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entitled 'Medicaid and Ticket to Work: States' Early Efforts to Cover 
Working Individuals with Disabilities' which was released on June 13, 
2003.

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Report to Congressional Committees:

United States General Accounting Office:

GAO:

June 2003:

MEDICAID AND TICKET TO WORK:

States' Early Efforts to Cover Working Individuals with Disabilities:

Medicaid and Ticket to Work:

GAO-03-587:

GAO Highlights:

Highlights of GAO-03-587, a report to the Senate Committee on Finance 
and the House Committee on Energy and Commerce 

Why GAO Did This Study:

Over 7 million individuals with disabilities rely on medical and 
supportive services covered by Medicaid.  However, if working-age 
individuals with disabilities desire to increase their self-
sufficiency through employment, they could jeopardize their 
eligibility for Medicaid coverage, possibly leaving them without an 
alternative for health insurance.  

In an effort to help extend Medicaid coverage to certain individuals 
with disabilities who desire to work, the Congress passed the Ticket 
to Work and Work Incentives Improvement Act of 1999.  This legislation 
authorizes states to raise their Medicaid income and asset eligibility 
limits for individuals with disabilities who work.  States may require 
that working individuals with disabilities “buy in” to the program by 
sharing in the costs of their coverage—thus, these states’ programs 
are referred to as a Medicaid Buy-In.  

The act also required that GAO report on states’ progress in designing 
and implementing the Medicaid Buy-In.  GAO identified states that 
operated Buy-In programs as of December 2002 and analyzed the income 
eligibility limits and cost-sharing provisions established by those 
states.  GAO also assessed the characteristics of the Buy-In 
participants in four states that were among the most experienced in 
implementing the program.

What GAO Found:

As of December 2002, 12 states had implemented Medicaid Buy-In programs 
under the authority of the Ticket to Work legislation, which was 
effective October 1, 2000, enrolling over 24,000 working individuals 
with disabilities. These states used the flexibility allowed by the 
legislation to raise income eligibility and asset limits as well as 
cost-sharing fees.    

Across the 12 states, income eligibility levels ranged from 100 
percent of the federal poverty level (FPL) in Wyoming to no income 
limit in Minnesota, with 11 states setting income eligibility limits 
at twice the FPL or higher.  In addition to increasing income and 
asset levels, these states required participants to buy in to the 
program by charging premiums, ranging from $26 to $82 a month, and 
copayments, generally ranging from $0.50 to $3 for office visits and 
prescription drugs.  

In detailed analysis of four states—Connecticut, Illinois, Minnesota, 
and New Jersey—GAO found that most Buy-In participants had prior 
insurance coverage by Medicaid and Medicare, few had prior coverage by 
private health insurance, and many earned low wages—most making less 
than $800 per month.

In commenting on a draft of this report, the Centers for Medicare & 
Medicaid Services noted that it expects to report in 2004 on its 
current study of states’ experiences in 2001 and 2002 with the 
Medicaid Buy-In programs.  

www.gao.gov/cgi-bin/getrpt?GAO-03-587.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Kathryn G. Allen at 
(202) 512-7118.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Individuals with Disabilities Had Lower Employment, Education, and 
Income--and More Insurance Coverage--than the General Population:

States' Buy-In Programs Expanded Eligibility and Increased Cost Sharing 
for More Workers with Disabilities:

Buy-In Participants in Four States Generally Had Prior Medicaid 
Coverage and Worked in Low-Wage Jobs:

Agency and State Comments:

Appendix I: Methodology for Developing Estimates and Characteristics of 
Working-Age Individuals with Disabilities:

Appendix II: Comments from the Centers for Medicare & Medicaid Services:

Tables:

Table 1: Highlights of SSI and DI and Their Links to Medicare and 
Medicaid:

Table 2: Comparison of Criteria for the Ticket to Work Buy-In and the 
BBA Option:

Table 3: Enrollment and Eligibility Characteristics of 12 States With 
Ticket to Work Medicaid Buy-In Programs:

Table 4: Twelve States' Premium Requirements for Ticket to Work 
Medicaid Buy-In Programs:

