Prescription Drug Coverage for Medicare Beneficiaries: Medicaid and State Pharmaceutical Assistance Programs

Prescription Drug Coverage for Medicare Beneficiaries: Medicaid and State Pharmaceutical Assistance Programs

Order Code RL31485
Report for Congress
Received through the CRS Web
Prescription Drug Coverage for Medicare
Beneficiaries: Medicaid and State
Pharmaceutical Assistance Programs
June 27, 2002
Julie Stone
Analyst in Social Legislation
Domestic Social Policy Division
Heidi G. Yacker
Information Research Specialist
Information Research Division
Congressional Research Service ˜ The Library of Congress

Prescription Drug Coverage for Medicare Beneficiaries:
Medicaid and State Pharmaceutical
Assistance Programs
Summary
Medicare is the nation’s health insurance program for 40 million elderly and
disabled individuals. It provides beneficiaries with significant coverage for many
health care services. However, it provides a very limited outpatient prescription drug
benefit. Most beneficiaries (almost 90%) have private or public supplemental
coverage to close the gaps in Medicare’s coverage. However, in 1999, only 62.3%
of beneficiaries had coverage for outpatient prescription drugs, primarily through
employer-sponsored plans, Medicare managed care plans, and Medigap plans.
Approximately 13% of all beneficiaries are eligible for prescription drug
coverage under programs run at the state level, through Medicaid and state
pharmaceutical assistance programs. These are primarily individuals who are low-
income or who have large medical expenses that deplete their income and assets.
Eligibility criteria for Medicaid and state pharmaceutical programs vary widely
among the states. Medicaid has numerous pathways through which Medicare
beneficiaries can qualify for coverage of their prescription drug costs. This report
describes the standards used by each state in determining eligibility. In addition, 20
states currently operate pharmaceutical assistance programs that provide subsidies
to qualified individuals, usually the low-income elderly or disabled. This report
describes the eligibility criteria and benefits under each program. The report will be
updated as new data become available.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Eligibility for Prescription Drug Coverage Under Medicaid . . . . . . . . . . . . . . . . . 3
Welfare-Related Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Coverage of SSI Recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Coverage of Persons in 209(b) States . . . . . . . . . . . . . . . . . . . . . . . . . . 5
State Supplemental Payment (SSP) benefits . . . . . . . . . . . . . . . . . . . . . 5
Maximum Income Eligibility Standard . . . . . . . . . . . . . . . . . . . . . . . . . 5
Medically Needy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Poverty-Related Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1115 Waiver Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1915(c) Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
State Pharmaceutical Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
List of Tables
Table 1. Medicaid Income Eligibility for Outpatient Prescription
Drug Coverage for Elderly and Disabled Individuals by State . . . . . . . . . . . 8
Table 2. State Pharmaceutical Assistance Programs in Operation as
of April, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 3. Highest Income Eligibility Standards under Medicaid and
State Pharmaceutical Assistance Programs as a Percent of the
Federal Poverty Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Prescription Drug Coverage for Medicare
Beneficiaries: Medicaid and State
Pharmaceutical Assistance Programs
Introduction
Medicare is the nation’s health insurance program for 40 million elderly and
disabled individuals. It provides coverage for many health care services, including
hospital, physician, home health, and skilled nursing facility services. It does not,
however, provide coverage for all of the health-related services that beneficiaries
need. Notably, Medicare provides only limited coverage of outpatient prescription
drugs.1
Most beneficiaries (almost 90%) have supplemental private and public coverage
for many expenses not paid by Medicare. However, in 1999, only 62.3% of
beneficiaries had supplemental coverage that paid for outpatient prescription drugs.2
Those who had supplemental coverage obtained it through employer sponsored plans
(28.3%), Medicare HMOs (15.3%), Medicaid (10%), Medigap (6.8%), and public
programs (1.9%) such as those through the Veterans Administration or the
Department of Defense and through state pharmaceutical assistance programs.3
Drug coverage under Medicaid and states’ pharmaceutical assistance programs
is provided primarily to elderly and disabled persons who are low-income or who
have large medical expenses that deplete their income and assets. Medicaid, the
largest public payer of prescription drugs, offers outpatient drug coverage to certain
groups of Medicare enrollees.4 In 1999, the most recent year for which data are
available, Medicaid paid for prescription drugs primarily on an outpatient basis for
approximately 19.8 million individuals. Combined federal and state Medicaid
spending for prescription drugs in that year totaled $16.6 billion.5
1 See CRS Report RL30819, Medicare Prescription Drug Coverage for Beneficiaries:
Background and Issues, by Jennifer O’Sullivan.
2 Laschober, Mary A., et al. Trends in Medicare Supplemental Insurance and Prescription
Drug Coverage, 1996-1999. Health Affairs, February 27, 2002. p. W127-W138.
3 The questionnaire employed for the survey whose data are used in this report might not
have fully captured beneficiary participation in state pharmaceutical programs.
4 Medicaid covers prescription drugs for all inpatient stays, i.e., in hospitals or nursing
homes. For more information on Medicaid coverage of prescription drugs, see CRS Report
RL30726, Prescription Drug Coverage under Medicaid, by Jean Hearne.
5 MSIS Statistical Report for Federal Fiscal Year 1999, Center for Medicare and Medicaid
(continued...)

