Disabilities Guidebook: Medicaid (for Adults)

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Author: David Wolowitz & Michael O'Connor, Prairie State Legal Services
Last updated: October 2014

(Chapter 9 Section 2 from Guidebook of Laws and Programs for People with Disabilities)
 

What It Is: Medicaid is a state and federal program that pays for medical expenses for certain eligible low-income individuals.

Where to Apply: Illinois Department of Human Services (IDHS)

Who May Be Eligible: Medicaid now covers low income adults with or without children . Additionally, it also covers persons who are 65 and older, blind, disabled, or pregnant and cannot afford to pay their medical bills. (The program also benefits certain other kinds of persons.)

What This Guide Covers: This guide focuses on Medicaid for people who are 65 and older, blind, or disabled. If you are between 18 and 65, and earn less than 133% of the federal poverty line, you may qualify for Medicaid in Illinois. For more information, visit Medicaid.gov

Your Legal Rights

The Medicaid Program
If you are eligible for Medicaid you will receive a medical card. You can use this card to pay for doctor visits, hospital care, prescription drugs, and other medical care, without cost to you.

Medicaid is a welfare program run by the Illinois Department of Healthcare and Family Services (IDHFS). However, the Illinois Department of Human Services is the state agency which actually takes applications and makes eligibility determinations for Medicaid.

In order to be eligible, your income and assets must be below a certain level. If your income or assets are over the limit, you may be ineligible, or you may be personally responsible for part of your medical bills and Medicaid will pay for the rest.

The coverage and eligibility rules for Medicaid will vary depending on what group you are in. This section deals with Medicaid for disabled or blind adults and those over 65 who cannot afford health insurance.

Doctors are not required to participate in the Medicaid program. Therefore, you may have trouble finding a doctor who will treat you, especially if you live in a rural area. Also, the law does not require doctors who participate to accept all Medicaid patients.

If your medical providers do participate in Medicaid, they cannot discriminate against you in the type or quality of treatment you receive just because Medicaid pays for the services.

The Difference between Medicare and Medicaid
Unlike Medicaid, which is run by IDHFS/IDHS, Medicare is a health insurance program operated by the Social Security Administration. Medicare is generally available only to people over age 65 and to people who receive Social Security Disability Insurance (SSDI). Unlike Medicaid, there are no income or asset limitations for Medicare participants. Medicare participants must pay premiums, deductibles and co-payments. Medicare is discussed in Section 4 of this Chapter.

Who is Eligible for Medicaid?

Medicaid for adults is available to Illinois residents. In general, only U.S. citizens, permanent residents and legal aliens residing in Illinois qualify for Illinois Medicaid. U.S. citizens must provide U.S. passports, birth certificates or other proof of citizenship or naturalization. Legal aliens must provide green cards or other proof of immigration status. On January 1, 2014, Medicaid in Illinois expanded and now includes all low income adults ages 19 to 64. It also includes people over 65, the disabled and blind, and pregnant women. Each group has a different set of income requirements. 

This guide only considers adults over 65 and those who are blind or disabled. The eligibility guidelines for these groups, sometimes called "the medically needy," have not changed with the new health care rules. 

Adults under 65 that are blind or disabled may also be eligible for the new Medicaid group that covers all low income adults. For more information, visit Medicaid.gov or the Illinois Department of Human Services website.

To be disabled means to be unable to work due to physical or mental impairments which has lasted or is expected to last for at least 12 months or to result in death. For a detailed discussion of Social Security's five step analysis to determine whether and individual is disabled, see the section of this Guidebook titled "Social Security Disability Benefits and Supplemental Security Income (SSI)."

Income and Asset Limits.
The income limit for Medicaid coverage of adults varies for different categories of applicants. For adults who are blind, disabled or who are age 65 or over, IDHS has established a community standard income level. This level is 100% of the federal poverty level.

You are eligible for Medicaid if your income is below the community standard income level. If your income is over the community standard, you will have an income spend down before Medicaid will be available to cover medical bills. The spend down process is discussed below in greater detail later. 

IDHS does not count certain types of "exempt" income in determining your eligibility for Medicaid. However, the resource limit may vary depending upon the type of Medicaid program you are enrolled in. Contact IDHS at 800-843-6154 to obtain the specific income and resource limits for your type of Medicaid.

Examples: the first $25 per month from any source; SSI benefits, food stamps, the first $50 of the total child support payments received each month, energy assistance grants, earned income tax credits, and a portion of employment income are exempt.