Table 5: Number of Buy-In Participants Reporting Other Sources of 
Health Care Coverage in Four States:

Table 6: Average Monthly Income for Ticket to Work Buy-In Participants 
in Four States:

Table 7: MEPS Sample and Estimated Population Sizes, 1997 and 1998:

Figures:

Figure 1: Selected Characteristics of Working-Age Individuals with 
Disabilities Compared with the Rest of the General Working-Age 
Population:

Figure 2: Twelve States' Medicaid Buy-In, SSI Work Incentive, and 
Spend-Down Income Eligibility Levels, as a Percentage of the FPL:

Abbreviations:

ADL: activities of daily living 
AHRQ: Agency for Healthcare Research and Quality 
AWI: average wage index 
BBA: Balanced Budget Act of 1997 
CMS: Centers for Medicare & Medicaid Services 
DI: Social Security Disability Insurance 
EPE: extended period of eligibility 
FPL: federal poverty level 
IADL: instrumental activities of daily living 
MEPS: Medical Expenditure Panel Survey 
NHIS: National Health Interview Survey 
SGA: substantial gainful activity 
SSA: Social Security Administration 
SSI: Supplemental Security Income:

United States General Accounting Office:

Washington, DC 20548:

June 13, 2003:

The Honorable Charles E. Grassley Chairman The Honorable Max Baucus 
Ranking Minority Member Committee on Finance United States Senate:

The Honorable W.J. "Billy" Tauzin Chairman The Honorable John D. 
Dingell Ranking Minority Member Committee on Energy and Commerce House 
of Representatives:

During fiscal year 2000, over 7 million individuals with disabilities 
were enrolled in Medicaid, a federal-state program that finances health 
care for certain low-income Americans. For these individuals, Medicaid 
gives states the option to cover a wide array of medical and supportive 
services, including assistance with basic daily activities such as 
bathing, dressing, and eating. Depending on state Medicaid rules, 
individuals with disabilities who qualify for cash assistance from the 
Supplemental Security Income (SSI) or Social Security Disability 
Insurance (DI) programs may qualify for Medicaid. Nearly all 
individuals who qualify for SSI, which primarily covers low-income 
individuals who are disabled and have little or no work 
experience,[Footnote 1] are assured eligibility for Medicaid coverage. 
Under DI, which assists people who worked but became disabled before 
their retirement age,[Footnote 2] individuals are eligible for 
Medicare, a federal health insurance program for elderly individuals 
and some individuals with disabilities. Depending on their income and 
assets, individuals eligible for DI also may qualify for Medicaid and 
thus receive coverage for some services not covered by Medicare, such 
as most outpatient prescription drugs.

Because eligibility for Medicaid is generally linked to individuals' 
income and assets, working-age individuals--aged 16 to 64--with 
disabilities who live in the community and work may jeopardize their 
Medicaid coverage due to earnings from work, possibly leaving them 
without an adequate health insurance alternative. The loss of Medicaid 
may be of particular concern for working-age individuals with 
disabilities because some benefits--including personal assistance with 
daily activities and adaptive equipment (such as household items 
modified for use by those with disabilities)--may not be available 
through other sources of health insurance. For example, private health 
insurance, such as that offered by employers, often does not cover 
personal assistance with basic daily activities or adaptive equipment. 
As a result, working-age individuals with disabilities may forgo 
employment and associated earnings in order to ensure their continued 
financial eligibility for Medicaid coverage of their health care needs.

