After the federal Balanced Budget Act of 1997 expanded Medicaid coverage of Medicare Part B premiums up to 175% of the poverty line, did New York need to amend Social Services Law § 367-a to comply?

Plain-English summary

Section 4732 of the federal Balanced Budget Act of 1997 (Pub L 105-33) expanded Medicaid's obligation to pay Medicare Part B premiums for low-income beneficiaries. Before the Act, Medicaid covered Part B premiums for "qualified Medicare beneficiaries" (QMBs) and for so-called Specified Low Income Medicare Beneficiaries (SLMBs) with incomes between 100% and 120% of the federal poverty line.

The Act added two more groups. For the period January 1998 through December 2002, Medicaid had to cover the full cost of Part B premiums for persons with incomes between 120% and 135% of the poverty line, and part of the cost for persons with incomes between 135% and 175% of the poverty line (42 USC 1396a(a)(10)(E)(iv)(I) and (II)).

New York's matching statute, Social Services Law § 367-a(3), tracked the pre-Balanced Budget Act federal law. It required Medicaid to cover Part B premiums for QMBs and for persons up to 120% of the poverty line, but no higher. The Commissioner of Health asked the AG whether the New York statute had to be amended to match the expanded federal coverage.

The AG concluded yes. The State statute does not authorize payment for the new categories the Balanced Budget Act added. Without amendment, New York would be out of compliance with federal law. The Department of Health had already submitted a proposed amendment, S.6584-A, in the State Senate.

The opinion also analyzed the compliance deadline. Section 4759 of the Balanced Budget Act gives a state needing legislation a grace period until the first day of the first calendar quarter beginning after the close of the first regular session of the state legislature that begins after August 5, 1997. For two-year session states, each year counts as a separate regular session. Under NY Const Art XIII, § 4, the legislative term commences on January 1. The recent practice of the State Legislature has been to remain in formal session throughout the calendar year. So the first regular session of the State Legislature after August 5, 1997 ran from January 1, 1998 to December 31, 1998, and New York's compliance deadline was December 31, 1998. After that, New York would be out of compliance if § 367-a(3) had not been amended.

The opinion is a clean statutory-compliance question. The AG's reasoning runs through the federal trigger, the State statute, and the timing rule in a few pages. The practical message: the Health Department was right to push the legislation, and the Legislature had a hard deadline to act.

Currency note

This opinion was issued in 1998. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is a "qualified Medicare beneficiary" (QMB)?

A QMB is a low-income Medicare beneficiary whose income is at or below the federal poverty line and whose resources are below a specific threshold. For QMBs, Medicaid pays Medicare's premiums, deductibles, and coinsurance. The categories the Balanced Budget Act added (SLMB-Plus and SLMB-Expanded) are above the QMB line but still low-income.

Why does Medicaid pay Medicare premiums for some seniors?

The structure is designed to avoid leaving low-income seniors squeezed by Medicare's cost-sharing. Medicare covers the medical service; Medicaid pays the senior's share of premiums, deductibles, and coinsurance for those whose income is low enough. The Balanced Budget Act expanded the income range eligible for this kind of premium-payment assistance.

What happens if New York misses the deadline?

The state could lose some federal Medicaid matching funds or face other compliance consequences. The opinion does not detail the enforcement mechanism, but federal Medicaid funding is conditioned on compliance with the Social Security Act's Medicaid requirements. The Health and Human Services Department typically uses funding leverage to bring states into compliance.

What about full coverage versus partial coverage in the new income tiers?

The Balanced Budget Act distinguished. For persons with incomes between 120% and 135% of poverty, Medicaid had to pay the full Part B premium. For persons with incomes between 135% and 175% of poverty, Medicaid had to pay only part of the premium. The Act treated these as transitional programs, set to expire December 2002.

Did Section 4732 affect any other Medicaid coverage besides premiums?

The opinion is focused on Part B premiums. Section 4732 also touched related provisions, but the AG's analysis only addresses the premium-payment obligation that intersected with New York's § 367-a(3).

Background and statutory framework

Medicaid is a federal-state cost-shared program. The federal government pays a portion of Medicaid expenses (the Federal Medical Assistance Percentage) and sets the program's basic requirements. States administer the program and must conform their statutes to federal law to maintain federal funding eligibility.

42 USC 1396 et seq. is the Medicaid statute. § 1396a(a)(10)(E) covers the QMB and related low-income-Medicare-beneficiary categories. The Balanced Budget Act of 1997 expanded those categories in § 1396a(a)(10)(E)(iv)(I) and (II), with the expansion running January 1998 through December 2002. 42 USC 1396u-3 contains related provisions on premium payments.