CRS-2
Pharmaceutical assistance programs provide subsidies for prescription drug
costs to about 1.25 million elderly and disabled individuals. As of April 2002, 20
states operated these programs. In general, these programs are targeted toward low-
income elderly and disabled persons whose income exceeds the Medicaid standard
used in the state but for whom paying for prescription drugs out-of-pocket is
difficult.6
The growing cost of health care has sparked debate about whether and how to
provide a Medicare prescription drug benefit. A number of bills have been
introduced in Congress to provide such a benefit. It is generally agreed, however,
that if Congress were to amend Medicare to create a drug benefit, it would take
several years before the program could be implemented. As an interim measure,
some proposals have been introduced to expand existing Medicaid drug coverage to
a subset of the Medicare population that is low-income and not otherwise covered.
The FY2003 budget proposed by President Bush, for example, would begin phasing
in prescription drug coverage for low-income Medicare beneficiaries by allowing
states to expand their current Medicaid programs to cover outpatient prescription
drug costs of Medicare beneficiaries whose incomes are up to 100% of the poverty
level. For this coverage, the federal government would pay states at the matching
rates provided in current law.7 Although some states already provide coverage to this
group of individuals, most states do not. The President further proposed to allow
states to expand their Medicaid programs to pay for prescription drug coverage for
Medicare beneficiaries with incomes up to 150% of the poverty level at an enhanced
federal match. The federal government would pay 90% of the states’ costs for those
beneficiaries with incomes between 100% and 150% of poverty. State participation
under both of these Medicaid expansion proposals would be voluntary.
This report presents a broad brush picture of who among low-income Medicare
beneficiaries are eligible for some level of prescription drug coverage under
Medicaid and state-funded pharmaceutical assistance programs. Three tables are
presented. Table 1 shows income eligibility requirements for Medicaid prescription
drug coverage by state in 2000, the most recent year in which data are available.8
Table 2 shows eligibility requirements and other information for state funded
prescription drug coverage under state pharmaceutical assistance programs in 2002.
Table 3 shows each of the program’s highest income eligibility requirements as a
percent of the federal poverty level.
5 (...continued)
Services, Washington, D.C. [http://www.hcfa.gov/medicaid/msis/msis99sr.htm]
6 Some states also have programs that provide certain elderly and disabled individuals with
discount cards or other bulk purchasing opportunities for the purchase of prescription drugs.
See [www.ncsl.org/program/health/drugaid.htm for more information].
7 The federal government shares in a state’s Medicaid costs by means of a statutory formula
designed to provide a higher federal matching rate, Federal Medical Assistance Percentage
(FMAP), to states with lower per capita income.
8 For more information on Medicaid eligibility requirements for the elderly and disabled, see
CRS Report RL31413, Medicaid: Eligibility for the Aged and Disabled, by Julie Stone.

CRS-3
Eligibility for Prescription Drug Coverage
Under Medicaid
Medicaid is a federal-state matching entitlement program, established under
Title XIX of the Social Security Act, that provides medical assistance for certain
groups of low-income individuals, primarily children, adult members of families
with children, pregnant women, and individuals who are aged, blind, or disabled. It
is the third largest social program in the federal budget, surpassed only by Social
Security and Medicare, and is typically the second largest spending item in state
budgets (surpassed often only by education). In FY1999, the federal share of
spending on Medicaid was $107.7 billion; the states spent approximately $72 billion.
Medicaid is a means-tested program. To qualify, enrollees’ income and other
resources must be within the program’s financial standards. Within broad federal
guidelines, states have flexibility to set these standards. Financial standards used by
states are based, in large part, on estimates of anticipated spending that will occur
with these standards.
Although the Medicaid statute requires states to pay for certain services for
Medicaid beneficiaries, it does not require them to pay for outpatient prescription
drugs. For states that choose to provide coverage of these drugs, the statute grants
them flexibility to select which groups they want to cover. Although there is a wide
variety in the level of coverage across state Medicaid programs, all states cover
outpatient prescription drugs for at least some beneficiaries; more than half of the
states cover outpatient drugs for all beneficiaries. Most of the $16.6 billion spent on
prescription drugs in 1999 was spent on medications for the program’s elderly and
disabled enrollees.
The following sections describe the eligibility categories that states use when
determining which elderly and disabled individuals may qualify for Medicaid
coverage. Table 1 provides a summary of these eligibility pathways and provides
information on the income eligibility standards for each of the categories. It is
important to note that there are additional groups of low-income Medicare
beneficiaries, not described below, that are eligible to have some of their Medicare
cost-sharing expenses paid for by Medicaid. These groups are referred to as qualified
Medicare beneficiaries (QMB), specified low-income Medicare beneficiaries
(SLMB), and qualifying individuals (QI-1 and QI-2).9 These individuals only qualify
9 Qualified Medicare Beneficiaries (QMBs) are entitled to Medicare Part A, have income
of 100% FPL or less and resources that do not exceed twice the limit for SSI eligibility
($4,000), and are not otherwise eligible for full Medicaid. Medicaid pays their Medicare
Part A premiums, if any, Medicare Part B premiums, and Medicare deductibles and
coinsurance for Medicare services provided by Medicare providers. Specified Low-Income
Medicare Beneficiaries (SLMBs) are entitled to Medicare Part A, have income of greater
than 100% FPL, but less than 120% FPL and resources that do not exceed twice the limit
for SSI eligibility, and are not otherwise eligible for Medicaid. Medicaid pays their
Medicare Part B premiums only. QI-1 and QI-2 categories are effective until December 31,
2002. There is an annual cap on money available for these categories, which may limit the
(continued...)

