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The Southern Regional Initiative to Improve Access to Benefits for Low Income Families With Children

Chapter 3

Child Health Coverage

The majority of uninsured children live in families where at least one parent was employed full time at low wages.2 Even if dependent health coverage is available through the workplace, which it often is not for low income workers, it is financially out of reach for these families.

Since the mid-1980s, public policy initiatives have been enacted to provide opportunities for poor and low income families to obtain Medicaid coverage for their children without requiring the families to be on welfare. The first major step was taken in 1986, when Congress passed an amendment to allow nonwelfare pregnant women and infants to age one to be eligible for Medicaid. Leadership for this significant and progressive change in national public policy emanated from the southern states as they sought ways to reduce the high number of infant deaths and disabilities occurring in the South.3

Since 1986, additional amendments have increased Medicaid age and income eligibility levels to allow more children in low income working families to be eligible for Medicaid. This group of children is often referred to as “poverty related” children because their Medicaid income eligibility levels are based on a specific percentage of the federal poverty level, rather than a relationship to welfare.

Table 7 displays the federal minimum Medicaid age and income eligibility levels for poverty related children as of October 1997. Each year, federal law requires that the age level for children under poverty be increased by one year. Currently, all children through age 13 in families with income below poverty are eligible for Medicaid. By year 2002, all children 18 and younger under poverty will be Medicaid eligible. However, states are not prohibited from taking action immediately to accelerate the phase in of coverage for children ages 14 through 18 so as to provide Medicaid coverage for all children under poverty. States can accelerate the phase in and even establish higher eligibility levels for children by simply amending their State Medicaid Plan. A federal waiver is not required.

(Expressed As a Percentage of the 1997 Federal Poverty Level)
Age Federal Poverty Level Annual Income
(Family of Three)
Birth to Age 1 133% $17,729
Age 1 - 5 133% $17,729
Age 6 - 13* 100% $13,330
*On October 1 of each year, federal law requires that the age limit advance by one year until 18 year old children are included in the year 2002.

Research has shown that health insurance makes a difference when it comes to children having access to needed health care. Children without health coverage are less likely to have access to a regular source of medical care or to seek care for injuries, and are more likely to receive care in a clinic or emergency room and less likely to be appropriately immunized.4 A Families USA report cited the following:

Uninsured children frequently go without annual doctor visits. Almost two out of five long-term uninsured children (37 percent) have no doctor visits throughout the year -- more than two-and-one-quarter times the rate for insured children. Even young children age five years and under, who should receive annual doctor visits to monitor their growth and development, go without such care at three times the rate of insured children. When they do see doctors, long-term uninsured children are twice as likely as insured children to get care in emergency rooms.5

Studies have also shown that children with public health coverage such as Medicaid have comparable access to children who have private coverage.6

For low income families, affordability of child health coverage is a major impediment to their children having access to preventive and primary health care. As shown in Table 8, in the South, 65% of all uninsured children live in families with income at or below 200% of the federal poverty level.7


Area Less Than or
Equal to 100%
101% - 200% Greater Than or
Equal to 201%
Alabama 38% 29% 33%
Arkansas 28% 46% 25%
Delaware 8% 53% 38%
District of Columbia 47% 38% 14%
Florida 25% 37% 38%
Georgia 18% 32% 50%
Kentucky 34% 19% 47%
Louisiana 53% 26% 21%
Maryland 10% 39% 51%
Mississippi 28% 37% 34%
Missouri 21% 45% 34%
North Carolina 14% 33% 54%
Oklahoma 34% 43% 23%
South Carolina 35% 30% 35%
Tennessee 20% 34% 47%
Texas 29% 43% 28%
Virginia 8% 49% 43%
West Virginia 28% 26% 46%
UNITED STATES 25% 35% 40%
Source: Southern Institute on Children and Families (1994 CPS).

This chapter presents a discussion of issues that impede access to health coverage for low income children. Although the focus is on Medicaid, the issues are relevant to the design of other state health coverage programs for children. Every effort has been made to simplify the discussion of some very technical issues. Reading about it is difficult enough, but for families trying to navigate the complicated eligibility system with minimal assistance, it can be overwhelming. The emphasis is on the critical need to implement effective outreach and also to simplify the application process. Even if families are better informed about their options, difficult application procedures will still impede their access to health care programs for which they are qualified.

Medicaid Income Eligibility Levels for Children

Whether provided through Medicaid or another method, the first decision is to determine the income eligibility level at which the state will assist low income working families to obtain child health coverage. Tying eligibility to some percentage of the federal poverty level has been the usual method of setting income eligibility levels. Table 9 provides percentage categories based on the 1997 federal poverty level by family size.

Family Size 100% 133% 150% 185% 200%
One $7,890 $10,494 $11,835 $14,597 $15,780
Two $10,610 $14,111 $15,915 $19,629 $21,220
Three $13,330 $17,729 $19,995 $24,661 $26,660
Four $16,050 $21,347 $24,075 $29,693 $32,100
Note: Income guidelines are adjusted upward annually to reflect increases in the poverty level.
Source: Southern Institute on Children and Families.

