criteria, but, according to federal law, they are supposed to target mothers and children with low-incomes or limited availability of health services. Low-income is defined as income below 100 percent of the federal poverty guidelines. States cannot charge low-income people for services under the block grant; they can charge others for services, based on a sliding scale that takes account of family income, resources, and size.

Medicaid

Traditionally, states have been required to provide Medicaid benefits to elderly, blind, and disabled people who receive SSI and to parents and children who receive AFDC. Hence, the income eligibility guidelines for these two programs (see next section) govern Medicaid eligibility for these groups.

There are various exceptions and modifications to the general rule that SSI and AFDC recipients are eligible for Medicaid. For example, states can—and 12 states do—apply the more restrictive criteria that were in effect in 1972 for low-income elderly, blind, and disabled people before the implementation of SSI. Conversely, states must extend Medicaid eligibility to certain groups who do not receive AFDC but who meet AFDC eligibility requirements: examples are first-time pregnant women, members of two-parent families in which the principal earner is unemployed, and people who do not receive a payment because the amount would be less than $10. States must also continue Medicaid coverage for 4-12 months for families that stop receiving AFDC. States must also continue Medicaid coverage for certain groups of people who lose SSI eligibility.

In addition, states may choose to cover the "medically needy," that is, people who are categorically eligible for AFDC or SSI but whose incomes are somewhat above the AFDC or SSI limits. People can be deemed medically needy if their incomes fall below a state-set standard that does not exceed 133 percent of the state's AFDC maximum benefit or if their incomes fall below AFDC or SSI limits after deducting out-of-pocket medical expenses.

Beginning in the mid-1980s, Congress has allowed—and, in some cases, required—states to provide Medicaid benefits to people on the basis of comparing their family incomes with the federal poverty guidelines rather than with AFDC or SSI standards. A growing number of people are becoming eligible on the basis of these income-to-poverty ratios, although the majority of Medicaid beneficiaries are still AFDC or SSI recipients (see, e.g., U.S. House of Representatives, 1994: Table 18-2). At present, states must extend Medicaid benefits to pregnant women and children up to age 6 with family incomes below 133 percent of the federal poverty guidelines. States must also cover all children under age 19 who were born after September 1983 and whose family incomes are below 100 percent of the poverty guidelines. In addition, states may provide coverage to pregnant women and children under age 1 with family incomes between 133 and 185 percent of the poverty



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