Under federal law, US government financial contributions (Medicaid "match") are not available to provide services to individuals while they are incarcerated. ^[1]   As a result of this restriction, individuals often lose eligibility for Medicaid and other related benefits once they are incarcerated. Termination of Medicaid benefits, however, is neither necessary nor required for all incarcerated persons.

The Center for Medicaid and State Operations (a division of the Centers for Medicare and Medicaid Services, within the US Department of Health and Human Services) has encouraged states "to 'suspend' and not 'terminate' Medicaid benefits while a person is in a public institution" (such as a correctional facility) to ensure that benefits are restored to eligible individuals immediately after they return to the community. ^[2]   In addition, unless a state determines that an individual is no longer eligible for Medicaid, it must ensure that incarcerated individuals are returned to the Medicaid eligibility rolls immediately upon release, allowing them to go directly to a Medicaid provider to receive services. Reinstating someone in Medicaid after his or her benefits have been terminated can take anywhere from 14 to 45 days (and sometimes longer), depending on the state. ^[3]  

For these reasons, policymakers should consider measures to promote the continuity of care that is critical to successful re-entry, through policies that enable the rapid reinstatement of benefits upon release. (See Policy Statement 20, Planning Continuity of Care, for additional information on developing policies and programs that promote continuity.) Ideally, for those detainees eligible for Medicaid by virtue of their enrollment in the SSI program, authorities should terminate their Medicaid coverage only when SSI eligibility is terminated. (This occurs after 12 consecutive months of SSI suspension.) Notably, while the confirmation of a released individual's qualification for Medicaid is pending, federal rules permit the reinstatement of the benefits for six months, although this reinstatement may be terminated before six months have expired if state officials determine beforehand that the individual is no longer eligible for Medicaid.

Corrections administrators should develop relationships with local application-processing agencies for Medicaid and SSI to promote timely communication of projected release dates, to ensure quick reinstatement of benefits for those inmates in "suspended" status, and to enable the application process to begin before those inmates whose benefits were terminated are released.