In order for state policy makers to make informed decisions on the establishment of child health coverage eligibility levels, state data on the characteristics of uninsured children are needed, although such data are not readily available. To assist states, the Southern Institute analyzed data on uninsured children using the 1994 Current Population Survey (CPS).8 Uninsured children in the CPS are children uninsured all year. From a regional perspective, it was found that in 1993, 43% of the nation’s uninsured children resided in 17 southern states and the District of Columbia. The analysis found that age and income ranges which had the lowest percentages of uninsured children coincided with Medicaid age and income ranges. Some of the other findings are presented below:

During the Southern Institute state site visits in the spring and summer of 1997, attention was focused on the magnitude of the problem of uninsured children in the southern states. At that time, three southern states (ARKANSAS, OKLAHOMA and SOUTH CAROLINA) had recently initiated Medicaid expansions for children in low income working families. A few additional states were looking at expanding Medicaid or creating other opportunities for child health coverage. Nine states (DELAWARE, KENTUCKY, MISSOURI, NORTH CAROLINA, OKLAHOMA, SOUTH CAROLINA, TENNESSEE, TEXAS and WEST VIRGINIA) and the DISTRICT OF COLUMBIA had expanded or were considering expansions of Transitional Medicaid programs to provide longer periods of Medicaid coverage for families leaving welfare for work.

A survey was conducted to collect information on Medicaid age and income levels for children in the 17 southern states and the District of Columbia as of September 1997. The results are displayed in Table 10 and are summarized as follows:

(Displayed as a Percentage of the 1997 Federal Poverty Level)
Area Birth to 1 Ages 1-5 Ages 6-13 Ages 14-18b
Federal Minimum 133% 133% 100% None
Alabama 133% 133% 100% 15.2%
Arkansasc 200% 200% 200% 200%
Delaware 185% 133% 100% 100%
District of Columbia 185% 133% 100% 38%
Florida 185% 133% 100% 28%
Georgia 185% 133% 100% 100%
Kentucky 185% 133% 100% 48.6%
Louisiana 133% 133% 100% 17.6%
Maryland 185% 133%d 100%d 34.5%
Mississippi 185% 133% 100% 34%
Missouri 185% 133% 100% 100%
North Carolina 185% 133% 100% 100%
Oklahoma 150% 133% 100% 47.7%
South Carolina 185% 150% 150% 150%
Tennesseee 185% 133% 100% 53.2%
Texas 185% 133% 100% 17%
Virginia 133% 133% 100% 100%
West Virginia 150% 133% 100% 100%
a) The shaded areas indicate income levels or ages higher than the federal minimum.
b) For ages 14-18, percentages below 100% of the federal poverty level are state Aid for Families with Dependent Children (AFDC) eligibility levels as of July 16, 1996.
c) Arkansas has a Medicaid waiver to provide benefits to uninsured children with incomes below 200% who are not Medicaid eligible. Covered services for the expanded group differ from the regular Medicaid program.
d) Maryland has a Medicaid waiver to provide primary care benefits only to children in these age groups with incomes in excess of these percentages, but no higher than 185%.
e) Tennessee has a Medicaid waiver which allows specified uninsured adults and children who are not Medicaid eligible to buy TennCare coverage on a sliding scale.
Source: Southern Institute on Children and Families, Southern State Survey, October 1997.

Effective October 1997, the new Title XXI State Children’s Health Insurance Program (CHIP) was implemented. The enactment of this new federal initiative gives states enhanced federal matching dollars to provide health coverage for low income, uninsured children through Medicaid expansions or a state health coverage program.

According to the National Governors’ Association, as of January 12, 1998, four southern states (ALABAMA, FLORIDA, MISSOURI and SOUTH CAROLINA) had submitted CHIP implementation plans to HCFA. Listed below is information on these expansions in health coverage for children.

Medicaid Age Groups for Children

As shown in Table 10 above, state Medicaid income eligibility levels vary by children’s ages. The major reason for the age and income differences is the piecemeal manner in which the federal expansions were created. The differing age and income levels create a confusing and often disheartening situation for families with children of multiple ages. States must decide whether children’s ages will matter when it comes to health coverage.

It is difficult for both families and providers to understand why Medicaid income eligibility levels for children vary by age. Age makes no difference in children’s need for health coverage. For providers, having health coverage differences among children in the same family poses problems related to charging for care for uninsured siblings. Some physicians have indicated that they were hesitant to become the primary care provider for a family where some children had health coverage and others did not have coverage.

To achieve equity among children in the same family, to reduce confusion about coverage groups and to foster good provider relationships, Medicaid expansions or state health coverage programs need to be designed to achieve uniformity across age groups and income levels. In doing so, states must be cautious not to adversely affect children in the younger age groups who are Medicaid eligible at higher income levels. ARKANSAS has achieved uniformity across all age groups. SOUTH CAROLINA has achieved uniformity for children ages one through 18 and maintained 185% of the federal poverty level for infants to age one.

Section 1931 Medicaid Eligibility

Prior to welfare reform, families who were eligible for welfare were automatically eligible for Medicaid. The passage of welfare reform severed this automatic link.

During the welfare reform debate, concern was expressed regarding the need to maintain Medicaid coverage for families receiving AFDC at the time welfare reform was enacted. There was also a desire to give states an additional opportunity to provide Medicaid coverage for both children and parents in low income families. As a result, Section 1931 of the Medicaid law created a new Medicaid eligibility category to provide Medicaid coverage for families who meet a state’s AFDC eligibility requirements in effect on July 16, 1996, shortly before welfare reform legislation passed Congress.

States must now determine how to deal with two separate eligibility determinations, one for welfare and another for Medicaid. This does not mean that states have to use a separate application process and no southern state indicated the desire to do so. However, when the eligibility criteria differs between the Section 1931 rules and the new state welfare rules, administrative complexity is added to an already complicated process.