CRS-4
for Medicaid prescription drug coverage if they fall into the eligibility categories
described below.
Welfare-Related Eligibility
Traditionally, Medicaid eligibility for aged and disabled individuals has been
linked to the federal welfare program, Supplemental Security Income (SSI), under
Title XVI of the Social Security Act. SSI is a means-tested cash assistance program
for aged, blind, and disabled individuals who have low incomes and limited
resources. The SSI program is administered at the federal level. While most states
and the District of Columbia extend automatic Medicaid eligibility to persons
receiving SSI, some states do not. These states are so-called “209(b) states.” 209(b)
states may elect to enroll all SSI recipients in their Medicaid programs or they may
choose to set standards that are more restrictive.
Medicaid eligibility is also often linked to a state-funded cash payment
assistance program for the aged, blind, and disabled, referred to as the State
Supplemental Payment (SSP) program. Many states, recognizing that the SSI benefit
standard may provide too little income to meet an individual’s living expenses,
supplement SSI with additional cash assistance payments. SSP is a voluntary
program, and states decide whether they will make such payments, to whom, and in
what amount.
Coverage of SSI Recipients. In general, states are required to provide
automatic Medicaid coverage to recipients of SSI, and they rely on SSI eligibility
rules, established at the national level, as the basis for Medicaid eligibility. In order
to qualify for SSI, a person must satisfy the program criteria for age or disability.
Aged persons are 65 and older and disabled persons are defined, in general, as those
unable to do any kind of work that exists in the national economy, taking into
account age, education, and work experience.
To qualify for SSI, persons must also meet income and resources requirements.
An individual’s income is used to determine eligibility for SSI and to calculate the
benefit payment. If an SSI recipient has no income, he receives the full SSI benefit
payment. If the recipient has income, a dollar-for-dollar reduction is made against
the maximum federal SSI benefit. In addition to income criteria, SSI limits the
resources, or assets, persons may have in order to qualify for benefits. Eligibility for
SSI is restricted to otherwise qualified individuals whose resources do not exceed
$2,000 for an individual and $3,000 for a couple, although certain resources, such as
a person’s home, are exempt. Applicants must also meet certain citizenship or
United States residency requirements.
9 (...continued)
number of people in the category. These beneficiaries are entitled to Medicare Part A , have
resources that do not exceed twice the limit for SSI eligibility and are not otherwise eligible
for Medicaid. QI-1s have incomes between 120%-135% FPL; Medicaid pays their Part B
premiums only. QI-2s have incomes between 135%-175% FPL; Medicaid pays a portion
of their Part B premiums.

CRS-5
Coverage of Persons in 209(b) States. Section 209(b) of the Social
Security Amendments of 1972 (Public Law 92-603) gave states the option to elect
to use income, resources and disability standards that are more restrictive or more
generous than SSI standards. Each of the 209(b) states has at least one eligibility
standard (income, resources, or definition of disability) that is more restrictive than
SSI standards. The 11 Section 209(b) states are Connecticut, Illinois, Hawaii,
Indiana, Minnesota, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma and
Virginia.
States that use more restrictive eligibility rules under Section 209(b) must also
allow applicants to deduct medical expenses from their income when determining
eligibility. This process is sometimes referred to as the “209(b) spend-down.” An
example of 209(b) spend-down is as follows: if an applicant has a monthly income
of $700 (not including any SSI or SSP payments – described below) and the states’
maximum allowable income standard for spend-down eligibility is $600, the
applicant would qualify for Medicaid after incurring $100 in medical expenses in that
month. As will be discussed later, the spend-down process is also used in
establishing eligibility for the medically needy.
State Supplemental Payment (SSP) benefits. Like SSI payments, SSP
benefits, paid on a regular monthly basis, are intended to cover such items as food,
shelter, clothing, utilities, and other daily necessities determined by the individual
states. Some states provide supplemental payments to all persons who receive SSI.
Other states may decide to make payments to elderly persons living independently
in the community without special needs, while still others may require that the elderly
have special needs, such as requiring in-home personal care assistance or home-
delivered meals. In all of these cases, states may decide whether to extend Medicaid
coverage to persons receiving SSP on the same basis as they do to persons receiving
only SSI. They may also decide to extend Medicaid eligibility to only some groups
of SSP recipients or decide not to extend it to all.
Maximum Income Eligibility Standard. When a state provides automatic
Medicaid eligibility to persons receiving SSI and that state does not provide SSP
benefits, then the maximum income eligibility standard is the SSI level ($545 in
2002).10 When a state provides automatic Medicaid eligibility to persons receiving
SSI and SSP, then the maximum income eligibility standard for Medicaid is the
combined federal SSI plus the SSP benefit. For 209(b) states, however, the effective
maximum eligibility standard is the 209(b) categorical eligibility standard plus the
SSP payment.
Table 1 provides data on income eligibility standards in January 2000. At that
time, the maximum SSI benefit was $512. The table shows SSP levels only for
persons who live in states that supplement aged, disabled, and blind individuals
living independently and provide them with automatic Medicaid eligibility. States
that only provide supplements to aged and disabled individuals living in group
homes, for example, are not represented.
10 The federal SSI benefit for a couple with both members qualifying for SSI is $817 in
2002.

CRS-6
Medically Needy
In addition to welfare-related pathways, Medicaid also provides states the option
of covering elderly and disabled persons whose incomes are higher than SSI or SSP
benefits, but who need assistance with medical care expenses. Individuals who live
in states that exercise the medically needy option can qualify for Medicaid if they
have income and sometimes resources that exceed the standards established by the
states for the welfare-related eligibility pathways, but only if they incur medical
expenses that “spend-down” or deplete their income and resources to specified levels.
The process is the same as that described above under 209(b) spend-down.
The income and resource standards that states elect to use for their medically
needy programs are restricted by certain federal guidelines. Often the monthly
income levels that states choose are lower than the income standard for SSI benefits.
The medically needy income standard represents income that individuals are left with
for living expenses after incurring medical expenses, and not necessarily total
income. State monthly income standards for their medically needy programs are
shown in Table 1, Columns 5 and 6. Although there is some variation across states,
most states use the SSI resource limit of $2,000 for an individual as the medically
needy resource standard.
Poverty-Related Group
The enactment of Omnibus Budget Reconciliation Act of 1986 (OBRA 86)
offered states another option for covering persons whose income exceeds SSI or
209(b) levels. This option allows states to cover aged and disabled individuals with
incomes up to 100% of the federal poverty level (FPL).11 States that have elected to
extend Medicaid to persons who qualify under this eligibility pathway are shown in
Table 1, Column 7.
Section 1115 Waiver Authority
Section 1115 of the Social Security Act authorizes the Secretary of Health and
Human Services (HHS) to waive certain statutory requirements that would otherwise
apply to services a state is required to cover under Medicaid. Under Section 1115,
the Secretary may waive Medicaid requirements contained in Section 1902 (usually,
freedom of choice of provider, comparability, and that the benefit be offered on a
statewide basis). Under this authority, states have the flexibility to experiment with
different approaches for the delivery of health care services, or to adapt their
programs to the special needs of particular geographic areas or groups of recipients.
Some states have used this authority to extend prescription drug coverage and other
services to a select group of beneficiaries in a state. Illinois for example, has used
1115 waiver authority to provide a comprehensive pharmacy benefit to low-income
11 The poverty guidelines, sometimes referred to as the FPL, are used to determine
eligibility for federal programs. In 2002, the Department of Health and Human Services
(HHS) reports the FPL to be $8,860 for individuals ($8,350 in 2000) and $11,940 for two
people ($11,250 in 2000). For more information, see
[http://aspe.hhs.gov/poverty/00poverty.htm].

