" The last group of people in this country who could keep the economy going for all of us, with low

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1 In order to preserve the historical data from the Devolution Initiative, the W.K. Kellogg Foundation Devolution Team, have captured the key content from grantee publications as of March In this process, we have attempted to accurately capture the context, but in some cases, links may be broken and images may not display properly. If you have questions about this publication or if you want to see if there have been any updates to the document, we suggest you contact the organization directly. Ticket to Work: Medicaid Buy-In Options for Working People with Disabilities National Conference of State Legislatures by Julie Scales, NCSL Donna Folkemer, NCSL Allen Jensen, GWU July 1, 2000 Contents Executive Summary Introduction Eligibility for Buy-In Options State Experiences Estimating Program Costs The Role of Legislators Conclusion Appendices A.) Characteristics of State Buy-In Programs B.) State Legislation on Medicaid Buy-In Programs -California -Connecticut -Iowa -Minnesota -Mississippi -Nebraska -Vermont C.) Resources or Related Organizations References Acknowledgments NCSL Contact Information Keeping the Economy and the Work Force Strong " The last group of people in this country who could keep the economy going for all of us, with low inflation, are Americans with disabilities-who want to work, who can work, and who are not in the work force." ~ President Bill Clinton 1

2 June 4, 1999 "If you're unemployed and not disabled, on the side of the road with a sign saying Will Work for Food, you will be seen as lazy. If you are disabled and not working, then you're meeting society's low expectations and probably pitied." ~ Scott Lay Oregon State Human Resources Department "Everyone benefits from removing policy barriers to employment. People with disabilities will no longer be forced into poverty to secure the long-term health coverage they need. Employers also benefit from an expanded pool of employees in a shrinking labor market." ~ Jeff Bangsburg Co-chair, Minnesota Consortium for Citizens with Disabilities (Minnesota CCD) Executive Summary Tom, a young man in his early 30s, is paralyzed from the chest down. Tom was a pipefitter prior to his accident. His employer is willing to re-train him to do computer-aided drafting or dispatching. Tom cannot accept this offer because he needs costly personal assistance services that are available only through the Medicaid program. Current regulations require him to impoverish himself to retain Medicaid. The more he earns, the more he has to give back to the government. Tom lives in an apartment building for the elderly and hates being on public assistance, but he has no choice under the current system. According to Tom, "Being able to go back to work and make a living as I was before my injury would be the best medicine ever out there." A woman named Deb is faced with the same issues. Deb works and has been offered raises, but is unable to accept them. In Deb's words, "If my wages increased, my Medicaid spenddown, which is based on gross income, would increase. My rent, which is also based on gross income, would increase. After taxes, you end up with less to live on than before your raise... I had been taught growing up that the American dream was to work hard, get ahead, and make a better life for 2

3 yourself. But the financial disincentives for working people with disabilities make that impossible. I cannot strive for what everyone else wants out of life. I cannot afford to have a house of my own. I live in subsidized housing because I can afford market rate rent. I drive a 1979 van that I cannot afford to replace. I couldn't afford car payments or an increase in automobile insurance. Because of my Medicaid spenddown and the $3,000 asset limit, I cannot participate in the matched savings retirement plan available through my employer. I want financial security for my retirement years." Helping people with disabilities become active participants in the workforce is an important goal of advocates, consumers and government. Because many disabled workers may not obtain affordable or adequate health insurance through their jobs, the risk of losing Medicare and Medicaid coverage can be a greater disincentive to work than the potential loss of income support benefits. Through federal legislation enacted in 1997 and broadened in the Ticket to Work and Work Incentives Improvement Act of 1999, states have the option of extending Medicaid coverage to working people with disabilities whose incomes otherwise would disqualify them from the program. States may establish income and asset guidelines and implement copayments, fees, premiums or other cost sharing for participants. Thus far, 11 states have implemented buy-in programs for working people with disabilities. Four additional states have enacted legislation to create such programs. One state, Massachusetts, created a similar program under Section 1115 Demonstration Project authority. The National Conference of State Legislatures (NCSL) and the Center for Health Services Research and Policy of George Washington University gathered information from the 16 states on: Financial eligibility, Cost-sharing policies, Previous Medicaid status of enrollees, Date of program implementation and number of participants as of March 2000, and State legislative authority. The programs are new and, with the exception of Minnesota, relatively small. Most enrollees previously received Medicaid, often through the medically needy option. All states impose a fee or premium on participants whose incomes are above certain levels. Legislation of five different types has been enacted by states to implement buy-in programs: 3