Asset Limits
In order to qualify for Medicaid because of blindness, disability, or age, you cannot possess over a certain amount of assets, depending upon if you are single ($2000) or if you are living with a dependent child or spouse ($3000 combined). Assets are separate from income and refer to your possessions that have value.

The asset limit for Medicaid coverage of adults depends on which of the above groups you are in. There are no asset limits for pregnant women and for persons eligible because they have a dependent child in their care.

For persons who are eligible for Medicaid because of blindness, disability, or age, IDHS will not count the value of your assets up to a certain level. They will not count up to $2000 worth of assets for a single adult and up to $3000 for an adult and one dependent residing together (add an additional $50 for each additional dependent household member). This is called the "asset disregard."

If the value of your assets exceeds the asset disregard limit, you will have an asset spend-down. Again, the "spend-down" process is discussed in greater detail below.

In the case of adults who are blind, "disabled," or over age 65, certain types of assets are not counted at all in determining whether you have reached the asset limit. These are called "exempt" assets.
Examples: the family home; clothing, personal effects and household furnishings; one automobile, up to a certain value, or of any value if it is necessary for employment, medical treatment or transportation of a person with disabilities.

Citizenship. To be eligible for Medicaid, you must be a U.S. citizen, or be within one of several categories of non-citizens (e.g., refugees, persons lawfully present in the U.S. for over five years). However, any non-citizen who is ineligible for Medicaid but who meets the financial eligibility criteria is eligible for medical assistance necessary for the treatment of an emergency medical condition. 

What Services Are Covered?

Medicaid coverage for adults is more limited than the coverage provided to children. Medicaid covered services for adults include the following:

  • Physician Services, including specialists, necessary to diagnose and treat illness or injury;
  • Hospital care, both inpatient, outpatient, and emergency room services;
  • Optical services and supplies, including exams and corrective lenses;
  • Dental Services, only for emergency services;
  • Podiatric Care, only for diabetics;
  • Prescription drugs. Prior approval is required for many drugs and the prior approval hotline number is 1-800-252-8942. Medicaid will cover up to 4 prescriptions a month. For more than 4 prescriptions in one month, prior approval is needed. When a generic equivalent drug is available, Medicaid will not pay for the full cost of the name-brand drug, unless the doctor indicates that the name brand-drug is medically necessary. Medicaid will cover some over the counter products.;
  • Mental Health Clinic Services, All mental health services are covered as long as they meet the standards of the Medicaid Community Mental Health Services Program. These services include an assessment and development of a treatment plan, crisis intervention, day treatment programs, and psychiatric care, therapy and medication management;
  • Therapy Services, including physical, occupational and speech/language services prescribed by a doctor and needed due to illness, disability or infirmity. Prior approval may be required;
  • Hospice Care to terminally ill persons, including nursing care, physician services, medical social services, short term inpatient care, medical appliances, supplies and drugs, home health aide services, and therapy and speech-language pathology services to control symptoms. These services may be provided regardless whether the person resides in the home or in a hospital, nursing home or institution;
  • Medical equipment, supplies and devices, medical supplies, equipment, prostheses and orthoses, and respiratory equipment and supplies, when prescribed by a doctor and are necessary to enable a person to remain at home or to function in the community;
  • Prosthetic Devices, including communication devices, which are essential to enhance functional mobility, medically necessary communication, or are essential to allow the person to independently perform activities of daily living;
  • Transportation for Medical Purposes, This includes transportation in a private car provided by a family member or friend, an ambulance, medicar, public transportation, or emergency helicopter. Except in emergencies, pre-approval must be obtained. The program pays for transportation only to the nearest available and appropriate provider, by the least expensive type which is adequate. When public transportation is available and is a practical form of transportation, the program will not pay for a more expensive mode of transportation;
  • Psychological Services, including the services of a psychologist in either a private practice or a community mental health center;
  • Group Care, Medicaid will cover medically necessary institutional care. The program will pay only those facilities licensed by the Illinois Department of Public Health. Pre-approval of group care is required;
  • Home Care Services, Short term, intermittent, home health services are covered by Medicaid. Covered services must be of a curative or rehabilitative nature. They must demonstrate progress toward short term goals outlined in a plan of care developed by a doctor. Home health services may be provided by a home health care agency, or by a physical therapist, speech therapist, or an occupational therapist. Long term home health care services are also covered under a Medicaid waiver program. These services are discussed in greater detail in the section of this guidebook titled "Home Services Program," in Chapter 11, Independent Living and Productivity.
  • Miscellaneous Medical Services, Encounter rate clinic visits, laboratory and x-ray services, family planning services and supplies, subacute alcoholism and substance abuse services, and telehealth services.
  • Nursing Home Care, Medicaid will pay for intermediate or skilled nursing home care. It will not pay for custodial care in a nursing home. The income and asset eligibility rules for Medicaid are different for nursing home residents.