New York's Social Services Law § 367-a governs the State's Medicaid program. § 367-a(3) specifically addresses Part B premium coverage. State legislative amendments to § 367-a are routine after major federal Medicaid changes; the Balanced Budget Act of 1997 triggered amendments in many states.

NY Const Art XIII, § 4 sets the legislative-term schedule and was central to the AG's calculation of the federal compliance deadline.

Citations

• NY Const Art XIII, § 4 (legislative term commences January 1).
• Social Services Law § 367-a (New York Medicaid).
• Social Services Law § 367-a(3) (Part B premium coverage; 120% poverty-line cap pre-amendment).
• 42 USC 1396a(a)(10)(E)(iv)(I) (full premium coverage for 120%-135% of poverty).
• 42 USC 1396a(a)(10)(E)(iv)(II) (partial premium coverage for 135%-175% of poverty).
• 42 USC 1396u-3 (Medicaid premium-payment provisions).
• Balanced Budget Act of 1997, Pub L 105-33, § 4732 (expansion of QMB-related premium coverage).
• Balanced Budget Act of 1997, Pub L 105-33, § 4759 (state-legislative-action grace period).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/98-F4_pw.pdf

Original opinion text

NY CONST, ART XIII, § 4; SOCIAL SERVICES LAW § 367-a; 42 USC
1396a(a)(10)(E)(iv)(I), (II); 42 USC 1396u-3.
Because Social Services Law § 367-a(3) does not authorize
Medicaid payment of Medicare Part B premiums for anyone whose
current income equals or exceeds one hundred twenty percent of
the poverty line, amendments to that section are necessary to
comply with the Balanced Budget Act of 1997.

March 31, 1998
Hon. Barbara A. DeBuono
Commissioner
Department of Health
Corning Tower
Empire State Plaza
Albany, NY
12237

Formal Opinion
No. 98-F4

Dear Commissioner DeBuono:
Your counsel has asked whether it is necessary to amend the
New York Social Services Law to implement the provisions of
section 4732 of the Balanced Budget Act of 1997, Pub L 105-33.
That section requires the Medicaid program to pay the cost of
Medicare Part B premiums for certain low-income persons.
Social Services Law § 367-a(3) governs Medicaid coverage of
Medicare Part B premiums in New York. Its provisions accord with
the requirements of federal law as they existed before the
enactment of the Balanced Budget Act. Section 367-a(3) requires
Medicaid to cover part B premiums for "qualified Medicare
beneficiaries" as defined by the federal social security act and
for persons who would be qualified Medicare beneficiaries except
that their incomes exceed one hundred percent of the federal
income poverty line applicable to the person's family size but
are less than one hundred twenty percent of the poverty line.
The Balanced Budget Act added two groups of low-income
persons whose Medicare Part B premiums must be paid, in whole or
in part, by Medicaid. Federal law now requires that, for the
period from January 1998 to December 2002, the full cost of such
premiums be paid for persons who would be qualified Medicare
beneficiaries except that their incomes are at least one hundred
twenty percent but less than one hundred thirty five percent of
the poverty line and that part of the cost of such premiums be
paid for persons who would be qualified Medicare beneficiaries

2
except that their incomes are at least one hundred thirty five
percent but less than one hundred seventy five percent of the
poverty line. 42 USC 1396a(a)(10)(E)(iv)(I), (II).
Because Social Services Law § 367-a(3) does not authorize
Medicaid payment of Medicare Part B premiums for anyone whose
current income equals or exceeds one hundred twenty percent of
the poverty line, amendments to that section are necessary to
comply with the Balanced Budget Act of 1997. At the request of
the Department of Health, S.6584-A has been introduced in the New
York State Senate. This bill would amend Social Services Law
§ 367-a to comply with these federal requirements.
Section 4759 of the Balanced Budget Act provides that a
state which must enact conforming state legislation will not be
held to be out of compliance until the first day of the first
calendar quarter beginning after the close of the first regular
session of the state legislature that begins after August 5,
1997. It also provides that in the case of a state that has a
two-year legislative session, each year of the session is
considered to be a separate regular session of the state
legislature. Section 4 of Article XIII of the New York State
Constitution provides that the legislative term commences on the
first day of January. The recent practice of the State
Legislature has been to remain in formal session throughout the
calendar year. Accordingly, for purposes of section 4759, the
first regular session of the State Legislature after August 5,
1997 commenced January 1, 1998 and will end December 31, 1998.
The time available to New York State to take legislative action
without being out of compliance with the Balanced Budget Act,
therefore, would extend until December 31, 1998.
We conclude that because Social Services Law § 367-a(3) does
not authorize Medicaid payment of Medicare Part B premiums for
anyone whose current income equals or exceeds one hundred twenty
percent of the poverty line, amendments to that section are
necessary to comply with the Balanced Budget Act of 1997.
Very truly yours,

DENNIS C. VACCO
Attorney General