4 Legislation requiring a study of work incentives. Legislation authorizing a work incentives demonstration project. Legislation providing authority to the executive branch to develop a Medicaid buy-in program. Legislation specifying details of a state Medicaid buy-in work incentives program. Legislation establishing various components of a comprehensive state work incentives initiative. States view their Medicaid buy-in programs as "works in progress" and expect to continue to make policy changes to foster simplicity, equity and consistency in their programs and to ensure that costs are maintained at reasonable levels. Introduction Mary Crawford's story may make you smile with pride. Then, again, it could make you angry. It appears that her story might end happily. Crawford, who uses a wheelchair and needs her Medicaid benefits, has had cerebral palsy all her life. As a third-year law student at a private university in Salem, Ore., she's worked hard enough to rank 18th in her class of 116. "I think I've been to two movies since I started law school," she says. Normally, the summer between a top student's second and third years of law school is a time for law clerking. Crawford says she didn't take the chance because earning more than $500 a month might have jeopardized her Medicaid benefits. "It's a traditional career path I had to skip," she says. Now, with federal approval, Oregon is launching the first statewide initiative to help people like Mary Crawford go to work upon graduation without losing Medicaid benefits. "I hope it's not just a Band- Aid. I hope it encourages people to say, 'I'm an intelligent person and I can work,' " she says. "It's the bridge I've been waiting for," says one of Crawford's friends, also disabled. The "bridge" that Oregon built with federal help is amendment to its state Medicaid plan. The amendment, the nation's first, permits people with disabilities who go to work to keep Medicaid benefits for expenses usually not covered by private insurance, such as mental health drugs and personal care attendants. What is the Medicaid buy-in program? How can states use this new Medicaid option to reduce work disincentives for people with significant physical or mental disabilities, some of whom do not seek employment for fear they will lose their Medicaid benefits, which enable them to live in the community? 4

5 More than 3.8 million working-age adults receive disability benefits through Supplemental Security Income (SSI) and more than 4.9 million receive them through Social Security Disability Insurance (SSDI). Most of these people are not employed or are working a limited number of hours. For people who receive SSDI benefits, earnings above a certain amount are considered an indication that they no longer may meet the SSDI definition of disability. Work may eventually affect their eligibility for health services under the Medicare program. Loss of disability status under SSDI also will eventually affect an individual's eligibility for specific disability-related health and long term support services in states that provide Medicaid for low-income SSDI recipients through a "medically needy" program. The Medicaid program often includes services that are not available under the Medicare program or through private health insurance. Among these are personal attendant services and medications needed by people with severe disabilities. The Medicaid buy-in option allows states to establish new Medicaid eligibility categories for working people with disabilities whose income or resources would otherwise make them ineligible for Medicaid. The buy-in provision, first established in 1997, was broadened through the Ticket to Work and Work Incentives Improvement Act of This paper describes the Medicaid buy-in option, discusses programmatic and fiscal considerations for states in designing their buy-in programs, identifies the 11 buy-in programs now under way in the states (along with a 12 th program that is similar to a buy-in), and examines major roles state legislators can play in shaping state policy around Medicaid buy-in. The paper includes copies of enacted legislation from several states. The paper focuses exclusively on the Medicaid buy-in and its potential as a support for disabled working people. To effectively support disabled people who are employed, the Medicaid buy-in option generally is designed as part of a broader package of initiatives that foster employment, including counseling, transportation, housing assistance and other supportive activities. Many of these initiatives are included in other sections of the Ticket to Work legislation. Considerations related to Medicare eligibility often are critical elements to consider when creating a viable buy-in program. These considerations are not discussed in detail in this paper. A resource center for developing and implementing Medicaid Buy-In programs and related employment initiatives for persons with disabilities has been established by the Center Health Services Research and Policy of George Washington University ( The Web site highlights the experiences of those states that are in the early stages of implementing comprehensive (person-centered) state work 5

6 incentive initiatives and provides primary sources of state-by-state information (such as state statutes, regulations, surveys, and program and fiscal estimates). Ticket to Work and Work Incentives Improvement Act Dates of Implementation of Key Provisions October 1, Medicaid Buy-In States can permit working individuals with disabilities with incomes at or above 250% of the Federal Poverty Level (FPL) to buy into the Medicaid program. (The Balanced Budget Act limited Medicaid Buy-In coverage to persons with incomes below 250% of poverty.) A state providing Medicaid coverage to these individuals also may extend coverage to employed persons with disabilities aged 16 to 64 whose medical conditions have improved but who continue to have a severe medically determinable impairment as defined by federal regulations. October 1, Medicare Extension SSDI beneficiaries can test their ability to work for up to nine months without affecting their SSDI status. After nine months (plus a three month grace period), SSDI payments stopped when a beneficiary has monthly earnings at or above substantial gainful employment levels. Prior to the passage of the Act, if the beneficiary remained disabled but continued to work, Medicare could continue for an additional 39 months (for a total of 48 months). Effective October 1, 2000, the Act provides for continued Medicare for an additional 54 months (4 1/2 years) for a total of 8 1/2 years. January 1, 2001 (in selected areas) - Ticket to Work (has 3 year phase in nationally) 6

