Introduction

Children eligible for Title IV-E adoption assistance are entitled to participate in the Title XIX Medicaid program. Established in 1965, Medicaid is an entitlement program through which eligible persons can receive, at least, basic medical care. Those entitled to Medicaid have satisfied certain qualifying criteria related to income and resources. With some statutorily created exceptions, Medicaid eligibility generally follows a determination that one is eligible to receive assistance under the Social Security Act's Title IV-A, Aid to Families with Dependent Children (AFDC); Title XVI, Supplemental Security Income (SSI); or Title IV-E, Foster Care.

This Issue Brief concerns the Medicaid eligibility of adopted children with special needs under the Title IV-E adoption assistance program. For a significant number of special needs children, prompt and dependable access to medical care is essential. Adoption specialists, therefore, are anxious that the Medicaid program remains available to these children at all times throughout the life of the adoption agreement. However, situations can arise that appear to leave the children unprotected. Specifically, some ICAMA administrators note those instances (involving interstate and intrastate adoptive placements) in which Medicaid is refused outright by the adoptive parents; or there is a failure to perform some required action that would cause the issuance of a Medicaid card. Administrators are concerned that when such things occur, the prospects for long-term protection of the children may be threatened and so the administrators then ask how to rectify this situation. The fundamental question here is the effect of the foregoing circumstances on eligibility and access to Medicaid. The purpose of this Issue Brief is to clarify policy and practice regarding Medicaid eligibility for adopted children with special needs who satisfy the requirements of Title IV-E adoption assistance.

A Question of Entitlement

Children who are eligible for or receiving SSI or AFDC at the time the petitions to adopt are filed meet the basic criteria for adoption assistance under Title IV of the Social Security Act. In addition, the state must find the children have special needs that make adoption placement difficult absent assistance through the program. The Act further stipulates that children covered by adoption assistance program agreements are "deemed" to be AFDC recipients. Medicaid eligibility under this situation is established and continues as long as the program conditions for adoption assistance are satisfied (sec. 473(b)). In these circumstances, the right to Medicaid is automatic and is not dependent upon receipt of any financial assistance that may be part of the adoption agreement. Moreover, access to Medicaid is not terminated simply because the benefits are not used or steps are not taken to immediately activate issuance of a card. Some act absolutely rejecting the program must be performed.

Medicaid provides a safety net for many adopted children with special needs. It may be used in conjunction with private health insurance or as the primary source of health care coverage. Its position as an entitlement under the adoption assistance program attests to Congressional recognition of the often high health care costs for special needs children. Such costs (absent Medicaid) can serve as a disincentive to adopt children with special needs. The availability of Medicaid is, in most cases, welcome and relied upon.

The fact that adoptive parents may view Medicaid as unwanted or unnecessary does not affect the long-term rights of the children to program benefits. As a practical matter, officials of the Health Care Financing Administration (HCFA) advise these parents to simply discard the Medicaid card upon receipt. Not using the card will not result in ineligibility at some future point in time.

An adoption assistance agreement must contain all essential terms and the nature of payments, services and assistance. Provision for medical care is an essential element of any agreement for assistance that would be binding between the state and the adoptive parents. It is therefore important to fully document refusal of Medicaid in the event the parents wish to disclaim their children's rights in that regard. In order to protect the future interests of the children, Medicaid eligibility specialists suggest that language should be included indicating the agreement could be modified to reactivate benefits when necessary.

At this point it is good to note that access to Medicaid is predicated upon the circumstances of the children in question prior to adoption. Hence, eligibility is not a reflection on the adoptive parents' financial or emotional ability to parent.

Medicaid Eligibility

The purpose of the Medicaid program is to provide basic medical care for certain individuals with low income. The intent of the program has not been altered since it was established in 1965 nor has the link between Medicaid and federal cash assistance been severed. The vast majority of Medicaid eligible persons actually receives or is entitled to receive financial aid under either of two programs, i.e., AFDC, or SSI. Individuals ineligible for AFDC or SSI may still receive Medicaid benefits if they meet other statutory requirements and classifications. For example, the 1986 Consolidated Omnibus Budget Reconciliation Act (COBRA) included an option to cover children with special medical or rehabilitative care needs who are adopted under state subsidy programs (non-Title IV-E children). Another example is a provision of the Omnibus Budget Reconciliation Act of 1987 that established a state option to extend Medicaid to pregnant women and infants with incomes at or below 185% of poverty.

Program options, such as those noted above, give states a measure of flexibility to tailor their Medicaid programs to meet the needs of those for whom the federal government has not mandated coverage. As a consequence those recipients of Medicaid in one state may be ineligible in another. However, this is not a unique situation. Differences in who is covered and in what is covered are evident among the mandatory populations, the SSI or AFDC eligible.

