibility is based on a wide range of factors, including your legal status (citizenship and state residency), your health condition, and your financial situation. Your state’s Medicaid office will explain the application process. Although you can start the process online, you may have to go to an office for an interview.

When you go for the interview, you will need to have your documents with you to verify your application statements. Although each state has its own list of required documentation, most ask you to provide verification like your income and your citizenship, residency, or immigration confirmation status.

Criteria for Qualifications

Two criteria used to determine qualification is modified adjusted gross income (MAGI) and the Federal Poverty Guidelines (FPL) for each year.

MAGI

Healthcare.gov explains MAGI, and the various factors used to calculate it:

  • ·  It is adjusted gross income (AGI). In addition, it also takes into consideration “[…] any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.”
  • ·  In many instances, it’s similar, even identical, to adjusted gross income.
  • ·  It does not factor in Supplemental Security Income (SSI), nor “[…] appear as a line on your tax return.”

Many federal and state government programs, like Medicare, the Affordable Care Act, and Medicaid are tied to the federal poverty level (FPL), or to percentages of it. These FPL guidelines are released by the U.S. Department of Health and Human Services (HHS) and adjusted each year.

FPL

Nolo.com, a legal encyclopedia site, provides a table for 2017 that is split up by family size in the first column and monthly income in the second column. Generally speaking, Medicaid falls within the 133% federal poverty levels based on certain guidelines: “133% FPL is the income limit used to expand Medicaid to adults in states that opted in to Medicaid expansion under the Affordable Care Act (ACA, or “Obamacare”) Medicaid expansion allows 5% of income to be ignored, however, so really those under 138% of the poverty level may qualify for Medicaid in expansion states. Also, in some states, children and pregnant women under 133% FPL qualify for Medicaid, and in other states, parents or even childless adults can qualify for Medicaid with income at this level.”

Expenses Covered By Medicaid

The government’s Medicaid website outlines how prescription limits and ER visits only apply only to particular enrollees based on specific criteria:

  • ·  Pregnant women and infants with family income at or above 150% FPL ($22,065 for a family of 2 in 2011)
  • ·  Qualified disabled and working individuals with income above 150% FPL ($16, 334 for an individual in 2011)
  • ·  Disabled working individuals eligible under the Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA)
  • ·  Disabled children eligible under the Family Opportunity Act (FOA)
  • ·  Medically needy individuals

Although the program is government-funded, with many services provided at no cost to you when you enroll, each state also has the power to charge out-of-pocket expenses like premiums, deductibles and copays.

A co-pay, for example, may be charged if you get a “non-preferred” prescription rather than what your state has listed as a “preferred” prescription. This policy is designed to discourage the purchase of expensive medications when an equally effective generic version is available.

If you have Medicaid and make an emergency room visit, you will not be charged for it—unless, you use the emergency room for a health condition that is not an emergency. In this case, you will be charged a copay. Once again, the idea is to discourage using emergency services when another equally viable alternative is available. However, you will be informed if your condition is considered a non-emergency before you receive treatment and what the copay will be. This prevents you from being taken by surprise by a high copay.

In closing, it’s important to mention that Medicaid is funded by the state and federal government. This means that while the federal government designed the program and regulates it, each state decides on eligibility and benefits requirements. Consequently, when you want to find out how to apply and receive Medicaid, you need to visit the Medicaid website for your state.

Image Credits: Flickr

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