7 The Act establishes an entitlement to a "ticket to work and self-sufficiency" (a ticket) for every individual who meets eligibility criteria established by the Social Security Administration (SSA). Every specified SSDI and disabled SSI beneficiary who wants to participate will receive a ticket that may be used to obtain vocational rehabilitation, employment services, and other support services from an "employment network" (service provider) chosen by the individual. SSA will pay the employment network using either an outcome payment system or an outcome-milestone payment system. January 1, Expedited reinstatement of benefits An SSDI beneficiary whose entitlement to SSDI benefits ends due to work (and who has exhausted a 36 month extended period of eligibility) may request reinstatement of SSDI benefits without filing a new application. The same applies to SSI recipients who lose their eligibility for SSI benefits (and whose 12 months of suspended status has expired). January 1, Continuing Disability Reviews Continuing disability reviews (CDRs) determine whether an individual remains disabled and thus eligible for continued benefits and are conducted on a regular schedule. In addition, evidence of recovery from disability, including a return to the workforce, can trigger a CDR. Effective January 1, 2002, for a long-term SSDI beneficiary (that is, an individual receiving benefits for at least 24 months), CDRs may not be scheduled solely as a result of the individual's work activity. A CDR may not be conducted under any circumstances for an individual using a "ticket" under the Ticket to Work and Self-sufficiency Program. Eligibility for Medicaid Buy-In Options Under the Medicaid buy-in option, states may make Medicaid coverage available to employed disabled people whose level of income from work previously would have disqualified them from coverage. Through this option, states may elect to create an eligibility category through which such employed people "buy in" to Medicaid coverage by paying premiums or sharing costs. When a state 7

8 establishes a buy-in program, it creates a Medicaid entitlement that serves as a supplement to any income and health benefits a person obtains from being employed. The Medicaid buy-in first was established in the Balanced Budget Act of 1997(BBA). Through BBA provisions, states can provide Medicaid coverage to working individuals with disabilities who, because of their earnings, cannot qualify for Medicaid under other statutory provisions. Under BBA rules, a state can extend eligibility to working disabled people who meet SSI disability medical criteria and whose net family incomes are below 250 percent of poverty (Poverty refers to poverty guidelines issued annually by the federal Department of Health and Human Services. The poverty guidelines are sometimes called the "federal poverty level" or FPL. See Figure 1 for the poverty guidelines for 2000). The concept of a Medicaid buy-in is to provide a choice for SSI and SSDI recipients to work and continue to be eligible for long-term supports and services. In states that choose this Medicaid option for people with severe disabilities, individuals in other Medicaid eligibility categories may choose to move to this new eligibility category if they are working. In addition, people with disabilities who currently are not eligible for Medicaid and who could meet the disability medical criteria under SSI- but not the disability earnings test for initial eligibility under SSI- may qualify under a state's Medicaid buy-in program. In other words, under a Medicaid buy-in program, people with disabilities may apply for assistance for health and related ongoing support services without becoming eligible for income support under the SSI or SSDI program (see figure 1). Figure 1 Supplemental Security Income and Social Security Disability Insurance Social Security Disability Insurance Program (SSDI). Title II of the Social Security Act establishes SSDI, a program of federal disability insurance benefits for workers who have contributed to the Social Security trust funds and who have become disabled or blind before retirement age. Spouses with disabilities and dependent children of fully insured workers (often referred to as the primary beneficiary) also are eligible for disability benefits upon the retirement, disability or death of the primary beneficiary. Section 202(d) of the Social Security Act also establishes the adult disabled child program, which authorizes disability insurance payments to surviving children of retired, deceased or workers with disabilities who were eligible to receive Social Security benefits, if the child has a permanent 8

9 disability that originated before the child reached age 22. Supplemental Security Income Program (SSI). Title XVI of the Social Security Act establishes SSI, a means-tested program that provides monthly cash income to low-income people with limited resources on the basis of age, blindness and disability for children and adults. Individuals are eligible for SSI if their "countable" income falls below the federal benefit rate ($512 for an individual and $769 for couples in 2000). The federal limit on resources is $2,000 for an individual and $3,000 for couples. Certain resources are not counted, including, for example, an individual's home and the first ($4,500 of the current market value of an automobile.) The Medicaid buy-in option authorized under the BBA has been modified and expanded in the Ticket to Work and Work Incentives Improvement act of 1999 (Ticket to Work). Effective October 1, 2000, states may cover working individuals who are between the ages of 16 and 65 and who, except for earnings, would be eligible to receive SSI benefits on the basis of disability. Unlike limitations under the BBA, Ticket to Work does not limit eligibility to people whose incomes are below 250 percent of poverty. This group is referred to by the Health Care Financing Administration as the "Basic Eligibility Group." 2000 HHS Poverty Guidelines Size of Family Unit 48 Contiguous States and D.C. Alaska Hawaii 1 $8,350 $10,430 $9, ,250 14,060 12,930 SOURCE: Federal Register, Vol. 65, No. 31, February 15, 2000, pp (The separate poverty guidelines for Alaska and Hawaii reflect Office of Economic Opportunity administrative practice beginning in the period. Note that the poverty thresholds - the original version of the poverty measure - have never had separate figures for Alaska and Hawaii.) 9