During the site visits discussions, it was apparent that states were struggling to find an efficient way to provide Medicaid coverage for families who receive welfare. Many states were experiencing difficulty in doing so because they had enacted or were preparing to enact more liberal eligibility criteria for welfare families than the state’s welfare criteria in effect on July 16, l996, particularly in the area of allowed assets and the deprivation requirement.

All but a few states provided assurances that when families applied for welfare, they were being informed of Medicaid coverage opportunities without welfare. Those that could not make such assurances at the time indicated that plans to inform families were underway.

As discussed in Chapter 2, it is essential that families applying for welfare and those receiving welfare understand that they do not have to receive cash assistance to receive Medicaid coverage. In particular, for children ages 14 through 18 in the nine southern states that have not accelerated the Medicaid age related phase in for children under poverty (see Table 10 above), coverage under Section 1931 may be the only way they can obtain Medicaid coverage without being on welfare unless a state also has a Medically Needy program.

While the southern states did not want to return to automatic eligibility, all states indicated that they would like to have the option to create a Medicaid category that is a mirror image of their state’s welfare criteria under the TANF block grant so that they would be able to link welfare families to Medicaid eligibility without the need for a separate eligibility determination.

Asset Testing

An additional state decision regarding eligibility for child health coverage is whether to disallow assistance to income eligible families who have assets such as a savings account and automobile. Federal law gives states the option to not impose an asset test in determining Medicaid eligibility for children.

Most states do not conduct an asset test for children. In the South, only ARKANSAS and TEXAS conduct asset tests for children’s Medicaid. OKLAHOMA recently took action to eliminate asset testing effective December 1, 1997.

Transitional Medicaid

Transitional Medicaid benefits are provided to families who leave welfare due to increased earnings. Federal law states that families are entitled to Transitional Medicaid coverage for six months regardless of income and for an additional six months if their income does not exceed 185% of the federal poverty level.

Discussions during the site visits indicated that when families lose Transitional Medicaid in the second six months, it is usually not because their income exceeded 185% of the poverty level. The major reason for loss of Transitional Medicaid benefits is because families did not comply with reporting requirements related to verification of income. These reporting requirements are burdensome for families, employers and eligibility agencies and have little merit with regard to quality control. During site visit discussions, all states indicated that they would like to have the option to provide Transitional Medicaid benefits for 12 months without interim reporting requirements.

Federal law also requires as a condition of eligibility for Transitional Medicaid that families actually receive cash assistance for at least three months of the preceding six months. In effect, this rule encourages families to apply for welfare in order to obtain Medicaid coverage for their family. All states indicated that they would like to have the option of eliminating this rule.

States recognize that providing Medicaid coverage during a transitional period is an important strategy for welfare reform. However, an issue related to Transitional Medicaid is that it is time limited rather than income based. Benefits are terminated at a specific time regardless of the family’s ability to pay for health coverage at that point.
As reported above, at the time of the site visits, nine southern states and the District of Columbia had increased or were giving consideration to increasing the time period for receipt of Transitional Medicaid. However, Southern Institute interviews and focus groups with families have identified time limited benefits as discouraging to families leaving welfare for work. Their clear message is that they would like to see benefits of all types available on a sliding income scale so that they earn out of the range of eligibility rather than having benefits expire due to an arbitrary time limit.

After the expiration of Transitional Medicaid, it is likely that the children will still be eligible for Medicaid, especially if they are in the younger age groups where income eligibility levels are higher. For very low wage workers, however, having coverage for parents as well as children is important for the family’s well being.

Two southern states have created programs to provide health coverage for adults. DELAWARE provides health coverage through the Diamond State Health Plan to uninsured individuals with incomes below the poverty level. TENNESSEE allows both children and adults in low income families to buy into Medicaid. Both states had to obtain federal 1115 waivers to enact their programs.

During site visit discussions, several states indicated a desire to be able to provide Medicaid benefits on a sliding income scale without having to go through what they consider to be an ordeal to obtain a federal Medicaid waiver.

State Child Health Coverage Strategies

During the site visit discussions, strategies implemented by southern states to expand health coverage for children in low income families were identified. Summaries of five state approaches are outlined below and state contacts are provided for further information.


An initiative of Governor Mike Huckabee, the ARKids First program was implemented in September 1997 to provide health coverage to working families who earn too much to be eligible for Medicaid, but cannot afford to purchase their own health insurance. ARKids is available to children through age 18 with income at or below 200% of the poverty level.

ARKids required a Medicaid 1115 waiver since it provides a limited benefits package and families are charged a small copayment for services. There is no resource test under ARKids.

Funding for ARKids is provided by $11 million in state Medicaid dollars and $33 million in federal Medicaid matching funds.

An aggressive marketing campaign is underway to reach out to eligible families. (See the Outreach program summary below for more information.) As of January 1998, 10,000 children were enrolled in the program.


William Freeburn
Arkansas Department of Human Services
PO Box 1437
Little Rock, AR 72203


Healthy Kids is a non-Medicaid health insurance program offered through public schools. Currently, Healthy Kids is operating in 19 of Florida’s 67 counties with over 47,000 children enrolled in the program. Children enrolled in the National School Lunch Program are deemed eligible for subsidized coverage. Those eligible for the program are uninsured children ages five through 18 who are enrolled in school and who are not eligible for Medicaid. Some counties have extended eligibility to pre-school children or younger siblings.