In an effort to help extend Medicaid coverage to certain individuals 
with disabilities who desire to work, the Congress passed the Ticket to 
Work and Work Incentives Improvement Act of 1999 (Pub. L. No. 106-170, 
113 Stat. 1860). This legislation, effective October 1, 2000, 
authorizes states to raise their Medicaid income and asset limits for 
individuals with disabilities who work. States may require that working 
individuals with disabilities "buy in" to the Medicaid program by 
sharing in the costs of their coverage--therefore, such states' 
programs are referred to as a Medicaid Buy-In. A Medicaid Buy-In 
program is intended to assist individuals by allowing them to work and 
thereby increase their independence and self-sufficiency, while at the 
same time enabling them to obtain or maintain health care coverage. The 
act directed that we report to the Congress on characteristics of 
individuals with disabilities, including their health care costs and 
health insurance coverage, as well as states' progress in designing and 
implementing the Medicaid Buy-In program. Accordingly, as agreed with 
the committees of jurisdiction, we examined:

1. characteristics of working-age individuals with disabilities 
compared with the rest of the working-age U.S. population with regard 
to employment, education, income, health insurance status, and health 
care expenditures,

2. how states that have chosen to establish a Ticket to Work Medicaid 
Buy-In program have designed their programs, including income 
eligibility limits and any cost-sharing provisions, and:

3. characteristics of selected states' Ticket to Work Medicaid Buy-In 
participants, including previous health insurance coverage and income 
from employment.

To compare characteristics of working-age individuals with disabilities 
to individuals in the rest of the working-age population, we analyzed 
data available from the Agency for Healthcare Research and Quality's 
(AHRQ) Medical Expenditure Panel Survey (MEPS)--the survey of 
individuals' demographics, employment, health characteristics, and 
medical spending (household component) for 1997 and 1998, the most 
recent years for which relevant data were available. We analyzed data 
from MEPS because such data provided both a way to identify working-age 
individuals with disabilities and details on their health care 
expenditures. Our estimates based on MEPS resulted in a relatively 
broad definition of disability for individuals aged 16 to 64 because it 
included individuals who reported one or both of the following 
conditions: (1) needing help or supervision in performing activities of 
daily living (ADL) (such as bathing or dressing) or instrumental 
activities of daily living (IADL) (such as taking medications or 
preparing meals) because of an impairment or a physical or mental 
health problem,[Footnote 3] or (2) being completely unable to work at a 
job, do housework, or go to school. For individuals meeting this 
definition of disability, we compared characteristics such as income 
level, insurance status, and health care expenditures to those of the 
rest of the U.S. population aged 16 to 64. AHRQ collected these data 
prior to implementation of Ticket to Work Medicaid Buy-In programs and 
thus the data do not reflect any effects of states' Buy-In programs. 
(App. I provides detailed information on our methodology for developing 
estimates and characteristics of working-age individuals with 
disabilities.) To examine the designs of the Buy-In programs for states 
that had chosen to establish a Buy-In program and whose programs were 
in effect as of December 2002, we reviewed state Medicaid plan 
amendments describing the Buy-Ins, analyzed published state documents, 
and conducted telephone interviews with state Medicaid officials. 
Additionally, we analyzed the Buy-In implementation experience of four 
states--Connecticut, Illinois, Minnesota, and New Jersey--that were 
among the most experienced in implementing the program. At the federal 
level, we interviewed officials at the Centers for Medicare & Medicaid 
Services (CMS), which oversees states' Medicaid programs, to gather 
information about states' programs. We reviewed documents, including 
federal laws and reports, related to the state Buy-In programs. We 
conducted our work from May 2002 through June 2003 in accordance with 
generally accepted government auditing standards.

Results in Brief:

Compared with the rest of the working-age U.S. population, the 
estimated 6.7 million working-age individuals with disabilities were 
more likely to be not working, have less education, and have incomes 
below the federal poverty level (FPL). However, they were less likely 
to be uninsured than the rest of the working-age U.S. population--just 
9 percent of those with disabilities reported being uninsured, compared 
with 15 percent of the rest of the working-age population. Nearly half 
of individuals with disabilities who reported having health insurance 
obtained coverage through public sources, such as Medicare and 
Medicaid. Annual average health care expenditures for working-age 
individuals with disabilities were about five times the expenditures 
for other working-age individuals.