If the Medicaid eligible adult does not have a spouse, the following rules apply:

  1. All income except $30 per month must be paid toward the nursing home costs. The normal income exemptions do not apply. However, expenses incurred for medical care not covered by Medicaid can be deducted from income;
  2. The value of the adult's house is not exempt, unless: the adult intends to return to the home following the nursing home stay, or the house is occupied by a sibling, minor child, or disabled adult child of the nursing home resident.

If the Medicaid eligible adult in the nursing home has a spouse.
If there is a spouse, then there are special rules so that the spouse who remains at home will have sufficient income and assets. These are called the "community spouse" rules.

The "Community Spouse" Rules: The spouse living in the nursing home may keep non-exempt assets totaling $2,000. In addition, the spouse who continues to live in the community may keep non-exempt assets, up to a certain value. This is called the "community spouse asset allowance." As of July 2012, the amount was $109,560.  The amount is revised each year. To the extent that the community spouse's assets are below the asset allowance, the spouse in the nursing home may transfer assets to the community spouse.  This also includes that the community spouse rules also apply when one spouse needs in-home services through the Home Services Program

Example: Sam is a resident of a nursing home. His wife, Mary, resides in their home. Sam's assets consist of a $40,000 Certificate of Deposit. Mary's assets consist of a $20,000 savings account. Sam and Mary also own a joint savings account with a balance of $10,000. Because Mary's assets are below the community spouse asset allowance, Sam may transfer his assets to Mary up to the amount of the community spouse asset allowance. In this case, Sam may transfer all of his assets to Mary, because the total value of the combined assets ($70,000) is less than the community spouse asset limit ($109,560).

For residents of nursing homes, there are special rules regarding income, as well. The spouse in the nursing home may keep income of only $30 per month. As of July 2012, the spouse in the community could have monthly income of up to $2,739. This is called the "the community spouse maintenance needs allowance (CSMNA)." The amount is revised each year. The $30 per month exemption is increased to $90 if nursing resident receives veteran’s benefits

If the community spouse's income is below this level, the nursing home spouse may transfer income to him or her up to the maximum income allowance.
Example: Sam is in a nursing home. His wife, Mary, resides in their own home. Sam's monthly income is Social Security of $900 and a pension of $200. Mary's monthly income is Social Security of $500. Because Mary's income is below the community spouse income allowance of $2,739, Sam may transfer his income to Mary up to the amount of the community spouse income allowance. In this case, Sam may transfer all of his income to Mary, because the total value of the combined monthly income ($1,600) is less than the community spouse income limit.

The Transfer Rule: To prevent people from transferring assets so they can qualify for Medicaid, there is penalty against people who transfer assets for less than fair value. Medicaid will look back for transfers made in the previous 60 months before the application for Medicaid is made. The penalty will not be enforced if the transferred asset is returned and if the transferred asset is only partially returned, the penalty will be reduced.

This penalty prevents Medicaid eligibility. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of nursing home care.

The penalty period will not begin until:

  • You move to a nursing home
  • You have spent down to the asset limit for Medicaid eligibility
  • You apply for Medicaid coverage and
  • You have been approved for coverage

Transferring assets will not always trigger the penalty. You are exempt if you make the transfer to:

  • A spouse
  • A blind or disabled child
  • A trust for the benefit of a blind or disabled child
  • A trust for the sole benefit of a disabled individual under age 65

The Medicaid applicant may transfer his or her home to:

  • The applicant's spouse
  • A child who is under age 21 or who is blind or disabled
  • Into a trust for the sole benefit of a disabled individual under age 65
  • A child of the applicant who lived in the house for at least two years and who provides care

Pre-Approval of Certain Medical Care: IDHFS requires pre-approval of many types of non-routine medical care. Pre-approval also is required for many types of medical equipment and assistive technology devices, and many prescription drugs.

The doctor or other healthcare provider who is recommending the proposed treatment or device must submit information about why the treatment or device is medically necessary in order to receive payment.

The "Spend Down" Process

If your income or assets are above the limits, you will have what is called a "spend-down." A spend-down is similar to a deductible under an insurance policy. If you have a spend-down, you will be eligible for Medicaid coverage and you will receive a medical card only after you meet the spend-down amount. The amount of the spend-down will vary, depending on how much your income or assets exceed the limits.

You meet the spend-down amount by incurring (not necessarily paying) medical bills in the amount of your spend-down. This means that as soon as you have medical bills in the amount of the spend-down, you have met your spend-down, even though you may not yet be able to pay all of those bills.