Mandatory coverage under a state's Medicaid plan is extended to those who satisfy the eligibility requirements of either AFDC or SSI. States enjoy significant latitude in deciding the exact nature and extent of the medical services and procedures that are included in a state's Medicaid plan. For example, although in-patient hospital care is a required service for all state plans, 15 states have exercised their right to set limits on the number of in-patient hospital stay days permitted in the course of a year or per spell of illness. Actual inclusion in the mandatory coverage group of those, who by definition would appear to be members of the target population, e.g., the disabled, blind or needy, and dependent children of low income, also differs from state-to-state. This is due to differences between state program participation requirements as explained below.

· Aid to Families with Dependent Children (AFDC)

Through Title IV of the Social Security Act the AFDC program provides cash assistance for needy children who are deprived of the care and support of a parent. In general terms, children eligible for adoption assistance through AFDC were at one time part of an assistance unit; or would have been eligible if application had been made during the time (prior to removal) they lived with a parent or specified relative. The assistance unit includes a parent, (usually a mother), or other caretaker relative and dependent children. In addition to the deprivation factor, AFDC eligibility is predicated on limited household income and resources. The household (or assistance unit) must satisfy the following tests related to income:

· gross income must not exceed 185% of the state established standard of need for the applicable family size;

· countable or net income (gross income minus certain deductions) must not be in excess of 100% of the standard of need set by the state.

Due to the different standards of need in the states, many "poor" children may not meet AFDC criteria (non-Title IV-E children). For example, the need standard for a three person household in Alabama in January 1989 was $571 while it was $376 in Georgia.

Medicaid program options are one way that states can assist low income children and their families despite ineligibility for mandatory program inclusion. Options also are available to assist states in meeting the medical needs of non-Title IV-E children who are adopted pursuant to state subsidy programs. Two of the state options that may be used to benefit them are identified below.

· Ribicoff Children: Prior to COBRA, states could, at their option, bring certain non-Title IV-E children under Medicaid. According to program regulations, eligibility under this option is directed at children under age 21 who would meet the AFDC income and resource standards, but do not meet some other program element, e.g., the children in question had not been deprived of parental support or care (42 CFR 435.222). Further, "reasonable classifications" of such children also may be covered, e.g., children adopted under state subsidy programs. Deeming the income and resources of adoptive parents as available to children generally results is due to the income and resources of adoptive parents in making the children ineligible for the program under this option.

· COBRA Option: For purposes of this option, the financial status of the adoptive parents need not be considered. A prerequisite, however, is a special need for medical or rehabilitative care that would have precluded adoption absent medial assistance. Before or at the time the adoption subsidy agreement was executed:

a) (at the state's option) the child would have been eligible for Medicaid given its own income and resources (i.e., Title IV-E criteria used to determine payment for children in foster care) prior to execution of the adoption assistance agreement; or

b) The child --

i) was receiving or was eligible to receive Medicaid as either mandatory, or optional categorically or medically needy, or;

ii) was deemed eligible to receive Medicaid for the three month retroactive benefits period prior to application.

· Supplemental Security Income (SSI)

As with AFDC, SSI eligibility operates as a connection to the adoption assistance program and, hence, to Medicaid. SSI guarantees cash assistance to needy individuals who are aged (at least 65 years of age), blind, or disabled (according to standards for severity of impairment and inability to engage in gainful activity). Children under age 18 with disabilities of a severity comparable to that of adults, also may qualify for SSI. Receipt of adoption assistance payments does not foreclose SSI benefits.

Program requirements also cover income and resources. Countable income may not exceed the monthly federal benefit level (in 1989 the applicable amounts were $354 for an individual or $532 for a couple). For children in institutions, only the parent's income actually contributed for their care and up-keep is counted for eligibility purposes. Under certain conditions, children being cared for at home may retain their Medicaid program access while actual SSI payments are not made. This is possible through the so-called Katie Becket option that less than half the states have elected.

Children who are SSI recipients tend to be in foster care. Limits on income and resources disqualify most adopted special needs children from the SSI program. Despite a disabling condition, children may be either SSI benefits ineligible or lose their eligibility due to their income. Most often this happens because the income and resources of (adoptive) parents are deemed available to them. For purposes of adoption assistance, the SSI eligibility must only be demonstrated at the time of the adoption. As is the case with AFDC, actual receipt of SSI is not a prerequisite to qualify for adoption assistance.

By law the state is duty bound to provide Medicaid to those SSI and AFDC eligibles covered by adoption assistance agreements under Title IV. The state must issue a Medicaid identification and must honor the legitimate obligations incurred through its use. The parents and children concerned have every right to take advantage of the program or to dispense with the benefits that may be obtained through the program. However, because the law confers Medicaid entitlement status on the subject of adoption assistance agreements, the long-term health care interests of adopted special children are safeguarded.

© June 1990