Of the 12 states that had opted to implement Medicaid Buy-In programs 
under the Ticket to Work authority, all expanded eligibility to include 
working individuals with higher incomes or more assets than generally 
allowed under the states' traditional Medicaid programs. As of December 
2002, the 12 states had enrolled over 24,000 working individuals with 
disabilities. Enrollment ranged from a low of 3 individuals in Wyoming 
to 8,461 in Missouri. Eleven of the 12 states set Buy-In eligibility 
limits for income at twice the FPL or higher--$17,720 per year for an 
individual in 2002. Additionally, the states' Buy-In programs generally 
allowed participants to keep more assets, such as retirement accounts 
and medical savings accounts, than allowed in states' traditional 
Medicaid programs. The higher income eligibility and asset levels set 
by states for the Buy-In programs provided additional opportunities--
particularly for DI-eligible individuals, who had prior working 
experience before becoming disabled--to secure and maintain Medicaid 
coverage. In addition to increasing income and asset levels, all states 
took advantage of the statute's flexibility by requiring participants 
to buy in to the program by paying premiums or copayments. Generally, 
states assessed premiums for individuals with incomes above the FPL and 
adjusted premiums upward as income increased. Across the 10 states that 
charged premiums in 2002, the average monthly premiums paid ranged from 
$26 in New Hampshire to $82 in Indiana. Additionally, the percentage of 
participants who were 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.

Our more detailed analysis of four states that were among the most 
experienced in implementing this program found that most Buy-In 
participants had prior insurance coverage by Medicaid and Medicare, few 
had prior coverage by private health insurance, and many earned low 
wages while participating in the Buy-In. More than half of the Buy-In 
participants in these four states had previous Medicaid coverage. Those 
Buy-In participants who had switched from another Medicaid eligibility 
category generally did so because they were able to increase their 
income and assets and maintain their Medicaid eligibility. Many Buy-In 
participants in these states were eligible for health care coverage 
through the Medicare program. However, Medicaid eligibility gave these 
individuals additional benefits that were not offered under Medicare, 
such as outpatient prescription drugs and personal care services. Few 
participants--less than 10 percent of participants in any of the four 
states--reported having employer-sponsored coverage at the time of 
their enrollment into the Medicaid Buy-In programs. Available 
employment data showed that participants generally were working in low-
wage jobs--most making less than $800 per month--although they could 
earn more and still retain Buy-In Medicaid benefits. These four states, 
however, had little information regarding the extent to which the Buy-
In programs fostered employment among individuals with disabilities.

In its comments on a draft of this report, CMS noted it is conducting 
an extensive study of states' experiences with the Medicaid Buy-In 
programs and expects to issue a report in 2004. CMS and 11 of the 12 
states in our sample also provided technical comments, which we 
incorporated as appropriate.

Background:

Eligibility for benefits under SSI, DI, Medicare, and Medicaid programs 
for individuals with disabilities is determined in part on whether an 
individual has a disability as defined in the Social Security 
Act.[Footnote 4] For purposes of these programs, a person is disabled 
if he or she has a medically determined physical or mental impairment 
that (1) has lasted or is expected to last at least 1 year or result in 
death and (2) 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.[Footnote 5] The Social Security Administration's (SSA) 
interpretation of disability specifies that for a person to be 
determined to be disabled, the impairment must be of such severity 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.[Footnote 6]

The Ticket to Work and Work Incentives Improvement Act of 1999 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 that implement Ticket to Work Buy-In programs may 
consider as disabled those individuals who, except for the fact that 
they are earning more than the SGA $800 monthly amount, otherwise would 
meet the Social Security Act definition of disabled.

Individuals with Disabilities Qualify for Medicaid Primarily through 
SSI or DI Eligibility:

Individuals with disabilities become eligible for Medicaid in a variety 
of ways but primarily through SSI or DI eligibility (see table 1). 
Individuals with disabilities, however, must also meet Medicaid income 
and asset requirements in order to obtain Medicaid coverage. Both the 
SSI and DI programs contain work incentive provisions designed to 
assist individuals with disabilities to achieve gainful employment 
while retaining some eligibility for health care coverage.[Footnote 7]

SSI:

Individuals receiving SSI also are assured eligibility for Medicaid in 
39 states and the District of Columbia. The remaining 11 states (known 
as 209(b) states) may use different standards for disability, income, 
or assets; thus, SSI beneficiaries in these 11 states may not have 
assured eligibility for Medicaid.[Footnote 8] Work incentives under SSI 
allow individuals to (1) have their SSI cash benefits gradually reduced 
as earnings increase, rather than having cash benefits removed entirely 
once earnings exceed the SGA limit, and (2) maintain their Medicaid 
coverage up to an income limit that varies across the states (from 
$15,049 (170 percent of the FPL) in Arizona to $39,228 (443 percent of 
the FPL) in New Hampshire as of 2002).[Footnote 9]

DI:

Individuals receiving DI also may become eligible for Medicaid under 
certain circumstances. By virtue of their DI disability determination, 
they meet one of the categorical eligibility requirements for 
Medicaid.[Footnote 10] However, they must also meet Medicaid's income 
and asset requirements as defined by each state. DI beneficiaries can 
"spend down" their income on medical expenses in order to meet state-
determined income limits for the medically needy eligibility category, 
if a state provides this optional coverage.[Footnote 11] While DI 
beneficiaries receive health care coverage through Medicare,[Footnote 
12] eligibility for the medically needy category provides Medicaid-
covered services that are not covered by Medicare, such as most 
outpatient prescription drugs. Work incentives under DI are structured 
such that if an individual's work activity increases to a level where 
he or she is no longer deemed disabled, the individual loses DI 
eligibility, and in turn, Medicaid eligibility.

Table 1: Highlights of SSI and DI and Their Links to Medicare and 
Medicaid:

Program: General description; SSI: * Means-tested income assistance 
program for disabled, blind, or aged individuals with or without prior 
participation in the labor force; * Federal income limit of $545 in 
countable income per month for an individual ($817 for a couple) and 
$2,000 in assets for a single adult ($3,000 for a couple) as of 
2002.[A]; * SSI cash benefits are based on a beneficiary's countable 
income, living arrangements, and state of residence. Most states pay 
some beneficiaries an additional amount referred to as a "state 
supplement." The amounts and qualifications for these state supplements 
vary by state; DI: * Income assistance program for individuals who 
have lost their ability to work as a result of a severe, long-term 
disability and have worked long enough in Social Security-covered 
employment and during a specified time period to meet program 
requirements.[B]; * No federal income or asset limit for participation 
in the DI program, other than meeting the SGA earnings limit to be 
determined disabled ($800 per month in 2003); * The DI cash benefits 
are based on a beneficiary's lifetime average earnings that were 
covered by Social Security. The payment amount is adjusted each year to 
account for changes in the cost of living.

Program: Number of working-age individuals covered; SSI: * In 2001, 3.8 
million individuals aged 18-64 received SSI benefits; DI: * In 2001, 
5.3 million individuals through age 64 received DI benefits because of 
a disability they incurred.

Program: Link to Medicaid and Medicare; SSI: * In 39 states and the 
District of Columbia, SSI eligibility assures an individual's 
eligibility for Medicaid benefits; * Eleven states use more 
restrictive disability, income, or asset requirements than SSI for 
Medicaid eligibility.[C]; * No direct link to Medicare; DI: * 
Individuals eligible for DI meet the Medicaid categorical designation 
for disability, but they also must meet the Medicaid income and asset 
requirements as defined by the state. DI individuals may spend down 
their income and assets and thus become eligible for Medicaid under the 
medically needy eligibility category, if a state uses this optional 
coverage category; * Entitled to part A Medicare coverage after they 
have received DI cash benefits for 24 months.[D].