CRS-7
seniors at or below 200% of the FPL. Tennessee has used this authority to provide
prescription drug coverage only to persons who can show proof that they have been
denied access to Medigap coverage. Table 1 shows those states with 1115 programs
that extend prescription drug coverage to a select group of beneficiaries.
1915(c) Waivers
States have the option of covering persons needing home and community-based
long-term care services, if these persons would otherwise require institutional care
that would be paid for by Medicaid.12 Section 1915(c) of the Medicaid statue allows
the Center for Medicare and Medicaid Services (CMS) to waive certain federal
requirements in order to allow states to cover a wide range of home and community-
based services. Rather than cover services for all qualifying individuals throughout
a state, for example, this waiver authority can be used by states to provide a select
bundle of services to a special population of persons that a state identifies.13
Recipients of 1915(c) waiver services must meet both financial and functional
eligibility requirements set by state and federal law. Under 1915(c) waivers, states
may limit coverage to those persons receiving SSI and/or SSP (209(b) states may
limit coverage to persons meeting more restrictive standards), or allow persons to
qualify under their medically needy standards. States also have the option of setting
financial eligibility limits for income up to 300% of SSI benefits, or 221% of the
federal poverty level. Those states that use the 300% rule, often referred to as the
“special income rule,” may also allow individuals to deposit income in excess of the
300% of SSI level in trusts, known as “Miller Trusts,” and qualify for Medicaid, so
long as the state becomes the beneficiary of the trust after the person’s death. Federal
functional requirements limit access to 1915(c) waivers to persons who would
otherwise require institutional care. States may add additional functional restrictions.
As of 1999, 688,152 persons participated in 1915(c) waiver programs across
the nation. Medicaid regulations require that services be limited to categories of
individuals in specific target groups. These groups are aged, persons with
disabilities, persons with mental retardation or developmental disabilities, and
persons with mental illness. States must apply for separate waivers to serve each of
these different groups. Enrollment numbers are capped for each waiver. Table 1
does not include 1915(c) waiver eligibility pathways because of variations in
eligibility used by states under this option.
12 Long-term care consists of supportive and health services for persons who have lost some
or all capacity for self-care.
13 For more information on HCBS waivers, see CRS Report RL31163, Long-term care: a
profile of Medicaid 1915(c) home and community-based services waivers, by Carol
O’Shaughnessy and Rachel Kelly.

CRS-8
Table 1. Medicaid Income Eligibility for Outpatient Prescription Drug Coverage
for Elderly and Disabled Individuals by State
Maximum
Welfare-related income eligibility standards
Medically needy
eligibility
(as of 2000)
(as of 2000)
standard for
1115 Waiver
Income
Poverty-
Authority as
Maximum
standard
Income
related
a % of FPL
SSI or 209(b)
income
as a % of
Income
standard as
group (as of
(as of March
Highest income eligibility
standarda
SSPb
standardc
FPL
standard
a % of FPL
2001)
2002)
standard as a % of FPL
State
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Alabama
$512
$60
$572
82%
-
-
-
-
82%
Alaska
$512
$362
$874
100.5%
-
-
-
-
100.5%
Arizona
$512
$70
$582
83.6%
-
-
-
-
83.6%
Arkansas
$512
$0
$512
73.6%
$108.33
15.5%
-
-
73.6%
California
$512
$180
$692
99.4%
$600
86.1%
100%
-
100%
Colorado
$512
$36
$548
78.8%
-
-
-
-
78.8%
Connecticut
$564.10
$235
$799.10
114.8%
$476
68.3%
-
-
114.8%
Delaware
$512
$0
$512
73.6%
-
-
-
-
73.6%
District of Columbia
$512
$0
$512
73.6%
$377
54.1%
100%
-
100%
Florida
$512
$0
$512
73.6%
$180
25.8%
90%
-
90%
medically
-
-
needy does
not cover
Georgia
$512
$0
$512
73.6%
Rx
100%
100%
Hawaii
$512
$4.90
$516.90
65%
$418
52.3%
100%
-
100%
Idaho
$512
$53
$565
81.2%
-
-
-
-
81.2%

