(1) Three month retroactive coverage will be provided to individuals determined eligible for Medicaid under this subchapter if:

(a) they received medical services during any of the three months prior to application;

(b) they are determined eligible for Medicaid on the 1st day of the month in the month or months medical services were received.

(c) Eligibility in the retroactive period will be determined in accordance with this subchapter, except that eligibility with respect to income will be determined using actual income received in the month or months of service.

(2) Under (1), Medicaid will pay only unpaid bills for services:

(a) incurred in the retroactive period;

(b) provided for in chapters 82, 83, 85, 86 and 88; and

(c) for which no third party payment is available.