(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 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 service:

(a) incurred in the retroactive period;

(b) provided for in this chapter; and

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