It is very important, therefore, that you keep copies of all medical bills, prescription receipts, and records of other medical expenses. When you accumulate enough bills to meet your spend-down, submit copies of the bills to your caseworker at the local IDHS. The program will then process the bills so that you can receive a medical card.

Pay-in Spend-Down
Pay-in Spend-Down gives you the option of paying your spend-down amount to IDHFS. If you are enrolled in Pay-in Spend-Down, there are three ways to meet your spend-down:

  • Use your medical expenses toward your monthly spend-down amount, or
  • Pay your monthly spend-down amount to IDHFS, or
  • Combine medical expenses (bills and receipts) and a payment to IDHFS.

FOR EXAMPLE: You are enrolled in Pay-in Spend-down. Your spend-down is $100. You need a medical card for August, but only have a $50 medical bill to use toward your spend-down. To combine medical expenses and a Pay-in payment, you may show the $50 bill to your IDHFS caseworker and send a $50 payment to IDHFS to meet spend-down for August.

Persons who are aged, blind or have a disability may qualify for Pay-in Spend-down. If you qualify for Pay-in Spend-down, DHFS will send you a notice and enrollment form with a return envelope. You must sign the form and send it to the IDHFS Pay-in Spend-Down Unit in Springfield to enroll.
 

Types of Expenses That Can Be Used to Meet the Spend-Down
You can use a number of expenses to meet your spend-down. They include the following:

  • Physician and hospital services
  • Medications
  • Cost of travel to obtain medical care (when Medicaid is not directly paying for travel)
  • Medicare and other medical insurance premiums, deductibles or other insurance co-payments
  • Some dental expenses, many in-home care services, and over-the-counter medicines when prescribed by a physician
  • Nursing home services
  • Clinic services
  • Medical supplies and equipment prescribed by your doctor
  • Eyeglasses
  • Insurance premiums, including Medicare premiums
  • Speech, occupational and physical therapy
  • Co-payments or deductibles you pay for medical care

To meet your spend-down, you can use a bill for medical services or medications purchased within the past six months. In some cases, you can use a bill which is older than six months if the bill is re-issued and you are still obligated to pay it (provided that you were eligible for Medicaid at the time the bill was incurred). However, you may not use the bill more than once to meet your spend-down.

If you have not met your spend-down for three consecutive months, IDHFS will send you a notice stating that your case has been canceled. However, you may reapply for Medicaid when you have sufficient bills to meet the spend-down.

Medicaid Liens and Estate Recovery
IDHFS can recover the money that it spends on nursing home care by filing a claim against the estate of the Medicaid recipient after he or she dies. IDHFS can also file a claim against the estate of the person's spouse after the spouse's death. In some cases, IDHFS also can obtain a lien against any real estate owned by the nursing home resident or that person's spouse.

In addition, upon your death, IDHFS can seek to recover from your estate the value of the medical assistance provided to you after you reached age 55.

How to Apply for Medicaid
You may file an application at your county Illinois Department of Human Services office or online here. Medicaid coverage of incurred medical bills can be granted retroactively, up to 3 full months before the date that you apply, as long as you met the eligibility criteria during that period. This is called "backdating" of eligibility. You should specifically request back-dating if you have any unpaid medical bills from the 3 month period before your application.

Using Medicaid to Pay for Medicare Premiums
Persons who receive Medicare part A and meet certain income guidelines are potentially eligible for the Qualified Medicare Beneficiaries/Specified Low Income Beneficiaries (QMB)/(SLIB) Program. For more information contact your local Family Community Resource Center (FCRC). For the office nearest you, please use the IDHS Office Locator.

What to Do If You Are Denied Medicaid or Medicaid Coverage

Common Problems
A person who already receives Social Security or SSI benefits based on their disability automatically meets the disability criteria for Medicaid eligibility. All other applicants who seek Medicaid coverage on the basis of disability are required to prove that they are "disabled."

The State denies many applications on the basis that the applicant is found to be "not disabled." It is very important that you provide your caseworker with all available medical evidence to document the presence of a disabling condition. If you do not have any current medical evidence and cannot afford to pay to see a doctor, IDHFS must pay for a medical examination. Often, it is necessary to file an appeal and obtain legal representation to establish that you are "disabled" and eligible for Medicaid.