To reach children who are eligible for the program, Healthy Kids relies on the school system. On the first day of an open enrollment period, an application is sent home with the children. Applications are also sent home with report cards, with PTO meeting announcements and other materials that the school uses to communicate with the families. Included with the application is a self addressed envelope that families send directly to the Healthy Kids corporate office in Tallahassee.

All applications are forwarded to a Third Party Administrator (TPA) who creates an electronic record for the account. Electronic matches are made with the school systems and the State of Florida to verify age, school enrollment, and lack of Medicaid enrollment. Current efforts are underway to coordinate more closely with Medicaid to assure that children are appropriately referred. Matches are also made with the school system to verify participation in the National School Lunch Program. Children who are determined eligible for Healthy Kids are sent a letter from the TPA announcing the effective date of health coverage.

Healthy Kids is also promoted through radio and television public service announcements that can be utilized by counties during an open enrollment period. In addition, counties may elect to create a marketing program that includes billboards, newspaper advertisements, flyers and tray liners for fast food restaurants.

South Carolina

In September 1997, Governor David Beasley announced the Partners for Healthy Children initiative which increased the income eligibility level for Medicaid to 150% of the poverty level for children ages one through 18. It is anticipated that the initiative will provide Medicaid coverage to an additional 75,000 children in South Carolina.

Funding for Partners for Healthy Children is being provided by a public-private partnership. State Medicaid match of $3 million was contributed by three children’s hospitals in South Carolina (Greenville Hospital System, Medical University of South Carolina and Richland Memorial Hospital). The South Carolina Department of Health and Human Services allocated $1 million and $2 million was appropriated by the South Carolina General Assembly. The state contributions will draw down federal Medicaid matching funds to provide a total program of over $31 million. (See the Outreach program summary below for more information.)

Contact :

Kelly Nicholson
Department of Health and Human Services
PO Box 8206
Columbia, SC 29202


The TennCare Program has been operating under an 1115 waiver since January 1, 1994. Initially TennCare provided health coverage to all uninsured who did not have access to health insurance. In January 1995, enrollment was closed to the uninsured but remained open to the Medicaid population and uninsurables.

Effective April 1, 1997, TennCare opened enrollment for children under age 18 who did not have access to insurance through their parents’ or guardians’ employers. It was estimated that as many as 50,000 children would qualify under the open enrollment. As of December 7, 1997, 24,916 children had enrolled.

On January 1, 1998 an expansion occurred to include all children under 19, regardless of access to insurance, if the family’s total income is below 200% of poverty. The open enrollment period for children below 200% of poverty will remain in effect until March 30, 1998. Open enrollment for children without access to health coverage will continue indefinitely.


Keith Johnson
Tennessee Department of Health
Bureau of TennCare
729 Church Street
Nashville, TN 37247-6501


In order to make health care coverage available to working families, Virginia offers a Health Insurance Premium Payment (HIPP) program. It was established in 1991 within the Department of Medical Assistance Services (Medicaid). Through HIPP, Medicaid funding is used to pay the health insurance premiums. After being approved for Medicaid and determined eligible for HIPP according to state regulations, the entire family may be covered. This program is allowed under Medicaid as long as it is cost effective and in accordance with Health Care Financing Administration regulations.

Every application for Medicaid is accompanied by an application for HIPP, providing there is evidence of insurability. Applications, employer verification forms and the medical history questionnaire are checked for accuracy at the Department of Social Services level. They are sent to the HIPP Unit at Medicaid. HIPP staff verify all necessary information with the employer. This may include but is not limited to types of plans, availability, premium amounts, eligibility and dates.

The cost of the group health insurance package is compared with the cost of the Medicaid managed care capitation plan. If the cost of the group health insurance package demonstrates savings on an annual basis, then the applicant is requested to enroll in HIPP. Medical utilization review and health insurance costs are taken into consideration when calculating cost effectiveness.


Debbie Giffin
Department of Medical Assistance Services
600 E. Broad Street, Suite 1300
Richmond, VA 23219

Medicaid Eligibility Outreach

Despite state initiatives to provide Medicaid coverage opportunities for more low income children, there are approximately three million children who are eligible for Medicaid, but are not enrolled.9 Therefore, state policy makers should not consider the job done when they raise Medicaid eligibility levels or create a state child health insurance program. Special attention must be given to outreach and eligibility simplification if the intent of expansions is to be realized. Outreach issues and strategies are discussed below.

State Outreach Strategies

State outreach initiatives were a major topic of discussion on the state site visits. While there are some exemplary programs that have been implemented in the South, outreach initiatives were not underway in most states. Five statewide eligibility outreach initiatives are summarized below and contact information is provided.


On September 1, 1997, ARKids First was implemented to provide health coverage to working families who earn too much to be eligible for Medicaid, but cannot afford to purchase their own health insurance. ARKids is available to children through age 18 with income at or below 200% of the poverty level. Outreach efforts to promote the new program include the following:


William Freeburn
Arkansas Department of Human Services
PO Box 1437
Little Rock, AR 72203


The Right from the Start Medicaid (RSM) Project began in July 1993 as Governor Zell Miller’s response to Georgia’s high infant mortality rate. The project was created to address the need to improve health care access for all children and pregnant women.

Through an agreement with the Georgia Department of Medical Assistance and the Georgia Department of Human Resources, eligibility workers are placed in health departments, hospitals, clinics, schools, day care centers, community action agencies and other locations in local communities. A major feature of the program is availability of staff during non-traditional hours so that applicants can apply for RSM without having to lose time from their jobs or from school. Non-traditional hours are defined as any time other than 8:00 AM to 5:00 PM, Monday through Friday.

