ODDC- Ticket To Work And Work Incentives, Annual Report To The President And Congress, April 2003

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TITLE:Title: Medicaid And Ticket To Work States’ Early Efforts to Cover Working Individuals with Disabilities, June 2003

Author: From the US General Accounting Office to Congressional Committees (KACW 7/15/03)

Background: As of December 2002, 12 states had implemented Medicaid Buy-In programs enrolling over 24,000 working individuals with disabilities. To help extend Medicaid coverage to individuals with disabilities who desire to work, Congress passed the Ticket to Work and Work Incentives Improvement (TWWII) Act of 1999. This legislation authorizes states to raise their Medicaid income and asset eligibility limits for individuals with disabilities who work. During fiscal year 2000, over 7 million individuals with disabilities were enrolled in Medicaid, giving states the option to cover a wide array of medical and personal assistant services (PAS).

Depending on the state, individuals who qualify for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) programs may also qualify for Medicaid. Working-age individuals with disabilities who live in the community and work may jeopardize their Medicaid coverage due to work income. This loss may be serious because some benefits, including PAS, may not be available through other health insurance preventing people from being employed and retaining the associated earnings to ensure their continued Medicaid coverage. States may require working individuals with disabilities "buy in" to the Medicaid program by sharing in the costs of their coverage.

According to the Social Security Administration (SSA), a person is disabled if he or she has a medically determined physical or mental impairment that has lasted or is expected to last at least 1 year or result in death and prevents the person from engaging in substantial gainful activity (SGA).

As of January 2003, SGA is defined as countable earnings - generally gross earnings less the cost of items that, because of the impairment, a person needs to work - of more than $800 per month. SSA states that the impairment must be severe enough that the person not only is unable to do his or her previous work but, considering the person’s age, education, and work experience, is unable to do any other kind of substantial work that exists in the national economy.

TWWII allowed states to expand the availability of Medicaid coverage for individuals with disabilities who work, even though they earn more than the SGA level. States may consider people disabled who earn more than the SGA $800 monthly amount, but meet the other requirements of the SSA’s definition of disabled. To be eligible for Medicaid coverage, they must also meet income and asset requirements. Both the SSI and DI programs contain work incentive provisions designed to assist individuals to achieve gainful employment while retaining some eligibility for health care coverage.

According to federal regulations, SSI recipients are assured eligibility for Medicaid in 39 states and the District of Columbia. The remaining 11 states may use different standards for disability, income, or assets; so eligibility is not guaranteed. Work incentives under SSI allow individuals to:
1. Have cash benefits gradually reduced as earnings increase, rather than removing cash benefits entirely once earnings exceed the SGA limit; and,
2. Maintain their Medicaid coverage up to an income limit that varies across the states, from 170 % of the Federal Poverty Level (FPL) in Arizona to 443% of the FPL.
With DI disability determination, people must also meet Medicaid’s income and asset requirement as defined by each state. DI beneficiaries can "spend down" their income on medical expenses to meet state-determined income limits for the medically needy eligibility category, if a state provides this optional coverage. Under DI, if an individual’s work activity increases to a level where he or she is no longer deemed disabled, he or she loses eligibility, and Medicaid.

States receive federal Medicaid matching funds for health care provided to certain individuals meeting broad federal requirements for eligibility, including categorical, income, resource, immigration status, and residency requirements. The categorical requirement includes individuals who fall into specified categories:

Individuals with disabilities

Children

Pregnant women

Individuals in families with dependent children

Elderly

The medically needy category is for people who meet certain requirements for Medicaid eligibility and have enough medical expenses where their income, less the medical expenses incurred, makes them eligible for Medicaid. As of November 2002, 35 states and the District of Columbia opted to cover Medicaid beneficiaries under the medically needy eligibility category.
Medicaid Buy-in Program Expands to Working People with Disabilities: Through the Balanced Budget Act of 1997 (BBA), states have the option to extend Medicaid coverage to those who meet the SSI definition of disability and exceed the SSI income eligibility limit but whose income remains under 250 percent of the FPL. The Ticket to Work Buy-In builds on the BBA option by giving states unlimited flexibility to set higher income and asset levels for two new eligibility groups, the Basic Coverage Group and the Medical Improvement Group.

The Basic Coverage Group allows states to cover people (16 to 64) who would be eligible to receive SSI benefits if they did not earn income more than the limit. States electing the Basic Coverage Group may require payment of monthly premiums or may impose other cost-sharing mechanisms. States may not impose premiums that exceed 7.5% of income for individuals with annual incomes less than 450% of the FPL. While the Basic Coverage Group Buy-In participants must have earnings, TWWII legislation does not specify a minimum level of employment for this group, preventing states from establishing requirements such as minimum earnings or hours worked.

The Medical Improvement Group allows states to cover working individuals who lose Medicaid eligibility under the Basic Coverage Group because they no longer meet the SSI definition of disability but still have "a severe, medically determinable impairment." TWWII legislation provides a definition and also allows a state to define employment for the Medical Improvement Group. Employment is defined as earning at least the minimum wage and working at least 40 hours per month. Alternatively, a state may use hours of work, wage levels, or other measures to define employment if the Department of Health and Human Services approves them.

Individuals with Disabilities Had Lower Employment, Education, and Income but More Coverage: The estimated 6.7 million working-age individuals with disabilities nationwide were more likely to be not working, have less education, and have incomes below the FPL compared with the general population.