10 States that cover the "Basic Eligibility Group" also can cover employed individuals who lose Medicaid eligibility because their medical condition has improved so that they are no longer disabled under the SSI definition of disability. This group is known as the "Medical Improvement Security Group." States may require disabled workers who are eligible for the buy-in to pay premiums or participate in other cost-sharing as a condition of their Medicaid coverage. Premiums and cost-sharing requirements are set by the state, subject to upper limits tied to a worker's gross income. States can claim federal matching funds for all newly eligible people, except for those who earn more than $75,000 annually. Medicaid buy-in plans must be available statewide, and a state must offer its regular Medicaid benefit package to all those enrolled. To implement Medicaid buy-in programs, states submit a Medicaid state plan amendment that describes the income, resource and cost-sharing policies for the group. Some states with buy-in programs under BBA enacted legislation before submitting their state plan amendment. In addition to authorizing Medicaid buy-in options submitted as state plan amendments, the Ticket to Work authorizes a state to apply to the secretary of the Department of Health and Human Services for approval of a Medicaid buy-in demonstration project. Through the demonstration, states provide workers who have potentially severe disabilities with medical assistance equal to that provided to others participating in Medicaid buy-in options. A "worker with a potentially severe disability" is an individual between the ages of who is employed and has a specific physical or mental impairment that is reasonably expected, but for the receipt of medical assistance, to result in his or her becoming blind or disabled under the SSI program. Before enactment of the Medicaid buy-in, other sections of federal law provided work incentive provisions for some working people with disabilities. Under Section 1619(a) of the Social Security Act, a portion of work-related income is disregarded when determining continued SSI eligibility for individuals. Under Section 1619(b), Medicaid coverage can continue for an individual whose earnings make him or her ineligible for an SSI cash payment if he or she meets SSI disability and resources criteria and his or her earnings are not sufficient to replace the value of the SSI and Medicaid benefits he or she would receive. These provisions guarantee extended Medicaid coverage to people who have previously received SSI benefits, but they do not provide support for those who have not received these cash payments. Moreover, Sections 1619(a) and (b) have been difficult for consumers to understand and for eligibility workers to implement. The provisions do not allow states to deviate from federal resource or assets guidelines, thus thwarting any efforts to encourage savings or to reward 10

11 increased earnings by beneficiaries. This lack of flexibility is reduced considerably by the Medicaid buy-in provisions. State Experiences Eleven states--alaska, California, Iowa, Maine, Minnesota, Mississippi, Nebraska, Oregon, South Carolina, Vermont and Wisconsin--have implemented Medicaid buy-in programs under the authority of the 1997 Balanced Budget Act. Four other states--arkansas, Connecticut, Illinois and New Mexico--have passed legislation or provided budgetary authority for such programs and are now determining their implementation strategies and timetables. Massachusetts has established eligibility for working disabled people through its Section 1115 Medicaid waiver which extends eligibility to a large number of people in the state who would not otherwise qualify for Medicaid. Among the states developing programs, Arkansas expects to begin offering the option on October 1, Illinois and New Mexico enacted appropriations bills directing the executive branch to develop the program. Connecticut authorized a program during the 2000 legislative session. State officials in all these states are now moving toward program implementation. Appendix A provides basic descriptive information about each of the 11 Medicaid buy-in programs now in operation and the one program operating under an 1115 waiver. The charts include financial eligibility and cost-sharing policies, the state's assessment of the previous insurance status of participants, the program's start date and number of participants, and, if state legislation was passed, the appropriate bill number. The charts do not include information about state policies related to income disregards; therefore, they should be interpreted with caution. Only four of the state buy-in programs--alaska, Massachusetts, Oregon and South Carolina--have been in operation for 12 months or more. Because the programs are so new, it is not yet possible to analyze their effectiveness. However, it is possible to articulate a variety of general policy criteria that states are using to respond to changes in recipients' earnings, assure accurate eligibility determinations, and maintain administrative efficiency at a reasonable cost. The general policy criteria include tradeoffs among the following: simplicity, progressive fee scales, consistency with existing Medicaid eligibility rules, coordination with private insurance, and cost control. General Policy Criteria 11

12 Simplicity Current work incentive provisions are complex, resulting in confusion among people with disabilities and impeding use of the provisions. Likewise, the complex provisions often make state program administration difficult. Some states are committed to making income eligibility guidelines and application processes easy for consumers to understand and for agencies to administer. Progressive fee schedule A number of states are developing Medicaid buy-in programs that increase the percentage of income that a program participant must pay as his or her income increases. Consistency with existing Medicaid eligibility rules Each state Medicaid program has numerous financial eligibility categories, and may have diverse methodologies governing countable income and resources, verification requirements, and family size and composition. To avoid further variations, some states want to conform their Medicaid buy-in methodologies to those used in other Medicaid eligibility categories for people with disabilities. For example, some states are adopting rules for counting income and resources in their buy-in program that are consistent with the medically needy eligibility category or with eligibility categories created within Medicaid home and community- based services waiver programs. Coordination with private health insurance For a substantial percentage of buy-in enrollees, states want their Medicaid buy-in programs to serve as "wrap around" coverage for employer-sponsored private health insurance. As a wrap-around plan, Medicaid will cover services not provided through the private plan. Some states want buy-in programs to be similar to state-administered health insurance programs for low-income families provided under Medicaid waivers or the State Children's Health Insurance Program (SCHIP). The use of a monthly premium based, at least in part, on projected health services costs for the insured group is consistent with the practices of many SCHIP programs. Cost Control States set income and resource standards and methodologies and determine appropriate cost-sharing requirements for applicants. State decisions about cost-sharing can be important to ensure compliance with budgetary constraints. For example, some states are mandating up-front payments by program participants of a portion of their unearned income over an income standard to better target enrollment in the Medicaid Buy-In program to those with significant work effort and to make costs more predictable. Eligibility In Four States 12