The application process for RSM is quick and easy. Verification requirements are limited and RSM workers are trained to assist applicants in obtaining the verification they need to become enrolled in RSM.

Workers and supervisory staff make presentations regularly to community groups, medical providers and employers. Since 1994, RSM staff have made over 33,000 presentations. RSM staff have utilized creative techniques for distributing information to the public. Some examples include: flyers sent home with school children, program information in women’s and children’s shoe boxes, visits to day care centers, and brochures on pizza boxes delivered to homes. Employer contacts have resulted in opportunities to distribute literature through personnel offices and at employee forums, and to accept applications at job sites.

Additionally, Georgia is using the Southern Institute information outreach brochures statewide.

Contact :

Shannon Patterson
Georgia Department of Human Resources
Division of Family and Children Services
Two Peachtree Street, NW (16-400)
Atlanta, GA 30303-3142

South Carolina

To assure that eligible children become enrolled in South Carolina’s Medicaid expansion program, Partners for Healthy Children, the South Carolina Department of Health and Human Services created a centralized eligibility system to give applicants new opportunities for filing applications. Parents can obtain applications from schools, doctors’ offices, neighborhood pharmacies, local health clinics, child care centers and nearby hospitals, as well as typical governmental sources such as the county Department of Social Services. Applications are mailed to a central location, where eligibility is quickly determined.

A simplified application, which includes a straightforward income eligibility chart, was designed especially for children’s Medicaid. McLeod Regional Medical Center participated in the printing of approximately 500,000 applications. (See Appendix D for a copy of the application.)

Additionally, South Carolina is using the Southern Institute information outreach brochures statewide.

Contact :

Kelly Nicholson
Department of Health and Human Services
PO Box 8206
Columbia, SC 29202


Effective April 1, 1997, the TennCare program opened enrollment to uninsured children up to age 18 who do not have access to insurance through parents’ or guardians’ employers. It was estimated that as many as 50,000 children would be eligible. The following outreach efforts were launched to enroll as many of the 50,000 children as possible:

Additionally, Tennessee is using the Southern Institute information outreach brochures statewide.


Keith Johnson
Tennessee Department of Health
Bureau of TennCare
729 Church Street
Nashville, TN 37247-6501

West Virginia

West Virginia is taking the following actions to improve access to Medicaid for children and families.


Jack Frazier
West Virginia Bureau for Medical Services
7012 MacCorkle Avenue, SE
Charleston, WV 25304

Medicaid Application Process

The success of efforts to reach out to families to let them know about health coverage opportunities for their children will be limited without also taking action to simplify the application process. If the application process is intrusive and creates embarrassment for families, many families will simply turn away. Some may form lasting impressions that will keep them from trying again.

Medicaid eligibility determinations are typically conducted in a bureaucratic atmosphere amidst many illogical eligibility rules and procedures. Families often describe the application procedures and requirements as demeaning. It is likely that the process of applying contributes significantly to the reported stigma associated with Medicaid. And many eligibility workers are just as frustrated as the applicants with all of the rules and regulations. The following statement by an eligibility worker in a previous study provides some insight:

You can either be a paper worker or a social worker, but it is difficult to be both with these caseloads and requirements...It would be great to have more discretion, but what happens when you use the wrong discretion?...Performance reviews are focused on reducing errors and on the standard of promptness. There is no discussion of who you helped. 10

Simplification of the process by which families file applications is a critical component of serious efforts to help children gain access to Medicaid or other health coverage programs. To decrease the eligibility barriers and increase the likelihood that eligible children can become enrolled will require state and local eligibility agencies to undertake a comprehensive review of current policies and procedures with the clear intent of making benefits more accessible.

Many of the policies and procedures that govern the Medicaid application process evolved from the welfare eligibility rules. While the Medicaid application process has become somewhat more user friendly in recent years, it is important to deal directly with some of the welfare policies that have influenced the Medicaid eligibility process for children, particularly verification requirements.

During the 1980s, federal and state policies communicated strong messages to local welfare agencies to direct more and more attention to keeping ineligible people from receiving assistance. There was no counterbalancing message to agencies to help eligible persons obtain benefits. Major resources were allocated for “quality control” measures that placed primary attention on errors that resulted in ineligible families receiving benefits. Little attention was given to the errors that resulted in eligible families being denied benefits. Few or no resources were directed to development of outreach systems to assist families who had difficulty obtaining the many required verification documents. Rather than promoting a balanced approach to eligibility services, this eligibility services environment favored denials.

One indicator of the extent of eligibility barriers present in the welfare program is the percentage of denials issued for procedural reasons rather than for reasons related to eligibility criteria, e.g., excess income. An analysis of AFDC (welfare) eligibility data for federal fiscal year 1996 is enlightening. It shows that almost one-third (31%) of families applying for welfare were denied. Of the denials, over half (55%) were due to what is recorded as applicant failure to comply with procedural requirements. At the time, AFDC eligibility resulted in automatic eligibility for Medicaid, so these families were also denied Medicaid coverage. Appendix E contains state by state data on AFDC application denials for 1996.

In the early 1990s, Congress directed that Medicaid quality control policies for poverty related groups take into account the need to measure both inappropriate approvals and inappropriate denials of eligibility. However, by the time this new policy direction was provided, the mindset that had produced numerous complicated rules for eligibility workers and numerous verification requirements for families had become well established. To bring some balance to eligibility services, new concepts and policies must be envisioned and implemented.

