MEDICAID INTER-AGENCY AGREEMENT (IAA)

Guam became a territory in 1950, and its Medicaid program was established in 1975. Medicaid is the largest health insurance program in the U.S. and is jointly financed by the federal and local government for low-income and other eligible individuals.

Despite near-identical reliance on the program, territories operate Medicaid program under different rules than the 50 states and D.C., Section 1108 of the Social Security Act established an annual ceiling on federal financial funds to the Medicaid program in the territories.

Unlike the 50 states and D.C., the federal government will match all Medicaid expenditures at that state's appropriate federal matching assistance percentage (FMAP) rate. In Guam, the FMAP is applied until the Medicaid ceiling funds, and other specific federal funds are exhausted. Historically, territories often exceed the annual cap, after which they must fund their programs using unmatched local funds.

Below are the allotment caps for F.Y. 2020, F.Y. 2021, and F.Y. 2022 under section 1108(g) for each territory. For the four territories of American Samoa, CNMI, Guam, and the U.S. Virgin Islands, CMS multiplied the territories' F.Y. 2021 cap by a 2.7% increase for the medical care component. 

Table 1:  Four Territories and FY 2021 caps:

Source: CMS

Eligibility rules in Guam's Medicaid program differ from those in the states. Guam is permitted to use a local poverty level established income-based eligibility for Medicaid and is exempt statutorily from requirements to extend poverty-related eligibility to children, pregnant women, and qualified Medicare beneficiaries. Guam currently provides coverage to individuals, including children, with modified adjusted gross income to 133 percent of the Guam poverty level. This is $1,536 per month for a family of four or approximately 61 percent of the federal poverty level, which is $2,500 per month for four in 2021.

Congress provided additional Medicaid funds temporarily. The appropriation package and the Families First Coronavirus Response Act significantly raised each territory's Section 1108 cap. These enhanced funds were set to expire Sept 2021, resulting in a return to the pre-pandemic relief bill amount.

In 1996, citizens from the Freely Associated States (FAS) were removed from the Medicaid program. Their eligibility to the program was restored by H.R. 4821, the "covering our FAS Allies Act" and as a clause in Public Law 118-260, in the Consolidated Appropriation Act of 2021. This went into effect in December 2021. As a result, Guam's Medicaid coverage has expanded to include FAS citizens through a State Plan amendment.

Graph 1: 2021 Participation in Medicaid for COFA, Marshallese, and Palauian:

Source: CMS

Supplemental Security Income (SSI) is a federal cash assistance program that provides monthly benefits to aged, blind, or disabled individuals (including blind or disabled children) who have limited income or resources (assets). It provides a flat monthly benefit of $794 or $1,191 for a couple. However, while these critical benefits are taken for granted in most American communities, they are not available to otherwise eligible residents of most U.S. territories for no other reason than where they happen to live.

In 2021, an individual with a disability began receiving SSI benefits while living in New. The following year, the individual moved to his home island of Puerto Rico, unaware that his move made him ineligible to receive SSI benefits. In 2016, the same individual registered to receive Social Security benefits. The Social Security Administration realized that the individual now lived in Puerto Rico and ceased SSI benefits. In 2017, the U.S. Department of Justice sued the individual to recover $28,081 in SSI benefits he received while living in Puerto Rico.

In court, the individual argued that SSI discrimination against residents of the U.S. territories violated the Constitution's guarantee of Equal Protection. The court and a unanimous panel of the U.S. Court of Appeals for the First Circuit agreed, concluding that discrimination against residents of Puerto Rico with aspect to the SSI program fails judicial review under any standard. In March, the Supreme Court rejected the U.S. Department of Justice's request to review the unanimous decision and summon a full review. In late 2021, the federal government filed a brief to the U.S. Supreme Court, arguing that Congress has the authority to withhold SSI benefits from U.S. citizens depending on where they live.

In April 2022, the U.S. Supreme Court issued its decision, holding that the equal protection component of the Fifth Amendment’s Due Process Clause of the U.S. Constitution does not require Congress to extend Supplemental Security Income (SSI) benefits to residents of Puerto Rico. Residents of Puerto Rico and other territories were excluded from eligibility for SSI benefits when the program was created in 1972.

The Court’s opinion, authored by Justice Kavanaugh, held that Congress’s decision to exempt Puerto Rico’s residents from most federal income and other taxes provides a rational basis for distinguishing residents of Puerto Rico from residents of the States for purposes of federal benefits, including SSI, with concurrences from Justices Thomas and Gorsuch. Justice Sotomayor was the sole dissenter.