More than 50 elderly citizens squeezed into a cramped committee hearing room today to listen as their representatives pleaded for the extension of state Medicaid benefits to 18,000 people now ineligible under state law.

One after another, the senior citizens and their spokesmen described for the Maryland Senate, Budget and Taxation Committee the strain and difficulty of trying to live on a fixed income and still purchase essential medications and medical services.

Speaking haltingly, 74-year-old Ellen Myers of Oxon Hill told committee members that her monthly Social Security income of $256 doesn't leave her enough money to meet her expenses - including that $81.96 she must spend each month for medical services.

"I may have to choose between food and medicine, but I need both to function," said the slight, dark-haired woman, who had to leave the committee room at times during the hearing to take the oxygen she needs to cope with a pulmonary ailment.

The senators were considering a package of three bills that would expand the state's eligibility requirements for Medicaid recipients, bringing about 18,000 more people into the program. At the moment, the maximum monthly income allowed for a single person on Medicaid is $150 - or $1,800 annually.

The legislation proposed by Sens. Rosalie Abrams (D-Baltimore) and Harry J. McGuirk (D-Baltimore) would increase this ceiling to $2,300 annually and would permit potential Medicaid clients to deduct the anticipated cost of their medications from their incomes when applying for Medicaid funds.

This latter provision would enable Mrs. Myers to deduct the $81.96 she spends on medications each month from her fixed monthly income of -256, leaving her with an adjusted monthly income of $174.04 - comfortably below the new proposed ceiling of $180 per month.

The proposals to increase the income ceiling for Medicaid recipients was put forward this year after thousands of Medicaid clients suddenly became ineligible for the program as a result of legislation passed in the 1977 session of the general assembly.

This 1977 legislaltion repealed an earlier law that allowed the state to disregard all cost-of-living increases in Social Security payments when figuring the income level of a Medicaid recipient.

The law was enacted to bring Maryland into compliance with federal guidelines and eliminate the risk that the federal funds that make up 59 per cent of the state's Medicaid payments would be cut off.

In the proicess, however, this law bumped an estimated 16,000 to 18,000 people out of the Medicaid program. Most of these same people would come back into the program if the Abrams-McGuirk bills passed.

Similar legislation is also advocated by Acting Gov. Blair Lee III, who said at his press conference last week that he would include sufficient funds in his proposed budget to cover the cost of a higher $180 per month income ceiling for a single person.

This ceiling would increase by increments of $500 for each additional person in a family, so a two-person family could have an income of no more than $2,800 to remain eligible, a three-person family could have an income of $3,300, and so on.

The director of the state's Medical Assistance Policy Administration took the witness chair today after the senior citizens had finished their testimony and warned that the bill permitting an advance deduction of anticipated medical costs from income would conflict with federal regulations and could cost the program federal funds.

Abrams defended this portion of the legislative package, saying that the deduction provision "would place in the hands of the medically needy people . . . the money necessary to pay anticipated documented medical expenses."

The total estimated cost of the proposed legislation is somewhere between $10 million and $15 million, according to testimony before the committee.