On the state site visits, meetings were held with state and local eligibility staff to examine Medicaid and welfare related eligibility policies and procedures. Extensive discussions were held to identify application procedures that can impede access to health coverage, especially those procedures that relate more to welfare than to Medicaid. Additionally, strategies to make the application process more user friendly were identified. Findings and strategies are discussed below.

Application Locations

In the Omnibus Budget Reconciliation Act of 1990, the Medicaid law was amended to require states to accept and begin processing applications for pregnant women and children at locations other than those used for welfare. These locations included “disproportionate share” hospitals and federally qualified health centers.

States were asked to identify the locations other than welfare agencies where applications could be filed. Outstationing practices varied considerably across the states. There was confusion in some states regarding the ability of providers to contribute to the state Medicaid match needed to implement outstationing.

Many states reported some outstationing of eligibility staff at hospitals, typically at regional hospitals, federal health centers and health departments. In some instances, the state Medicaid match for outstationed staff has been provided by the hospitals where staff are located. ALABAMA reported that Medicaid eligibility staff are outstationed in all health departments.

LOUISIANA reported the establishment of 400 Medicaid application sites throughout the state, including rural health clinics, community action agencies and application centers. Employees of application centers are required to complete a four day training session. At the application centers, Medicaid applications are taken and then forwarded to the Medicaid agency for a determination.

Face-to-Face Application Requirements

Face-to-face interviews can be problematic for working families, especially those who do not get paid unless they are on the job. During site visit discussions, states were asked if they allow families to apply for Medicaid by mail or telephone and whether state policy requires face-to-face interviews. Most states allow applications to be submitted by mail and many states also allow submission by telephone. Eight states (ALABAMA, ARKANSAS, FLORIDA, MISSOURI, SOUTH CAROLINA, TENNESSEE, VIRGINIA and WEST VIRGINIA) and the DISTRICT OF COLUMBIA do not require face-to-face interviews.

Verification Requirements

Studies have documented the extent to which verification requirements restrict access to Medicaid. Written verification of income, age, citizenship, family composition and other items often require considerable time and resources to collect and frequently applicants must rely on third parties to provide the required documentation within a tight time period. These third parties, such as employers or family members who may be making a small cash contribution to help the family, may or may not be cooperative.

The process of obtaining verification requirements is often considered demeaning by families seeking health coverage for their children. Verification is an area where states have flexibility. States make the decisions regarding which items must be verified by a document, which items can be self declared and the extent to which eligibility workers are given discretion. Generally, the process is regimented and little discretion is given to eligibility workers. Typically, when the applicant fails to return all required verification within the specified time, the application is denied for procedural reasons.

Agency initiatives to review verification requirements are essential to making the application process more private and more user friendly. An agency review of verification requirements should include the following:

When attention is given to reducing the percentage of denials due to procedural reasons, improved eligibility outcomes have been achieved. Some examples are:

Income Verification. Table 11 shows the results of research conducted in Atlanta, Georgia on procedural denials of pregnant women and children applying for Medicaid. The table represents an unduplicated count of the number of different documents requested of each applicant and not returned.13 As shown, wage related information, such as check stubs or employer statements, is the information most likely not to be returned by applicants. Employer cooperation is critical to the family’s ability to verify information on the application if payroll stubs are not issued or the family did not retain their check stubs for the required period of time.

ARKANSAS reported that a new state law requires employers to report income in 20 days and that this information is used to verify that recipients are leaving welfare for work. GEORGIA allows self declaration of income for families with income below the poverty level and has not experienced increases in error rates using this method of verification.

One study examining issues related to procedural denials reviewed 100 randomly selected cases denied for procedural reasons to determine the likelihood that the family met income criteria. The review of cases denied for procedural reasons showed that 77% of the denied applicants were likely to be financially eligible.14

Documents Not Returned Total Documents
Not Returned
% of Documents
Not Returned
Employer Related 51 36%
Check Stub/Wage Verification 39 28%
Employment Separation Notice 12 9%
Personal/Family Characteristics 35 25%
Social Security Number 18 13%
Health Insurance Questionnaire (285) 5 4%
Citizenship 4 3%
Health Insurance Information 3 2%
General Identification 2 1%
Proof of Address 1 1%
Verification of Living Arrangements 1 1%
Proof of Relationship 1 1%
Pregnancy Related 21 15%
Pregnancy Verification 13 9%
EDC 8 6%
Miscellaneous 15 11%
Child Care Expenses 3 2%
Life Insurance Information 2 1%
Copy of Lease from Apartment 2 1%
Information on Medical Insurance 2 1%
Expense Statement 2 1%
Shelter Statement 1 1%
Statement Regarding Name Change 1 1%
Work Registration Exemption 1 1%
Verification of Student Financial Aid 1 1%
Other Cash Benefits 7 5%
Proof of Application/Award for UCB 4 3%
Proof of SS Award Letter 1 1%
Final Payment of UCB 1 1%
Verify Worker's Compensation 1 1%
Contribution 6 4%
Contribution Statement 6 4%
Child Support Related 5 4%
Proof of Child Support Payment 3 2%
Information on Absent Parent 1 1%
Child Support Form (130) 1 1%
TOTAL 140 100%
Source: Sarah Shuptrine and Associates, 1994.