13 Creating a program structure that translates these general objectives into specific eligibility criteria is no easy task. Choices made in Minnesota, Oregon, Vermont Wisconsin and illustrate the questions states have to answer as they develop their Buy-In programs (see Table 1). Table 1. Selected Criteria in Four State Medicaid buy-in Programs State Enrollee Pays Deductions from Income Premiums, Fees, or other Premium above this when Determining Amount Cost Sharing Level of Poverty of Fee Minnesota 200% of poverty None 10% of gross income above 200% of poverty Oregon 200% of poverty Taxes and disability related expenses deducted All unearned income in excess of SSI income standard and, after first six months, 2% of income at 200% of poverty up to maximum of 10% Vermont 185% of poverty None 185%-225% FPL: $10 monthly; 225%-250% FPL: $12 or $25 monthly Wisconsin 150% of poverty The SSI income standard in state plus medical and remedial expenses; All unearned income in excess of deductions and 3% of earned income. disability related expenses 13

14 deducted What is the upper income limit for eligibility? All existing buy-in programs, including these four, were created under BBA authority. Eligibility is limited to persons whose net family income is 250 percent of poverty or less. Effective October 1, 2000, states may implement Medicaid buy-in policies that have higher eligibility levels. They may establish the limit as a percentage of the federal poverty line or set it at an annual dollar level. Is there an initial monthly cost based on unearned income? In some states, participants in the Medicaid buy-in program are required to pay back to the state some or all of their unearned income above a specified income level. An initial monthly cost- share has two purposes. First, all SSDI recipients will start from the same non-earnings income level when they begin to use some of their earnings to buy into the Medicaid buy-in program. Second, this approach requires a substantial commitment to work on the part of beneficiaries because they must contribute a significant portion of their unearned income to retain Medicaid benefits. Are work and disability-related expenses deducted from income when determining the amount of fee or premium? Some states disregard work and disability-related expenses in determining what to count as income when assessing an income-related fee. This has the effect of leveling the differences among people who have varying amounts of disability-related expenses. Oregon and Wisconsin provide for such deductions in their programs. At what income level does a beneficiary begin to pay a fee or premium for the Medicaid buy-in? Taking into account the variations in initial cost-sharing and deductions, the level at which an individual has to pay a fee ranges from 150 percent to 200 percent of poverty. The level at which a participant must begin to pay a fee or premium or otherwise provide a cost-share is a different policy issue from the initial income eligibility test for a state's Medicaid buy-in program. What is the amount of the Medicaid buy-in premium or fee? Most states set a fee as a fixed percentage of income. These percentages range between 2 percent and 10 percent in the states that have implemented programs. Minnesota requires participants to pay a premium equal to 10 percent of the portion of their gross income that is above 200 percent of poverty. Vermont requires payment of a fee or premium based on income brackets and uses the same fee amount and brackets as it uses for the Vermont CHIP program. Oregon requires initial payments of unearned 14

15 income, but then assesses fees only on income remaining after taxes and disability-related deductions are made. Can an individual retain assets beyond the SSI level? States can disregard certain assets when determining eligibility or encourage asset retention after people are enrolled in the Medicaid buy-in. Wisconsin allows individuals to retain $15,000 in assets. In addition, after buy-in enrollment, individuals can set up special accounts that allow them to save up to 50 percent of their earnings. Vermont allows people to retain any savings they accrue as a result of earnings. Minnesota allows exclusion of $20,000 in resources, as well as any funds in retirement accounts. Similarly, Oregon excludes $10,000 in resources and any funds held in state-approved accounts for retirement or medical needs. Estimating Program Costs One of the most difficult tasks states face is estimating the cost of their Medicaid buy-in program. States must determine how many people in their state would be eligible for enrollment, what proportion of those eligible would actually enroll, and the average cost for each enrollee. Although information about cost per enrollee may be estimated from the cost experience of similar groups, the data on eligible people and potential enrollees is much more difficult to obtain. In addition to Medicaid data, states use information from the Social Security Administration, the state Vocational Rehabilitation Agency, state mental health and developmental disabilities agencies, and private community service agencies as they develop their financial analysis. The states with operating programs have made several assumptions about program costs. 1. The majority of people who will choose the Medicaid buy-in program already are Medicaid recipients. States have assumed that the people most likely to enroll in the buy-in are those who have Medicaid, but who would lose it if they worked. A smaller number of people will be individuals who do not have Medicaid coverage at the time of enrollment. The relative distribution of the two groups in a particular state will vary based on the availability and affordability of private health insurance for working people with disabilities who have not been Medicaid beneficiaries. 2. Some proportion of beneficiaries will increase their work hours and qualify for employersponsored insurance, thereby reducing Medicaid costs. Typically, a person must work a minimum number of hours per week to be eligible for employer- sponsored health insurance. In Minnesota, for example, state officials estimated Medicaid costs would be reduced by 20 percent to 25 percent for those who secured private health insurance. 15