CRS-9
Maximum
Welfare-related income eligibility standards
Medically needy
eligibility
(as of 2000)
(as of 2000)
standard for
1115 Waiver
Income
Poverty-
Authority as
Maximum
standard
Income
related
a % of FPL
SSI or 209(b)
income
as a % of
Income
standard as
group (as of
(as of March
Highest income eligibility
standarda
SSPb
standardc
FPL
standard
a % of FPL
2001)
2002)
standard as a % of FPL
State
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
200% (as of
Illinois
$487
$351
$718d
103.2%
$283
40.6%
85%
1/28/02)e
200%
Indiana
$512
$0
$512
73.6%
-
-
-
-
73.6%
Idaho
$512
$22
$534
76.7%
$483
69.3%
-
-
76.7%
Kansas
$512
$0
$512
73.6%
$475
68.2%
-
-
73.6%
Kentucky
$512
$0
$512
73.6%
$217
31.1%
-
-
73.6%
$100
urban/ $92
Louisiana
$512
$0
$512
73.6%
rural
14.3%/13.2%
-
-
73.6%
300% (as of
Maine
$512
$10
$522
75%
$315
45.2%
100%
6/1/01)f
300%
Maryland
$512
$0
$512
73.6%
$350
50.2%
-
-
73.6%
over 133%
100% A/
non-working
100% A/ over
Massachusetts
$512
$128.82
$640.82
92.1%
$522
74.9%
133% DB
disabledg
133% DB
Michigan
$512
$14
$526
75.6%
$408h
37%
100%
-
100%
Minnesota
$482
$81
$563
80.9%
$482
69.2%
95%
-
95%
Mississippi
$512
$0
$512
73.6%
-
-
100%
-
100%

CRS-10
Maximum
Welfare-related income eligibility standards
Medically needy
eligibility
(as of 2000)
(as of 2000)
standard for
1115 Waiver
Income
Poverty-
Authority as
Maximum
standard
Income
related
a % of FPL
SSI or 209(b)
income
as a % of
Income
standard as
group (as of
(as of March
Highest income eligibility
standarda
SSPb
standardc
FPL
standard
a % of FPL
2001)
2002)
standard as a % of FPL
State
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
73.6% AD/
$0 AD/
129.8% B
73.6% AD/
Missouri
$512
$391B $903
B
only
-
-
-
-
129.8% B
Montana
$512
$0
$512
73.6
$508
72.9%
-
-
73.6%
Nebraska
$512
$7
$519
74.6%
$392
56.3%
100%
-
100%
$36.40
AD/
$213.96
$548.40 AD/
Nevada
$512
B
$725.96 B
78.8%
-
-
-
-
78.8%
New Hampshire
$526
$27
$553
79.5%
$526
75.5%
-
-
79.5%
medically
needy does
not cover
New Jersey
$512
$31.25
$543.25
78.1%
Rx for AD
-
100%
-
100%
New Mexico
$512
$0
$512
73.6%
-
-
-
-
73.6%
New York
$512
$87
$599
86.1%
$600
86.1%
-
-
86.1%
North Carolina
$512
$0
$512
73.6%
$242
34.7%
100%
-
100%
$0 (an
option of
individual
65.4% (could be higher for
North Dakota
$455
counties)
$455
65.4%
$455
65.3%
-
-
these counties with SSP)

CRS-11
Maximum
Welfare-related income eligibility standards
Medically needy
eligibility
(as of 2000)
(as of 2000)
standard for
1115 Waiver
Income
Poverty-
Authority as
Maximum
standard
Income
related
a % of FPL
SSI or 209(b)
income
as a % of
Income
standard as
group (as of
(as of March
Highest income eligibility
standarda
SSPb
standardc
FPL
standard
a % of FPL
2001)
2002)
standard as a % of FPL
State
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Ohio
$444
$0
$444
63.8%
-
-
-
-
63.8%
Oklahoma
$512
$53
$565
81.2%
$259
37%
100%
-
100%
$1.70
$513.70
100%
($25.70
($537.70 for
(Oregon
Oregon
$512
for blind)
blind)
73.8%
$413
59.3%
-
Health Plan)
100%
MN does
not cover
Rx for
Pennsylvania
$512
$27.40
$539.40
77.5%
ABD
-
100%
-
100%
Rhode Island
$512
$64.35
$576.35
82.8%
$600
86.1%
100%
-
100%
South Carolina
$512
$0
$512
73.6%
-
-
100%
-
100%
South Dakota
$512
$15i $527
75.7%
-
-
-
-
75.7%
-
Medicare
73.6%/ Medicare recipients
recipients who
who are denied Medigap
are denied
Medigap
Tennessee
$512
$0
$512
73.6%
$241
34.6%
policiesj
Texas
$512
$0
$512
73.6%
-
-
-
-
73.6%
Utah
$512
$0
$512
73.6%
$382
54.8%
100%
-
100%
Vermont
$512
$57.66
$569.66
81.9%
$708
101.6%
100%
175%k
175%
Virginia
$512
$0
$512
73.6%
$250
35.9%
80%
-
80%