Age of Children Verification. Birth verification can be an expensive verification item for families applying for health coverage. Charges for birth certificates vary by state. If the child is born within the state, eligibility workers should obtain verification of birth through state vital statistics systems rather than requesting that families provide birth certificates. In 1991, SOUTH CAROLINA implemented a statewide birth verification system which provides a link to vital statistics. ARKANSAS reported that recent action has allowed eligibility workers on line access to vital statistics data for the purpose of verifying birth records.

Eligibility Worker Discretion Regarding Verification. Discussions during the site visits identified state practices regarding the extent to which eligibility workers are allowed discretion in determining when verification is necessary. Some states allow considerable discretion while others take a strict approach to verification. Table 12, Table 13, Table 14 and Table 15 provide information collected on the site visits regarding state approaches to verification.

State Income Verification
Required in All Cases
Income Verification
Required When
Alabama X  
Arkansas X  
Delaware X  
District of Columbia X  
Florida X  
Georgia Only when declared income
exceeds 100%
Only when declared income
is below 100%
Kentucky X  
Louisiana X  
Maryland X  
Mississippi X  
Missouri X  
North Carolina X  
Oklahoma X  
South Carolina X  
Tennessee X  
Texas X  
Virginia X  
West Virginia X  
TOTAL 18 1
Source: Southern Institute on Children and Families, 1997.

State Age Verification
Required in All Cases
Age Verification
Required When
Alabama X  
Arkansas X  
Delaware X  
District of Columbia X  
Florida   X
Georgia   X
Kentucky   X
Louisiana X  
Maryland X  
Mississippi X  
Missouri X  
North Carolina   X
Oklahoma   X
South Carolina   X
Tennessee X  
Texas X  
Virginia X  
West Virginia X  
TOTAL 12 6
Source: Southern Institute on Children and Families, 1997.

State Family Composition
Verification Required
in All Cases
Family Composition
Verification Required
When Questionable
Alabama   X
Arkansas X  
Delaware X  
District of Columbia   X
Florida   X
Georgia   X
Kentucky   X
Louisiana X  
Maryland   X
Mississippi   X
Missouri X  
North Carolina   X
Oklahoma   X
South Carolina   X
Tennessee X  
Texas X  
Virginia   X
West Virginia   X
TOTAL 6 12
Source: Southern Institute on Children and Families, 1997.

State Citizenship Verification
Required in All Cases
Citizenship Verification
Required When
Alabama   X
Arkansas   X
Delaware X  
District of Columbia X  
Florida X  
Georgia   X
Kentucky   X
Louisiana X  
Maryland   X
Mississippi   X
Missouri   X
North Carolina   X
Oklahoma   X
South Carolina   X
Tennessee X  
Texas   X
Virginia X  
West Virginia   X
TOTAL 6 12
Source: Southern Institute on Children and Families, 1997.

Verification Check Lists. A written list of required verification items that is orally reviewed during the application interview can be helpful to applicants. Notwithstanding the usefulness of “check lists,” preprinted check lists that contain more items than are required for verification of a child’s Medicaid application can contribute to procedural denials.

Families may misunderstand that they are required to return only the items checked. In some cases, families said they did not return any verification items because they did not have all of the items.15 The family has no way of knowing which items are most important. It’s also helpful to have a statement that indicates that the agency is willing to provide assistance if needed.

Another issue related to check lists is that many are difficult to read and understand. DELAWARE has developed an attractive approach to check lists. They have utilized some color and each check list gives the date and time for the application interview appointment. The check lists, referred to as “Slim Jims,” also include a statement letting applicants know to call if they need assistance.

Application Processing Period

Southern states indicated that applicants are typically given 10 days following an application interview to submit required verification unless there are unusual circumstances that would require more time. Since most states have not devoted resources to providing outreach workers to augment the eligibility worker who is normally desk bound, the eligibility worker usually has no choice but to initiate a procedural denial if the verification is not provided within the specified period.

Since many states have been sued on timeliness issues, eligibility workers are particularly attuned to the need to take quick action even if that means a procedural denial. If the applicant requests more time, it is generally allowed, but many applicants are unsure that additional time is a possibility.

Eligibility workers report that denial notices are sometimes treated as reminder notices by families and thus result in a second application being submitted, producing a reapplication. Assisting applicants to obtain required verification can reduce procedural denials and duplicative work by eligibility workers.

Maintaining Eligibility

During the site visits, the discussions included a review of procedures by which states assure that all categories of Medicaid eligibility are searched before determining a child is ineligible and that Medicaid coverage should be terminated. Most states indicated that they rely on eligibility workers to manually initiate searches for other possible categories of eligibility and to transfer the child’s case if a category is found.

In five states (FLORIDA, KENTUCKY, LOUISIANA, TENNESSEE and WEST VIRGINIA) and the DISTRICT OF COLUMBIA, automation has made the process of searching for other Medicaid eligibility categories less burdensome and error prone for eligibility workers, while protecting children from inappropriate case closures. The West Virginia automated system, know as RAPIDS, is outlined below.

West Virginia

West Virginia has 47 Medicaid eligibility categories. Before the automated system known as RAPIDS was developed, eligibility workers were expected to manually review all eligibility possibilities. Working through a hierarchy of eligibility, the system evaluates the applicant or recipient for eligibility within the various categories and informs the worker of the results.