16 3. States with health insurance programs for low-income adults set up through Medicaid waivers have estimated that some potential buy-in applicants will instead enroll in the lowincome program. The Medicaid buy-in cannot be separated from other health reform initiatives, especially Medicaid waivers or state initiatives that have broadened eligibility for Medicaid or state-funded health insurance. Vermont officials projected that Vermont residents currently who are working and not on SSI or SSDI will be likely to apply for the Vermont Health Plan, a means-tested Medicaid Section 1115 waiver program for lowincome people in the state. They assumed that they are not likely to apply for the Medicaid buy-in. Likewise, in Oregon, state officials believe that low-income people will more likely apply for health care coverage under the Oregon Health Plan. Similar considerations would apply in states with high-risk health insurance pools. 4. States believe they can use cost-sharing and premiums to control entry into the Medicaid buy-in program if initial fiscal estimates understate enrollment. States have discretion in setting the amount of premiums and intend to use them to limit the program to certain populations. They can modify the cost-sharing arrangements as necessary to control costs. For example, some states require an initial cost-sharing of unearned income above specified income levels to ensure that only those with significant work effort enroll in the Medicaid buy-in program. The Role of Legislators Legislation enacted to create buy-in programs has varied in the degree to which program details are specified and in the extent to which legislators encourage linkage of the buy-in program to other work incentive activities. Appendix B includes enacted legislation of various types from seven states. The following types of legislation have been enacted. 1. Require a Study Legislation identifies the work disincentive issue and directs a state agency to conduct a study and report to the legislature on possible actions to deal with the issue. Vermont passed legislation of this type in Develop a Work Incentives Demonstration Project 16

17 Legislation provides general authority for a state executive branch agency to develop and submit for approval a Work Incentive Research and Demonstration Project that would require waivers of federal rules. Colorado passed legislation of this type. 3. Create Authority to Establish a Buy-In Program Legislation provides general authority for the state executive branch agency to develop a Medicaid buy-in program and allows such a program to be established through Medicaid state plan amendments or Medicaid waiver requests. Legislation of this type was enacted in Nebraska in 1998, in Mississippi in 1999, and in Vermont in Other examples are laws enacted in Arkansas in 1999 and in New Mexico in Create a Buy-In Program Legislation specifies details of a Medicaid state plan program, which is to be developed by an executive branch agency and submitted to a federal agency for approval. Legislation of this type was enacted in California in 1999, in Iowa in 1999 and in Minnesota in Wisconsin also followed this model. 5. Create Authority to Establish Work Incentives Initiatives Legislation authorizes the creation of multiple elements of a state work incentive and employment initiative. The legislation may include, for example, the establishment of a Medicaid buy-in program, authorization of federal Medicaid waivers, support for requesting demonstration projects from federal agencies to complement the state's work incentive initiatives and funds for staff to work on the state's comprehensive employment initiative. Alaska, Connecticut, Oregon, and Wisconsin passed legislation of this type. Conclusion States will face many implementation challenges as they move ahead with buy-in programs. Appendix C lists those resources available to assist the states. Among the challenges faced by states that currently have buy-in programs are how to: 17

18 Facilitate quick conversion to the regular Medicaid program when employment ends Ensure that the policies are responsive to the needs of people with severe mental illness or other disabilities who have varying ability to work over time. Create a structure for collecting premiums in an environment where premiums have not previously been used. Discourage applications by people who do not meet disability criteria. Despite these challenges, the Medicaid buy-in program is an important option that is available to states that seek to support employment of persons with severe disabilities. States have great flexibility in establishing program standards and guidelines to accommodate the needs of disabled workers in their states. Implementation of the Medicaid buy-in has the potential to help many persons with disabilities gain and sustain competitive employment. Appendix A Characteristics of State Buy-In Programs ALASKA Financial eligibility Net family income below 250% of the FPL. Cost-sharing policies No premium if below 100% of the FPL. At or above 100% of the FPL, premiums paid on sliding fee scale. Maximum is 10% of income. In general, premiums range from $20 to $120 monthly Previous Medicaid status of enrollees Most current participants are people with access to Medicaid for the first time. 18

19 Start date and number of participants (as of July 1, 1998; 47 March 2000) Legislation (if applicable) HB 459 (1998) CALIFORNIA Financial eligibility Net countable income must be less than 250% of the FPL. Cost-sharing policies All beneficiaries must pay a monthly premium, based on countable income, ranging from $20 to $250 monthly for an eligible individual to $30 to $375 for an eligible couple. Previous Medicaid status of enrollees Expect most to come from medically needy group. Start date and number of participants(as of April 1, 2000; 2 March 2000) Legislation (if applicable) AB 155 (1999) 19

