OLR Research Report

August 13, 2013




By: Robin K. Cohen, Principal Analyst

You asked if (1) Connecticut is maximizing the amount of federal Medicaid funds available to offset inmate health care costs and (2) the federal Affordable Care Act (ACA) provides states with additional funding for this purpose.


Connecticut appears to be maximizing the amount of federal funds available to offset inmate health care costs. Federal law generally prohibits Medicaid federal matching funds for care provided to inmates of public institutions such as correctional institutions. But the law makes federal matching funds available for this purpose when the inmate leaves the correctional institution for more than 24 hours to receive inpatient medical care. Connecticut is among several states that have pursued these funds.

The ACA does not change the federal prohibition against funding inmate care. But its Medicaid expansion allows states to temporarily provide 100% federally funded health care (currently the state receives a 50% match) to childless adults, including any who may be former inmates or individuals at risk of incarceration and for whom access to health care could prevent incarceration. Since 2010, Connecticut's Medicaid expansion program (Medicaid for Low-Income Adults) has served this population. The Department of Correction (DOC), in conjunction with the Department of Social Services (DSS) and other partner agencies, has been active in ensuring that inmates enroll in or are able to restart their Medicaid when they leave prison, thereby ensuring that the state accesses federal funds as quickly as possible.

The ACA also allows individuals ineligible for Medicaid to purchase health insurance through their state's health insurance exchange (HIX). It also enables individuals who are awaiting sentencing or are in jail awaiting trial (i.e., “pending disposition”) to continue to be covered by such plans. To the extent these individuals use their existing health plan coverage (and potential federal health care premium tax credits) while detained, there could be some savings for the state's correctional health care system, as well as maximized federal premium subsidies.


Although many incarcerated individuals may be financially eligible for Medicaid, their incarceration prevents federal Medicaid payments for their health care because federal law prohibits “federal financial participation (FFP)” for services provided to “inmates of public institutions. The prohibition excludes individuals, including incarcerated individuals, who are patients in medical institutions, which, under regulations, includes individuals who are patients for at least 24 hours in a medical institution not run by the correctional system (42 USC 1396d(a)((29)(A) & 45 CFR 435.1009).


The exception to the general prohibition against the use of federal Medicaid matching funds for inmates is when the inmate must leave the correctional facility for inpatient hospital or nursing home care. Connecticut is currently receiving federal funds for the hospital stays and intends to recoup them for care inmates receive in a newly opened nursing home.

Medicaid and Inmates in Connecticut's Hospitals and Nursing Homes

Since late 2011, DOC, through a memorandum of agreement with DSS, has transferred some of its appropriation for inpatient hospital care to DSS. DSS in turn pays John Dempsey Hospital at the University of Connecticut Health Center and private hospitals for rendering Medicaid-covered inpatient services to prisoners deemed to be Medicaid-eligible. These state payments qualify for federal Medicaid matching funds (see OLR Report 2012-R-0256 for a brief overview of this program).

As a result of 2011 and 2012 legislation, the state recently opened a 95-bed nursing home in Rocky Hill for individuals needing a nursing home level of care, including those transitioning from a Department of Mental Health and Addiction Services facility or a DOC infirmary. The expenditures for serving these individuals are likewise eligible for federal matching funds if the patients meet the program's eligibility requirements. We do not know if DSS has received approval for federal matching funds as of this writing. (PA 11-44, PA 12-1, JSS, codified in CGS 17b-372a and 18-100i, respectively.)

Expediting Federal Funds—Suspending Eligibility of Inmates and Reentry Planning

States can suspend the Medicaid eligibility of someone who becomes incarcerated. This ensures that when he or she is released from correctional custody, Medicaid coverage is available quickly, if not immediately since there is little delay in reactivating coverage. To the extent that the ACA's expansion of Medicaid for childless adults increases the workload of DSS staff, suspension of benefits could potentially reduce the likelihood of eligibility determination delays.

According to a DSS official, that agency's eligibility management system does not presently support suspensions of Medicaid benefits while someone is in a correctional facility and Medicaid recipients who become incarcerated currently are terminated from the program. However, she notes that DSS has “several administrative processes in place to support this population.” For example, DSS regulations allow the agency to reinstate Medicaid for an individual who lost eligibility because of incarceration within the previous 24 months. The agency has begun modernizing its computer systems and it hopes to be able to incorporate suspensions into the new system.

In addition, DOC and DSS have partnered for some time to ensure that inmates who are to be discharged from a DOC facility continue to receive necessary health care upon reentry through the Medicaid program. Under a separate MOU between the two agencies, DSS has provided two eligibility workers dedicated solely to processing Medicaid applications for those inmates determined to be potentially eligible for assistance and DOC reimburses DSS for the employees' costs.


Starting January 1, 2014, the ACA requires all Americans to have health insurance coverage (individual mandate), and it permits “all qualified individuals” to purchase qualified health plans through their state's health insurance exchange (HIX).

Individuals who (1) do not qualify for Medicaid and (2) have income under 400% of the federal poverty level (about $46,000 annually in 2013) receive federal income tax credits to help offset their premium costs. The ACA specifies that an individual is not qualified if he or she is incarcerated, except in cases pending disposition.

According to an Access Health CT (the state's HIX) official, individuals who have coverage from a qualified health plan and are incarcerated pending disposition of charges can remain on their current plans until their case is disposed and they are incarcerated based on final sentencing. The official added that these plans can be designed to restart on the date of release or in such a way as to minimize coverage gaps. But, if the inmate has exchange coverage pending disposition and is jailed, he or she would probably terminate this coverage to avoid having to pay the plan's monthly premiums.

The ACA also provides for a special enrollment period, which allows people who lose existing coverage (including individuals released from prison and who lose state-funded prison health care), to enroll in a qualified plan and not have to wait for an open enrollment period (45 CFR Part 155).

To the extent that someone who is arrested and is in jail pending disposition of the charges or enters prison and restarts his or her HIX coverage after release, federal premium tax credits could be maximized.