Roger S. Neptune, HHR Specialist, Sr.
RAPIDS/Office of Family Support
West Virginia Department of Health and Human Services
1012 Kanawha Boulevard East
Charleston, WV 25301
Phone: (304) 348-0879
Fax: (304) 348-0875

Measuring Eligibility Outcomes

During the site visits, states were asked about the availability and use of data to measure Medicaid eligibility outcomes, particularly procedural denials. LOUISIANA is the only state that reported having an official policy to avoid procedural denials. Only three states (DELAWARE, NORTH CAROLINA and MISSISSIPPI) reported that they regularly review eligibility outcome data.

States were also asked whether they were seeing equivalent increases in Transitional Medicaid and poverty related children Medicaid cases as welfare rolls declined. Only two states (DELAWARE and VIRGINIA) reported equivalent increases in Transitional Medicaid and poverty related Medicaid for children as welfare rolls declined.

The Health Care Financing Administration does not require states to report Medicaid eligibility outcome data. Without a federal reporting requirement of eligibility outcome data, data on Medicaid approval rates and the reasons for denial or the extent of procedural denials are not readily available.

Actions That Can Improve Access to Child Health Coverage

Actions are needed at the state and federal levels to improve access to health coverage for low income children. Some of these actions are described below.

  1. To increase the number of low income children who have health coverage, states should utilize the opportunities presented by the Medicaid program, CHIP and state/local coverage programs to design a coordinated approach to child health coverage.
    • To assure health coverage for all children living in poverty, states should accelerate the federal Medicaid phase-in for all children 18 years old and younger.
    • To prevent inequity of health coverage across age groups, states should design coverage programs for low income children to achieve uniformity in age groups and income levels.
  2. To allow states to efficiently provide Medicaid coverage for children and families who are eligible under the state welfare (TANF) program, the Medicaid law can be amended to give states the option to create a Medicaid eligibility category which mirrors TANF eligibility.
  3. To assure that families applying for welfare (TANF) understand that they do not have to be on welfare to obtain Medicaid coverage for their children, states should fully inform and link applicant families to health coverage opportunities, such as Medicaid poverty related children coverage, Section 1931 coverage, state CHIP coverage and other state/local coverage programs.
  4. To avoid denying Medicaid coverage to children in income eligible families who have resources that exceed state asset limits, states should exempt assets when determining eligibility for child health coverage.
  5. In order to reduce the chances that reporting requirements could result in income eligible families losing Medicaid benefits during the first year after leaving welfare, the federal Medicaid law can be amended to give states the option to eliminate reporting requirements in the second six months of Transitional Medicaid.
  6. To avoid requiring families to spend a specified time on welfare in order to obtain health coverage, the federal Medicaid law can be amended to give states the option to eliminate the rule that requires families to receive cash assistance for three out of the previous six months in order to be eligible for Transitional Medicaid.
  7. To assist low income families to access health coverage for their children, states and communities should design and implement aggressive outreach strategies.
  8. To improve access to child health coverage, states and communities should identify and implement actions needed to make the application process less burdensome for families.
  9. In order to avoid erroneous or premature termination of Medicaid benefits for a child, states should develop and implement information systems which assure that children are automatically transferred from one eligibility category to another without disruption to their Medicaid benefits.
  10. To assure that the eligibility system is regularly examined with the goal of reducing policy and procedural barriers, states and communities should establish a periodic review process of eligibility outcome data.


2 General Accounting Office, New Strategies to Insure Children, (Washington, DC: US General Accounting Office, GAO/HEHS-96-35, January 1996) p.4.

3 Southern Regional Task Force on Infant Mortality, Final Report for the Children of Tomorrow, (Washington, DC: Southern Governors' Association, November 1985).

4 General Accounting Office, New Strategies to Insure Children, 3; Linda J. Blumberg and David W. Liska, The Uninsured in the United States: A Status Report, (Washington, DC: The Urban Institute, April 1996); and Ron Pollack, Cheryl Fish-Parcham and Barbara Hoenig, Unmet Needs: The Large Differences in Health Care Between Uninsured and Insured Children, (Washington, DC: Families USA, 1997).

5 Pollack, Fish-Parcham and Hoenig, 1.

6 U.S. Congress, Office of Technology Assessment, Healthy Children: Investing in the Future, OTA-H-345 (Washington, DC: U.S. Government Printing Office, February 1988), 17; Alan C. Monheit and Peter J. Cunningham, "Children Without Health Insurance," The Future of Children, Vol. 2, No. 2 (Winter 1992): 154-170; The Uninsured in the United States: A Status Report, 5.

7 Sarah C. Shuptrine and Vicki C. Grant, Uninsured Children in the South, Second Report, (Columbia, SC: Southern Institute on Children and Families, November 1996) p. 10.

8 Ibid., p.v.

9 General Accounting Office, Health Insurance for Children: Private Insurance Coverage Continues to Deteriorate, HEHS-96-129, June 17, 1996.

10 Sarah C. Shuptrine and Vicki C. Grant, Assessment of the Medicaid Eligibility Process in Chatham County, Georgia, (Columbia, SC: Sarah Shuptrine and Associates, June 1991) p. 13.

11 Sarah C. Shuptrine, Vicki C. Grant and Genny G. McKenzie, Addressing the Need for Outreach to Pregnant Women and Children in Georgia, (Columbia, SC: Sarah Shuptrine and Associates, March 1994) p. 13.

12 Ibid., p. 13.

13 Sarah C. Shuptrine, Vicki C. Grant and Genny G. McKenzie, Improving Access to Medicaid for Pregnant Women and Children (Columbia, SC: Sarah Shuptrine and Associates, February 1993) p. 24.

14 Ibid., p. 37.

15 Ibid., p. 30.