20 IOWA Financial eligibility Family income less than 250% of thefpl. Cost-sharing policies Assess premiums on sliding fee scale when eligible person's gross income is at or above 150% of the FPL. Previous Medicaid status of enrollees Participants generally coming from Medicaid medically needy coverage group. Start date and number of participants (as of March 1, 2000; 606 March 2000) Legislation (if applicable) Senate file 211 (1999) MAINE Financial eligibility Income at or below 250% of the FPL. Cost-sharing policies Premium assessed when countable income exceeds $1,044 per month for a single individual. Premium is $10 to $20 per month depending upon income level. 20

21 Previous Medicaid status of enrollees Most participants already were receiving Medicaid. Start date and number of participants (as of August 1, 1999; 210 March 2000) Legislation (if applicable) No state legislation MINNESOTA Financial eligibility Minnesota has no income limit as a result of the use of liberal methods under 1902 (r) (2) Cost-sharing policies Premiums are 10% of the individual's gross income above 200% of the FPL for family size. Previous Medicaid status of enrollees About 66% of enrollees had at least one month of Medicaid eligibility in FY 1999 (7/1/98-6/30/99). Start date and number of participants (as of July 7, 1999; March 2000) Legislation (if applicable) Legislation passed May

22 MISSISSIPPI Financial eligibility Eligible if income is below 250% of the FPL. Cost-sharing policies Fee assessed if income at150% of the FPL. Fees range from $51to $85 per month. Previous Medicaid status of enrollees Most enrollees are first-time Medicaid enrollees. Start date and number of participants (as of July 1999; less than 10 March 2000) Legislation (if applicable) HB 403 (1999) NEBRASKA Financial eligibility Eligible if net income is up to 250% of the FPL. Cost sharing policies No cost-sharing up to 200% of the FPL. Incomes between 200% and 210% of the FPL pay premiums of 2% of family net income above 200%. Incomes between 210% and 220% of the FPL contribute 4% of family net income above 200%. Fees are graduated up to a maximum contribution of 10% of income above 200% for those with incomes between 240% and 250% of the FPL. 22

23 Previous Medicaid status of enrollees Most recipients received Medicaid prior to buy-in, but were not working. Start date and number of participants (as of June 1,1999 ; 50 March 2000) Legislation (if applicable) LB 594 (1999) OREGON Financial eligibility Participants must have adjusted income of less than 250% of the FPL. Cost-sharing policies Contribute unearned income above SSI level and 2% to 10% of earnings above 200% of the FPL. Previous Medicaid status of enrollees 90% already were on Medicaid. Start date and number of participants (as of February 1, 1999; 280 March 2000) Legislation (if applicable) Medicaid State Plan 23

24 SOUTH CAROLINA Financial eligibility Monthly income below 250% of the FPL. Monthly net income, not counting earnings from work, must be less than SSI income standard. Cost sharing policies No cost-sharing-charges apply. Previous Medicaid status of enrollees The majority of the participants were previously covered by Medicaid. Start date and number of participants (as of October 1, 1998; 50 April 2000) Legislation (if applicable) 1998 Appropriations Act VERMONT Financial eligibility Participant must have an adjusted net income of less than 250% of the FPL. Cost-sharing policies There is no premium for earnings up to 185% of the FPL. There is a $12 monthly premium for earnings between 185% to 225%, and a $25 monthly premium for earnings between 225% to 250%. If a person has private insurance, that premium is $10 24

25 per month. No cost-sharing charges apply. Previous Medicaid status of enrollees About 91% of enrollees moved into the buy-in from an existing Medicaid eligibility category. Start date and number of participants (as of January 1, 2000; 160 May 2000) Legislation (if applicable) Vermont Act 62 Section 121 H WISCONSIN Financial eligibility Net family income up to 250% of FPL. Cost-sharing policies Individuals with gross individual incomes of less than 150% of the FPL are exempt from paying a monthly premium. Premiums for individuals with gross incomes at or greater than 150% of the FPL are calculated as the sum of: 3% of individual's earned income and 100% of individual's unearned income minus some disregards. Previous Medicaid status of enrollees About 72% of enrollees had at least one month of Medicaid eligibility in

26 Start date and number of participants (as of March 15, 2000; 53 June 2000) Legislation (if applicable) 1999 Wisconsin Act 9 Assembly Bill 133 Section 1115 Waiver MASSACHUSETTS Financial eligibility No income eligibility maximum. Cost-sharing policies Premiums assessed if income is at or above 200% of the FPL. Premiums based on income, family size and availability of other insurance. Clients pay a onetime deductible similar to Medicaid spend-down to enroll. Previous insurance status of enrollees 60%; enrollees have other insurance. Start date and number of participants (as of February 2000) 1988/3,624 working adults This program also covers disabled children (2,281) and disabled non-working adults (2,754). Legislation (if applicable) None Appendix B State Legislation on Medicaid Buy-In Programs California Bill Number: CA AB 155 Year:

27 THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section is added to the Welfare and Institutions Code, to read: (a) The department shall adopt the option made available under Section 1902(a)(10)(A)(ii)(XIII) of the federal Social Security Act (42 U.S.C. Sec. 1396a(a)(10)(A)(ii)(XIII). In order to be eligible for benefits under this section, an individual shall be required to meet all of the following requirements: j. His or her net countable income is less than 250 percent of the federal poverty level for one person or, if the deeming of spousal income applies to the individual, his or her net countable income is less than 250 percent of the federal poverty level for two persons. (2) He or she is disabled under Title II of the Social Security Act (Subch. 2 (commencing with Sec. 401), Ch. 7, Title 42 U.S.C.), Title XVI of the Social Security Act (Subch. 16 (commencing with Sec. 1381), Ch. 7, Title42, U.S.C.), or Section 1902(v) of the Social Security Act (42 U.S.C. Sec. 1396a(v)). An individual shall be determined to be eligible under this section without regard to his or her ability to engage in, or actual engagement in, substantial gainful activity, as defined in Section 27

28 223(d)(4) of the Social Security Act (42 U.S.C. Sec. 423(d)(4)). (3) Except as otherwise provided in this section, his or her net nonexempt resources, which shall be determined in accordance with the methodology used under Title XVI of the federal Social Security Act (42 U.S.C. Sec et seq.), are not in excess of the limits provided for under those provisions. (b) (1) Countable income shall be determined under Section 1612 of the Social Security Act (42 U.S.C. Sec. 1382a), except that the individual's disability income, including all federal and state disability benefits and private disability insurance, shall be exempted. Resources excluded under Section 1613 of the Social Security Act (42 U.S.C. Sec. 1382b) shall be disregarded. (2) Resources in the form of employer or individual retirement arrangements authorized under the Internal Revenue Code shall be exempted as authorized by Section 1902 of the Social Security Act (42 U.S.C. Sec. 1396a ). (c) Medi-Cal benefits provided under this chapter pursuant to this section shall be available in the same amount, duration, and scope as those benefits are available for persons who are eligible for Medi-Cal benefits as categorically needy persons and as specified in Section (d) Individuals eligible for Medi-Cal benefits under this section 28

29 shall be subject to the payment of premiums determined under this subdivision. The department shall establish sliding-scale premiums that are based on countable income, with a minimum premium of twenty dollars ($20) per month and a maximum premium of two hundred fifty dollars ($250) per month, and shall, by regulations, annually adjust the premiums. Prior to adjustment of any premiums pursuant to this subdivision, the department shall submit a report of proposed premium adjustments to the appropriate committees of the Legislature as part of the annual budget act process. (e) The department shall adopt regulations specifying the process for discontinuance of eligibility under this section for nonpayment of premiums for more than two months by a beneficiary. (f) In order to implement the collection of premiums under this section, the department may develop and execute a contract with a public or private entity to collect premiums, or may amend any existing or future premium-collection contract that it has executed. Notwithstanding any other provision of law, any contract developed and executed or amended pursuant to this subdivision is exempt from the approval of the Director of General Services and from the Public Contract Code. (g) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department shall 29

30 implement, without taking any regulatory action, this section by means of an all-county letter or similar instruction. Thereafter, the department shall adopt regulations in accordance with the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. (h) Notwithstanding any other provision of law, this section shall be implemented only if, and to the extent that, the department determines that federal financial participation is available pursuant to Title XIX of the federal Social Security Act (42 U.S.C. Sec et seq.). j. Subject to subdivision (h), this section shall be implemented commencing April 1, (j) This section shall become inoperative on April 1, 2005, and as of January 1, 2006, is repealed, unless a later enacted statute that is enacted on or before January 1, 2006, extends or deletes the dates on which it becomes inoperative and is repealed. SEC. 2. Notwithstanding Section of the Government Code, if the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the 30

31 claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund. Type of Legislation: Legislation Specifies Details of State Medicaid Buy-In Work Incentives Program. Connecticut House Bill No Public Act No Year: 2000 "An Act Providing Work Incentives For Persons With Disabilities" Be it enacted by the Senate and House of Representatives in General Assembly convened: Section 1. (NEW) (a) The Department of Social Services shall establish and implement a working persons with disabilities program to provide medical assistance as authorized under Section 201 (a)(1) of Public Law , as amended from time to time, to persons who are disabled and regularly employed. (b) The Commissioner of Social Services shall amend the Medicaid state plan to allow persons specified in subsection (a) of this section to qualify for medical assistance. The amendment shall include the following requirements: (1) That the person be engaged in a substantial and reasonable work effort as determined by the commissioner and as permitted by federal law and have an annual adjusted gross income, as defined in Section 62 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, of no more than seventy-five thousand dollars per year; (2) a disregard of all countable income up to two hundred per cent of the federal poverty level; (3) for an unmarried person, an asset limit of ten thousand dollars, and for a married couple, an asset limit of fifteen thousand dollars; (4) a disregard of any retirement and medical savings accounts established pursuant to 26 USC 220 and held by either the person or the person's spouse; (5) a disregard of any moneys in accounts designated by the person or the person's spouse for the purpose of purchasing goods or services that will increase the employability of such person, subject to approval by the commissioner; (6) a disregard of spousal income solely for purposes of determination of eligibility; and (7) a contribution of any countable income of the person or the person's spouse which exceeds two hundred per cent of the federal poverty level, as adjusted for the appropriate family size, equal 31