CRS-12
Maximum
Welfare-related income eligibility standards
Medically needy
eligibility
(as of 2000)
(as of 2000)
standard for
1115 Waiver
Income
Poverty-
Authority as
Maximum
standard
Income
related
a % of FPL
SSI or 209(b)
income
as a % of
Income
standard as
group (as of
(as of March
Highest income eligibility
standarda
SSPb
standardc
FPL
standard
a % of FPL
2001)
2002)
standard as a % of FPL
State
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Washington
$512
$27
$539
77.4%
$539
77.4%
-
-
77.4%
West Virginia
$512
$0
$512
73.6%
$200
28.7%
-
-
73.6%
Wisconsin
$512
$83.78
$595.78
85.6%
$591.67
84.9%
-
-
85.6%
Wyoming
$512
$9.90
$521.90
75%
-
-
-
-
75%
Sources: (1) Congressional Research Service survey of selected Medicaid eligibility and post-eligibility for aged and disabled groups, November 2000; (2) Centers for Medicare and
Medicaid Services, Center for Medicaid and State Operations.
Key: A = Aged; D = Disabled; and B = Blind
Notes: Table 1 shows only how elderly and disabled individuals could qualify for outpatient Medicaid prescription drug coverage in each state. Although Medicaid eligibility criteria
includes income and resources standards (as described above), for simplification purposes the table depicts only income eligibility criteria. There are numerous ways in which elderly
and disabled persons may qualify for Medicaid, however, prescription drug coverage is not extended to all Medicaid beneficiaries. Table 1 shows only the income eligibility criteria
that would qualify an individual to receive prescription drug coverage in that state. This table does not include 1915(c) waiver eligibility.
a Column 1 indicates the maximum amount of income an individual may retain and remain eligible for Medicaid through the welfare-related pathway. The federal SSI benefit rates
in January 2000 are included in the combined federal SSI/state SSP data column (Column 3). In 2000, the federal SSI benefit for an individual living independently was $512.00.
b Column 2 shows only those SSP levels that are made to persons living independently and for whom Medicaid eligibility is guaranteed. The SSP benefit levels are included in the
combined federal SSI/state SSP data column (Column 3).
c Column 3 shows the maximum amount of income an individual may retain and remain eligible for Medicaid through the welfare-related pathway. This amount is determined by
adding the maximum SSI payment in 2000 ($512), or categorical limit for 209(b) states, to the maximum SSP payment, which varies by state as described above. Because specified
amounts of income are disregarded in determining eligibility for SSI and most state SSP programs, a person with income exceeding the maximum benefit may still be eligible for cash
assistance and Medicaid.
d Combined SSI plus SSP may not exceed this amount.
e On January 28, 2002, CMS approved Illinois’ application to provide comprehensive pharmacy benefits to low-income seniors at or below 200% of the FPL. The demonstration
program, approved under a Medicaid 1115 waiver, will be implemented by moving the majority of enrollees in Illinois’ state-only pharmacy benefit program into the waiver program.
Moving the state-funded program into the 1115waiver program would expand the scope of the pharmacy coverage. Participants will be required to pay an annual enrollment fee as
well as contribute to the cost of care through cost-sharing.

CRS-13
f Healthy Maine Prescriptions is currently in operation. The elderly and disabled have been able to use services as of June 1, 2001, and other eligible individuals continue to sign up.
There are currently approximately 180,000 individuals enrolled in the program and eligible to receive services. Maine anticipates that approximately 200,000 to 225,000 individuals
will be eligible to participate in this demonstration program. Of this total, the state anticipates that approximately 20% will participate in the first program year.
g MassHealth Common Health has no cap and is statewide.
h Spend-down levels for Michigan vary by region (Shelter Area).
i Limited to SSI recipients with no other source of income.
j TennCare extends prescription drug coverage to uninsurable persons receiving Medicare who can prove that they cannot obtain Medigap insurance. There is no income limit for this
program and coverage is statewide. Benefits are limited to services not covered by Medicare (no assistance with Medicare co-pays), and include drugs.
k Vermont Health Access Plan is statewide and has no enrollment cap. For Medicare and Social Security Disability beneficiaries with incomes up to 150% of FPL, Vermont Health
Access Plan provides prescription drug coverage for all medications; copayments of $1-$3, depending on cost of drug, are required. For Medicare and Social Security Disability
beneficiaries whose incomes are between 150% and 175% of FPL, Vermont Health Access Plan provides pharmacy-only coverage for maintenance medications only; copayments of
$2-$4, depending on cost of drug, are required.

CRS-14
State Pharmaceutical Assistance Programs
Although Medicaid provides coverage of prescription drugs to some low-income
elderly and disabled individuals, many more do not qualify for the program. Many
states have established their own programs to assist low-income elderly and disabled
individuals with purchasing prescription drugs. As of April 2002, 19 states operated
programs that provide subsidies to approximately 1.25 million qualified individuals.
Table 2 describes these programs. In addition, five states (Arizona, Arkansas,
Missouri, Texas, and Wisconsin) plan to be start new programs within the year, and
four states (Illinois, North Carolina, Oregon, and Wyoming) plan expansions of their
current programs.
Table 2 describes only those state programs that provide a subsidy to qualified
individuals for purchasing pharmaceuticals. Although not listed in the table, there
are currently 11 states which operate discount pharmaceutical purchasing programs
through which qualified individuals can purchase prescription drugs at local
pharmacies at discounted prices. These states are California, Florida, Iowa,
Maryland, Maine, Massachusetts, New Hampshire, New Mexico, Oregon, Texas, and
West Virginia.
Most of the subsidy programs are run with state dollars. Many use general
revenue funds, while others use monies from state lotteries or tobacco settlements.
Most plans cover those aged 65 and over, although the minimum age under the
Kansas plan is 67, Nevada covers those over 62, and the Wyoming and one Maryland
plan cover all ages. The disabled are included in many plans.
Massachusetts sets no income eligibility standard for the elderly, although the
disabled must have incomes at or below 188% of the federal poverty level. All other
state plans set income eligibility standards, ranging from 100% of the federal poverty
level in some states to over 400% of poverty in others. All plans require some level
of beneficiary financial participation in the form of premiums, deductibles,
copayments, or a combination of these. Some use flat fees, such as a $5 copayment
per prescription for cost-sharing, and others use sliding scales based on beneficiary
income level.
The level of coverage offered also varies among the states. Some states set
maximum payment limits on their spending per beneficiary. Others provide coverage
only once persons have incurred certain out-of-pocket expenses (often called a
“catastrophic cap”); e.g., the state assumes the full cost for any additional drugs
purchased by the beneficiary in that year. While some states cover all prescription
drugs, some cover only those on specific formularies or those used to treat specific
conditions.
The majority of states impose no limits on enrollment. Some states, however,
have faced budgetary problems and have confined enrollment to current levels or will
restrict new enrollees as funds are exhausted.