Even if you are found eligible for Medicaid participation, Medicaid may deny coverage of a medical service or medical equipment. Common reasons for denial include:

  • Failure to obtain pre-approval
  • The treatment or equipment is not medically necessary
  • There are more cost effective [INVALID]natives
  • The medical service or item is not a Medicaid covered service

What to Do If You Are Being Billed for Medicaid Covered Services
Sometimes, you may find that you are being billed for medical treatment or some other service or item that you believe should have been covered by Medicaid. Perhaps the bill has been placed with a collection agency or you are being sued or threatened with a lawsuit. In these cases, you may file a "Medicaid Claim Inquiry" with IDHS.

When receiving such an inquiry, IDHFS will investigate the matter and must give you a written response within 30 days. IDHFS may agree to pay the bill at this time. If IDHFS decides that the bill is not covered by Medicaid, you may file an appeal as described below. If IDHFS decides that the bill would have been covered, but that the medical provider failed to properly bill IDHFS without fault on your part, this may be a valid defense for your refusal to pay the bill.

A Medicaid Claim Inquiry must be in writing, and should include: your name and address; the patient's name; the date of service; the Medicaid case number and recipient identification number; the medical provider's name and address; and a brief description of the facts. You must attach a copy of the collection agency's letter or written evidence of a pending or threatened lawsuit.

The form should be mailed to :

Illinois Department of Healthcare and Family Services
Bureau of Comprehensive Health Services
Litigation/Collection Review
201 S. Grand Ave. East
Springfield, Illinois 62763-0002

Those making an inquiry also can call the litigation collection staff at (217)782-5565

Appeal Procedures
If your application for medical benefits is turned down, you can appeal and ask for a fair hearing. You must file the appeal within 60 days of the date of the denial notice. The appeal can be filed at your local IDHS office, in the following way:

  • Your local Family Community Resource Center can give you an appeal form and will help you fill it out, if you wish;
  • You can file an appeal by writing to the Bureau of Administrative Hearings, 401 S Clinton Street, Chicago, Il 60607;
  • Or you may call 1-800-435-0774 (TTY: 1-877-734-7429). The call is free.

After you file the appeal, IDHS will hold a "pre-hearing conference." You will meet with the caseworker and her supervisor. If the denial was due to a misunderstanding about the facts, IDHS may agree to approve the case at this stage.

If IDHS does not approve your request at the pre-hearing stage, they will schedule a "fair hearing." At the hearing you will have the opportunity to present your case before a hearing officer, and IDHS will then issue a written decision. At the hearing, you have the following rights:

  • To be represented by a lawyer, a friend or relative
  • To present the testimony of witnesses
  • To present documents supporting your case, such as medical records and doctor's statements

If you win an appeal concerning the denial of your initial application for Medicaid, your Medicaid coverage will be retroactive to the date that coverage would have started if your application had been approved. Likewise, if you successfully appeal the termination of your Medicaid, coverage will be restored retroactive to the date of termination.

To continue Medicaid benefits during an appeal, you must appeal within 10 days of the date of the notice of change OR before the date the change becomes effective (the date the change becomes effective is included on the notice of change). Be sure to get some kind of record that you filed your appeal showing the date you filed it.

Review by a Court
If the hearing officer rules against you, you may file a lawsuit in the Illinois Circuit Court. You must file any such lawsuit no later than 35 days from the date that the decision was sent to you.

There are strict rules about who to include as a defendant in such a court case. For Medicaid cases, check your decision and add as a party every agency on the decision - this may include IDHS and IDHFS. Consult an attorney for further assistance.

You or your lawyer will have the opportunity to make written and oral arguments in support of your case. The judge will then decide whether IDHFS and the hearing officer fairly considered the facts and properly applied the law. The judge can approve your claim, deny your claim, or remand your case to the IDHFS to be reevaluated in accordance with the judge's instructions.

Where to Go for More Information

Phone Numbers
For information about your eligibility status if you are a Medicaid participant, or for help in finding medical providers participating in Medicaid, call the Client Health Benefits Hotline in Illinois at 1-800-4-OUR-KIDS (1-866-468-7543) toll free or TTY at 1-877-204-1012.

For information about the location of your nearest IDHS office or for other information, call the IDHS-Bureau of Customer Inquiry and Assistance at 1-800-843-6154(v) or 1-800-447-6404(TTY).

Statutes and Regulations
The Federal Medicaid statute can be found starting at 42 U.S.C. § 1396. The federal regulations are at 45 C.F.R. 246-250.

The Illinois state Medicaid law can be found at 305 ILCS 5/5.
State regulations are at 89 Ill. Admin.Code Part 120 (medical program eligibility), Part 140 (medicaid covered services), Part 148 (medicaid covered hospital services).

Websites

Social Security Administration
Medicare
Medicaid
Illinois Department of Healthcare and Family Services

Illinois Department of Human Services

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