HI 00815.012 Deemed Cash Recipients

Some beneficiaries who lose their eligibility for cash assistance because of an increase in Social Security benefits, Veterans Administration (VA) benefits, or earnings. Congress has determined that in certain cases, Medicaid benefits for these beneficiaries should continue as if their cash assistance had continued. Five specific laws cover these situations.

  1. Section 249E of Public Law 92-603 (Social Security Amendments of 1972).

    1. This provision mandates that any individual who is an Supplemental Security Income (SSI), State supplement, or cash assistance recipient under a State plan approved under Titles I, X, XIV, XVI, or Part A of Title IV for any month after August 1972 will be considered eligible for Medical assistance and Buy-in coverage if:

      1. for August 1972 the beneficiary was eligible for cash assistance under such plan for the State; and

      2. for August 1972 the beneficiary was entitled to monthly insurance benefits under Title II of the Social Security Act; and

      3. for such month (after August 1972), the beneficiary would be eligible for SSI, a State supplement or cash assistance under a State plan had the 20 percent increase in monthly insurance benefits under Title II of the act provided by P.L. 92-336 effective September 1972 not been applicable for such beneficiary. (Although P.L. 92-603 provided for coverage under this provision only until September 1974, P.L. 93-66 extended this coverage through June 1975 and P.L. 94-48 extended this coverage indefinitely. It does not apply to increases in title II subsequent to September 1972).

This provision affects Buy-in coverage primarily in those States which have bought in only for cash assistance recipients or which have included only the categorically needy in their title XIX plans. However, it could affect the month in which an beneficiary's Buy-in coverage begins in a State which has bought in for Title XIX Medical Assistance Only (MAO). If a beneficiary who has Medicaid as a result of this provision loses eligibility for some other reason (e.g., has an increase in resources) and subsequently reestablishes his eligibility, he should be placed on Buy-in immediately. Since the beneficiary is treated as a cash recipient, the normal 2 month waiting period is waived (see HI 00815.018.B.2. for stated policy). Any cases that have been improperly deleted should be reaccreted by the State to provide continuous Buy-in coverage. State Medicaid Eligibility records should be annotated to indicate deemed cash pay status to prevent inappropriate deletion activity.

  1. Section 503 of Public Law 94-566 — Under this law, those recipients of SSI or State supplements who lose those payments due to Cost-of-Living (COLA) increases in Title II benefits, and would still be eligible for those payments were it not for the Title II Cost-of-Living (COLA) increases, will be treated as continuing to receive those payments for purposes of Medicaid eligibility and Buy-in coverage. This law is effective with respect to Medicaid eligibility in July 1977 and thereafter and applies to COLA increases for June 1977 and all subsequent COLA increases provided by section 215(i) of the Social Security Act. This continuation of Medicaid Eligibility was based on the application of the “solely” test which considered only the Title II COLA.

    In 1984 the U.S. District Court, Northern District of California rendered a decision (Lynch v. Rank) that eliminated the “solely” test and replaced it with a “But for” test in all States. Under this “But for” test, Medicaid Eligibility is not limited to individuals who lose their SSI eligibility as a sole result of a Title II COLA.

    The “But for” beneficiaries are those who were entitled to (and received) both Title II and SSI benefits in any month after April 1977 and who subsequently lost eligibility for SSI for any reason, but who would still be eligible for SSI (or for an optional or mandatory State supplement) if the Title II COLA's which they received after they were last eligible for (and received) SSI and Title II concurrently were deducted from their countable income.

  2. Public Law 96-265, section 201, provides continued Medicaid eligibility for disabled or blind beneficiaries who lose SSI benefits or State supplements because they are performing Substantial Gainful Activity (SGA).

    1. Disabled or blind beneficiaries may qualify for a special SSI or State supplementation monthly payment provided earnings and other income are within prescribed limits set forth in this law. This special payment is treated the same as the regular SSI and State supplement payment for purposes of Medicaid eligibility. This provision is effective from January 1, 1981 through June 30, 1987.

    2. Medicaid eligibility is continued for blind and disabled beneficiaries who lose SSI