CRS-15
Table 2. State Pharmaceutical Assistance Programs in Operation as of April, 2002
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
Connecticut
65+or on SSDI
Single $20,000;
225%
Beneficiary pays $12
no
no
Couple $27,100.
per prescription; state
Cannot have other
pays the rest.
prescription coverage; CT
resident for 6 months.
Delaware
65+
200% FPL
200%
Beneficiary pays the
no
no
State pays a maximum of
or on SSDI
greater of 25% of cost of
$2,500 per person per
or medical costs =
prescription or $5.
year.
40% of income
Florida
65+ 90%-120%
FPL.
90%-120%
10% copayment
no
yes, capped
State pays maximum of
Eligible for Medicare and
at present
$80 per person per month.
Medicaid; not enrolled in
level.
Medicare HMO.

CRS-16
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
Illinois
Pharmaceutical
65+
Single $21,218;
240%
Annual fee of $5 for
no
no
Drugs covered are for
Assistance
or disabled
Couple $28,480;
people below FPL, no
treatment of heart disease,
Program
3 or more $35,740.
copayments.
diabetes (including
Annual fee of $25 for
supplies), arthritis,
those above FPL, $3
Alzheimer’s, Parkinson’s,
copayment.
lung disease, smoking-
When state has paid
related illness, glaucoma,
$2,000 for a beneficiary,
cancer, and osteoporosis.
then beneficiary pays
20% of cost of drug.
Those above FPL
continue to pay $3
copayment; others have
no copayments.
Indiana
65+
135% FPL.
135%
None (see Comments)
no
no
Beneficiary pays for drugs
State resident for 3
and gets quarterly refunds
months; cannot have
from state. State pays
other prescription drug
50% of cost of drugs up to
coverage.
an annual limit on sliding
scale: Income limits:
$8,352 (single), $11,256
(couple): refund up to
$1,000;
$10,020 (single), $13,500
(couple): refund up to
$750;
$11,280 (single), $15,192
(couple): refund up to
$500.

CRS-17
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
Kansas
67+
135% FPL; resource limit
135%
30% copayment
no
no
State pays maximum of
of $4,000 (single), $6,000
$1,200 per person per
(couple).
year.
Must be enrolled in
Covers maintenance drugs
Medicare QMB or SLMB
only.
program; cannot have
other prescription drug
coverage.
Maryland
Maryland
All ages
Single: income $10,300,
116%
$5 copayment
no
no
Pharmacy
resources $3,750;
(single);
Assistance
Couple: income $11,150,
93% (couple)
Program
resources $4,500.
Maryland Care
65+
300% FPL
300%
$10 monthly premium.
no
30,000
Temporary program for
First
Copayments: $10 for
seniors to replace
generics, $20 for
Medicare+Choice pullouts.
preferred brand name,
Preferred drugs are those
$30 for non-preferred
on Medicare+Choice
brand name.
formulary.

CRS-18
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
Massachusetts
65+
No income eligibility for
For disabled
Premium, copayments,
Single=
no
and disabled
elderly;
only: 188%
and deductible
$2,000
188% FPL for disabled.
computed on sliding
Couple=
MA resident; not enrolled
(no limit for
scale based on income.
$3,000
in Medicaid
elderly)
or 10% of
gross annual
household
income.
Michigan
65+
Gross household income
200%
$15 copayment for
no
Limited by
of 200% FPL – no
brand name drugs if
funding
deductions.
generic is available.
availability
Not enrolled in
Copayment cannot be
Medicaid; cannot have
more than 20% of cost
other prescription drug
of drug. Maximum
coverage
monthly copay amount
computed on sliding
scale based on income.
Minnesota
65+
100%-200% FPL.
100%-120%
$35 monthly premium.
no
Limited by
Drugs covered are those
Starting July 1,
Enrolled in Medicare
No copayments.
funding
on Medicaid formulary
2002: under 65 on
QMB or SLMB program;
availability
plus antacids, insulin,
Medicare
MN resident; cannot have
vitamins, smoking
had prescription drug
cessation, and lice
coverage in prior 9
medication.
months.
Nevada
62+
Family income $21,500.
180% of FPL
Copayments:
no
7,500
Maximum benefit $5,000.
Nevada resident for 12
for two
$10 for generic, $25 for
State contracts with insurer
months; not eligible for
people
insurer’s formularya
and pays seniors’
Medicaid.
drugs, more for
premium.
nonformulary based on
cost of drug.

CRS-19
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
New Jersey
Pharmaceutical
65+
Single $19,739;
222%
$5 copayment
no
no
Assistance for
or 18+ on SSDI
Couple $24,203.
(single);
the Aged and
NJ resident.
202%
Disabled
(couple)
(PAAD)
Senior Gold
65+
Single $29,739;
335%
$15 copayment plus
When
no
Program
or 18+ on SSDI
Couple $34,203
(single);
50% of cost of drug.
beneficiary
286%
(See Catastrophic cap)
has reached
(couple)
out of pocket
cap in a year
($2,000 single,
$3,000
couple),
copayment is
only $15.

CRS-20
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
New York
65+
PLAN I:
225%
Annual fee based on
Total out of
no
Single $20,000;
(single);
income ranging from
pocket
Couple $26,000
218%
$8-$230 (single) and
expenses
(couple)
$8-$300 (couple).
limited to 6%
No deductible.
(single) and
8% (couple)
of income.
PLAN II:
225%-395%
Deductible based on
Single $20,000-$35,000;
(single);
income ranging from
Couple $26,000-$50,000
218%-418%
$530 (single at $20,000)
(couple)
to $1,715 (couple at
$50,000).
For both plans: NY
resident; not enrolled in
Medicaid; have no other
For both plans: copays
better prescription
on sliding scale based on
coverage.
cost of drug, ranging
from $3 to $20.
North Carolina
65+
150% FPL.
150%
$6 copayment
no
Limited to
Coverage limited to drugs
Not enrolled in Medicaid
funding
to treat cardiovascular
availability
disease and diabetes.