82 % of working-age individuals with disabilities, or about 5.5 million individuals, reported that they were not working.
Nearly three-fourths of working-age individuals with disabilities reported they had a high school education or less, but they were nearly three times more to have incomes below the FPL.
Individuals with disabilities were less likely to be uninsured compared with the rest of the working-age population (9% compared with 15%) and nearly half of individuals with disabilities who reported having health insurance had it through public sources, such as Medicaid and Medicare, far more than working-age individuals in the general population.
Health insurance coverage is imperative for people with disabilities to help cover the costs of their care because their expenditures were about five times the expenditures for other working-age individuals, annually averaging about $7,600 and $1,500, respectively.

States’ Buy-In Programs Expanded Eligibility and Increased Cost Sharing: As of December 2002, the number of Buy-In participants for the 12 states totaled 24,258, ranging from 3 participants in Wyoming to almost 8,500 participants in Missouri. Eleven of the twelve states set eligibility limits for income at twice the FPL or higher, or $17,720 per year for an individual in 2002. Buy-In programs also allowed participants to retain more assets than usually allowed in states’ Medicaid programs.

Of the 12 states, 7 states set asset limits that ranged from $10,000 to $30,000 for individuals, couples, or both.
Three states, Missouri, Indiana, and Arkansas, opted for asset requirements of $4,000 or less for an individual
Washington and Wyoming imposed no asset limits.
Arkansas and Indiana set $10,000 and $20,000 limits, respectively, on the amount of savings participants can accumulate in these accounts.

States generally allowed participants to exclude certain assets from the asset limits and 10 of the 12 states allowed them to save money in retirement accounts; medical savings accounts; or special accounts for modifications for job or home and education costs.

Calculated in a variety of ways, all 12 states adopted cost-sharing mechanisms, primarily premiums or co-payments, for Buy-In participants. Pennsylvania and Washington set premiums as a percentage of allowable income, while Indiana and Kansas established varying premium levels for different incomes. Among states that charged premiums in 2002, the percentage of participants whose incomes were high enough to be charged premiums varied significantly across the states, from 12 percent of participants in Connecticut to all or nearly all participants in Illinois, Pennsylvania, Washington, and Wyoming. Average monthly premiums ranged from $26 to $82, with nearly half of the states setting premiums from $40 to $60.

Buy-In Programs May Offer Greatest Benefit to DI Participants: Prior to the TWWII legislation, people receiving SSDI, in 11 of the 12 states could qualify for Medicaid by spending down their incomes to specified levels ranging from 15 % to 100% the FPL. Under the new Buy-In programs:

The eligibility levels significantly exceeded those established under the spend-down categories, allowing individuals to qualify for the Medicaid Buy-In directly without spending down their incomes.
People, not entitled to receive Medicare coverage until they received a cash benefit for 24 months, also receive more immediate health insurance coverage through the Medicaid Buy-In.
Buy-In participants may also have access to a more expanded benefit package than individuals who receive Medicaid through a state’s medically needy program. After a 9-month trial work period and a 36-month extended period of eligibility, if a DI beneficiary’s earnings increase over the SGA limit in any month, the individual loses DI eligibility entirely. Additionally, DI beneficiaries who earn more than the SGA level after the initial 9-month trial period could lose Medicare coverage after 8-1/2 years. In contrast, most SSI beneficiaries were assured eligibility for Medicaid, so they need the Buy-In program or to spend down their incomes.

SSI beneficiaries in Medicaid would receive the same benefit package as those in a Buy-In program and they remained eligible for Medicaid as participants in a work incentive program. Beneficiaries in SSI’s work incentive program are not subject to premium payments in Medicaid, while Buy-In programs generally have imposed premium requirements for participants.

Available Employment Information Shows Participants Worked in Low-Wage Jobs and Experienced Minimal Increases in Earnings: While one purpose of the Ticket to Work legislation was to enable individuals with disabilities to reduce their dependency on federal cash benefit programs through earnings from work, available data from Connecticut, Illinois, Minnesota showed that few participants earned more than the SGA limit, which was $780 in December 2002.

Sixty-four percent of participants in Connecticut, 61percent of participants in Illinois, and 77 percent of participants in Minnesota had earned income well below the SGA limit.
Two of the four states could identify whether participants had increased their earnings once enrolled in the program
40% of Minnesota participants and 28% of Connecticut participants increased their earnings between the time of initial enrollment and December 2001, the most recent date for which these data were available.
Average monthly increases over previous earnings were $306 in Minnesota and $332 in Connecticut. New Jersey.
Minnesota found that 64% of those in the state’s Buy-In program as of December 2001 earned wages for at least one 3-month period in the 2-year period prior to enrollment.
In Connecticut and Minnesota Buy-In participants generally were employed in low-wage jobs, less than the SGA threshold.
The share of Buy-In participants with previous Medicaid coverage was 53% in Connecticut, 81 % in Illinois, 61% in Minnesota, and 58 % in New Jersey.
Of those who switched from Medicaid coverage to the Buy-In program, Illinois and Minnesota estimated that 79 % and 51 % of participants, respectively, were beneficiaries who originally had spent down their income to qualify for Medicaid.
In New Jersey, most Buy-In participants who were enrolled in Medicaid before switching to the Buy-In category had to spend down their income to qualify for Medicaid, found the Buy-In program particularly beneficial because the state’s Medicaid coverage for medically needy beneficiaries did not include prescription drugs or community-based long-term care services, both were covered by the Buy-In.
In three of the four states, Connecticut, Minnesota, and New Jersey, more than 80 percent of Buy-In participants also received health care coverage through Medicare, relying on the Medicaid Buy-In for drug coverage since Medicare generally does not cover it.

For Buy-In participants with private health insurance coverage, the Buy-In can be a "wrap around" to private coverage by providing such services as home health and personal care, and durable medical equipment.

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