What Does the Term "Medically Needy" Mean?

If Your State Has a Medically Needy Program, You Might Be Medicaid-Eligible

Medically needy programs cover pregnancy.
Medically needy programs cover pregnancy. Nils Hendrik Mueller/Getty Images

The term medically needy is a distinction used for individuals who fall into a specific category of Medicaid eligibility in states that have opted to implement the medically needy program.

32 states and the District of Columbia operate medically needy programs, which allow them to provide Medicaid to certain groups of individuals with high medical costs who would not otherwise be eligible for Medicaid based on their income.

Medicaid is designed to cover low-income individuals, generally without regard for how they spend their income. But if your state has implemented a  medically needy pathway to Medicaid eligibility, your medical costs can be taken into account when determining whether your income makes you eligible for Medicaid.

So in other words, your income might be too high for Medicaid eligibility, but if you have to spend so much of your income on medical costs that the remaining income would make you Medicaid-eligible, you could qualify for Medicaid if your state has a medically needy program.

The opportunity to subtract the money you spend on medical care from your income in order to qualify for Medicaid may be particularly useful if you are elderly and reside in a nursing home. Also, children and adults with disabilities who live in the community may have high prescription drug, medical equipment, or other health care expenses.

The Affordable Care Act significantly expanded the number of people in the country who are eligible for Medicaid—total enrollment in Medicaid and CHIP (Children's Health Insurance Program) grew by 29 percent from late 2013 through late 2017. Some people who were previously only eligible for Medicaid under a medically needy program are now eligible due to the expanded income guidelines for Medicaid that the majority of states have implemented.

Medicaid

Medicaid is an insurance program specifically designed for low income and needy individuals. Medicaid has historically provided health coverage for low-income children (and in some cases, their parents), senior citizens, and individuals with disabilities.

The expansion of Medicaid under the Affordable Care Act opened up Medicaid eligibility to low-income, non-elderly adults as well, regardless of disabilities or whether they have children (note that there are still 19 states that have not accepted federal funding to expand Medicaid as of 2018).

And while there are several factors that determine eligibility for Medicaid for various populations, income is a primary factor. By and large, Medicaid is designed to provide health coverage to low-income Americans (there are some exceptions, such as the Katie Beckett waiver program).

Medicaid is funded by the federal government in conjunction with all fifty individual states. So unlike Medicare (which is funded solely by the federal government), Medicaid programs differ from one state to another, since the states have control over some aspects of the program.

If your state offers a medically needy program, it must cover:

  • Pregnant women
  • Children under 19

    Your state also has the option to cover:

    • Children up to 21
    • Parents and other caretaker relatives
    • Elderly individuals
    • Individuals with disabilities

    Medicaid Benefits

    Each state is required to cover certain particular health benefits. Benefits that the states are required to cover by the federal government are known as mandatory benefits. Such mandatory benefits include:

    • Services of a physician, a nurse midwife, and nurse practitioner, if necessary.
    • Necessary laboratory or x-ray services
    • Outpatient and inpatient hospital services
    • Services, supplies, and information regarding family planning
    • Access to services within various community health centers and rural health clinics
    • Various other services and state options

    To find the Medicaid Agency in your state, use the interactive map from the National Association of State Medicaid Directors.

    Sources:

    Kaiser Family Foundation. Medicaid and the Uninsured. The Medicaid Medically Needy Program: Spending and Enrollment Update. December 2012.

    Kaiser Family Foundation. Medicaid Eligibility Through the Medically Needy Pathway. State Participation, 2015.

    Kaiser Family Foundation. Total Monthly Medicaid and CHIP Enrollment. November 2017.