CRS-21
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
Pennsylvania
Pharmaceutical
65+
Single $14,000;
158%
$6 copayment
no
no
Does not cover
Assistance
Couple $17,200
(single);
experimental drugs,
Contract for the
144%
cosmetic drugs, or over-
Elderly (PACE)
(couple)
the-counter drugs.
Needs
65+
Single $17,000;
192%
$500 deductible
no
no
Enhancement
Couple $20,200
(single);
Copayments: $8 generic,
Tier
169%
$15 brand name.
(PACENET)
For both programs:
(couple)
PA resident 90 days;
Not enrolled in Medicaid.

CRS-22
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
Rhode Island
65+
Single $16,400-$36,225
185% to
Copayments:
Cap of $1,500
no
Covers medications for
Couple $20,613-$41,400.
409%
for people
high blood pressure, heart
(single);
Single up to $16,490
with incomes
disease, circulatory
RI resident.
168% to
and couple up to
at or below
insufficiency, asthma or
346%
$20,613 = 40% of
$16,400
chronic respiratory
(couple)
program’s price for
(single) and
disease, diabetes, cancer,
drugs.
$20,613
Parkinson’s, Alzheimer’s,
(couple).
glaucoma, urinary
incontinence, depression,
arthritis, anti-effectives,
Single up to $20,700
influenza A and B, and
and couple up to
osteoporosis. Does not
$25,875 = 70% of
cover anti-pain (narcotics),
program’s price.
gastrointestimal, anti-
anxiety, psychotic,
Single up to $36,225
thyroid, or ERT
and couple up to
medications.
$41,400 = 85% of
program’s price.
South
65+
Single $8,351-$15,032;
94% to 170%
Deductible $500
no
no
Program cardholders
Carolina
Couple $11,000-$20,000.
(single);
receive 10% discount on
92% to 167%
After deductible is met,
drugs.
SC resident for 6 months.
(couple)
copayments = $10
generic, $21 brand
Does not cover
name.
experimental, cosmetic, or
OTC drugs.
Vermont
65+ or disabled
175%-225% FPL
175% to
Copayment 50%.
no
no
receiving OASDI
225%
or Medicare.

CRS-23
Income/other eligibility requirements
Deductibles
Catastrophic
Enrollment
Additional information
State
Age
Program
% FPL
copayments
cap
cap
when available
Wyoming
All ages
100% FPL
100%
$25 copayment per
no
no
$1,000 resource limit
prescription; limit three
(excluding home, one
prescriptions per month.
vehicle).
Not categorically eligible
for Medicaid.
Sources: Congressional Research Service interviews conducted with program administration offices, April 2002. Data from the National Governors’ Association and the National
Council of State Legislatures.
a A formulary is a list of drugs which are preferred for use by a health plan.

CRS-24
Table 3 presents a broad brush picture of who among low-income Medicare
beneficiaries are eligible for some level of prescription drug coverage through either
Medicaid or state-funded pharmaceutical assistance programs. Eligibility is
presented as a percent of the federal poverty level. Columns 1 and 2 are extracted
from Tables 1 and 2.
Table 3. Highest Income Eligibility Standards under Medicaid
and State Pharmaceutical Assistance Programs
as a Percent of the Federal Poverty Level
Pharmacy assistance
Medicaid
programs
State
(1)
(2)
Alabama
82%
no subsidy program
Alaska
100.5%
no subsidy program
Arizona
83.6%
no subsidy program
Arkansas
73.6%
no subsidy program
California
99.4%
no subsidy program
Colorado
78.8%
no subsidy program
Connecticut
114.8%
225%
Delaware
73.6%
200%
District of Columbia
100%
no subsidy program
Florida
90%
90%-120%
Georgia
100%
no subsidy program
Hawaii
100%
no subsidy program
Idaho
81.2%
no subsidy program
Illinois
200%
240%
Indiana
73.6%
135%
Iowa
76.7%
no subsidy program
Kansas
73.6%
135%
Kentucky
73.6%
no subsidy program
Louisiana
73.6%
no subsidy program
Maine
300%
no subsidy program

CRS-25
Pharmacy assistance
Medicaid
programs
State
(1)
(2)
Maryland
116% (single)
93% (couple)
and
73.6%
300%
Massachusetts
100% for aged;
no limit for elderly
over 133% for
188% for disabled
disabled and blind
Michigan
100%
200%
Minnesota
95%
100%-120%
Mississippi
100%
no subsidy program
Missouri
73.6% for aged
no subsidy program
and disabled;
129.8% for blind
Montana
73.6%
no subsidy program
Nebraska
100%
no subsidy program
Nevada
78.8%
180% for family
New Hampshire
79.5%
no subsidy program
New Jersey
100%
222% (single)
202% (couple)
and
335% (single)
286% (couple)
New Mexico
73.6%
no subsidy program
New York
86.1%
225% (single)
218% (couple)
and
225%-395% (single)
218%-418% (couple)
North Carolina
100%
150%
North Dakota
65.4% (could be
no subsidy program
higher for those
counties with
State
Supplemental
Payments)
Ohio
63.8%
no subsidy program
Oklahoma
100%
no subsidy program

CRS-26
Pharmacy assistance
Medicaid
programs
State
(1)
(2)
Oregon
100%
no subsidy program
Pennsylvania
100%
158% (single)
144% (couple)
and
192% (single)
169% (couple)
Rhode Island
100%
185%-409% (single)
168%-346% (couple)
South Carolina
100%
94%-170% (single)
92%-167% (couple)
South Dakota
75.7%
no subsidy program
Tennessee
73.6%
no subsidy program
Medicare
recipients who are
denied Medigap
Texas
73.6%
no subsidy program
Utah
100%
no subsidy program
Vermont
175%
175%-225%
Virginia
80%
no subsidy program
Washington
77.4%
no subsidy program
West Virginia
73.6%
no subsidy program
Wisconsin
85.6%
no subsidy program
Wyoming
75%
100%