(1) Medicaid will be provided to the following SSI-related institutionalized individuals under the heading categorically needy:

(a) Individuals receiving SSI on the basis of the SSI income standard for institutionalized individuals.

(b) Individuals in medical institutions and intermediate care facilities who are ineligible for SSI because the SSI income standard for institutionalized individuals is lower than the SSI income standard for noninstitutionalized individuals.

(c) Individuals who were eligible for medicaid in December, 1973, as inpatients of medical institutions or residents of intermediate care facilities, if, for each consecutive month after December, 1973, they:

(i) continue to meet the December, 1973, eligibility requirements;

(ii) remain institutionalized; and

(iii) continue to need institutional care.

(2) Medicaid will also be provided to the following SSI-related institutionalized individuals under the heading medically needy:

(a) individuals described in (1) (b) who are ineligible for coverage as categorically needy because of excess income.