Program: Program work incentives and effect on health coverage; SSI: 
Under section 1619 (a),(b) of the Social Security Act, 42 U.S.C. 
1382h(a),(b), disabled SSI beneficiaries who work may be eligible for 
continued Medicaid coverage through two work incentive programs: * 
Section 1619(a): Allows disabled beneficiaries to continue to receive 
SSI cash payments even when earnings exceed the SGA ($800 per month in 
2003). However, as earnings increase, the SSI cash payment decreases 
until earnings completely replace cash benefits. There is no effect on 
Medicaid coverage as long as an individual receives SSI cash benefits; 
* Section 1619(b)--SSI work incentive:[E] Allows disabled 
beneficiaries to continue to receive Medicaid coverage even when they 
no longer qualify for SSI cash benefits. Medicaid coverage continues 
until earnings reach a threshold amount that varies by state. In 
contrast to other Medicaid income eligibility thresholds, which are 
usually set by the state within broad federal parameters, SSA sets the 
income threshold for SSI-related Medicaid eligibility, which varies 
from state to state on the basis of each state's current SSI cash 
benefit (the federal benefit and any state supplement) and a state's 
per capita Medicaid expenditures.[f] Across the 50 states and the 
District of Columbia, Medicaid eligibility for SSI-related individuals 
in 2002 ranged from 170 percent of the FPL in Arizona to 443 percent of 
the FPL in New Hampshire; DI: DI beneficiaries who work may retain 
eligibility for Medicaid as long as their medical disability continues 
and they continue to meet a state's Medicaid income and asset 
requirements; Medicare coverage for DI beneficiaries who work may be 
retained under the following circumstances: * Trial work period: 
Allows DI beneficiaries to have a trial work period of 9 months (not 
necessarily consecutive) within a 60-month rolling period during which 
they can earn any amount without affecting their DI benefits. Medicare 
part A coverage continues for the 9-month period; * Extended 
period of eligibility (EPE): Immediately after the trial work period, 
DI beneficiaries enter a 36-month EPE as long as medical disability 
continues. Cash benefits continue for the first 3 months of this period 
regardless of the earnings level. For the remaining 33 months, DI cash 
benefits are paid only in months in which countable earnings were less 
than SGA ($800 per month in 2003). For those who earn at or above SGA 
level after the 36-month EPE, part A Medicare coverage continues for at 
least 7 years and 9 months (including the 36 months of the EPE), unless 
the person is determined to be not disabled for a reason other than 
earning the SGA level; With the trial work period and the EPE, DI 
beneficiaries who work, and continue to have a medical disability, are 
entitled to at least 8-1/2 years of Medicare part A coverage following 
the start of a trial work period.[G].

Source: SSA.

Note: GAO analysis of SSA documents, as of December 2002.

[A] Not all income or assets are counted in order to calculate 
"countable" income or assets. Income exclusions include $20 per month 
of most income, $65 per month of wages and one-half of wages over $65, 
food stamps, and home energy and housing assistance. Assets excluded 
are the home a person lives in; a car, depending on its use or value; 
certain burial spaces and burial funds up to $1,500; and life insurance 
with a face value of up to $1,500.

[B] To be eligible for DI benefits, workers (except those who are 
blind) also must meet a test of substantial recent covered work, which 
means that workers aged 31 and older must have been in Social Security 
covered employment for at least 20 quarters of the 40 calendar quarters 
ending with the quarter in which the disability began. Workers disabled 
before age 31 may qualify for benefits under a special insured status 
requirement.

[C] In identifying eligible individuals with disabilities, states 
generally are required to use the SSI eligibility requirements; 
however, they also have the option to use their January 1972 state 
assistance eligibility rules under section 1902(f) of the Social 
Security Act, which tend to be more restrictive than SSI rules. If a 
state's 209(b) rules are more restrictive, it must also allow 
individuals to spend down into Medicaid eligibility by deducting 
incurred medical care expenses from income. As of 2002, 11 states had 
elected this option: Connecticut, Hawaii, Illinois, Indiana, Minnesota, 
Missouri, New Hampshire, North Dakota, Ohio, Oklahoma, and Virginia.

[D] Medicare part A helps cover inpatient care in hospitals, critical 
access hospitals, and skilled nursing facilities. It also covers 
hospice care and some home health care. Medicare part B helps cover 
physician services and outpatient hospital care. DI beneficiaries are 
eligible to enroll in part B Medicare coverage after they have received 
DI cash benefits for 24 months.

[E] Throughout this report, we refer to individuals who qualify for 
Medicaid under 1619(b) as participants in the SSI work incentive 
program.

[F] If an SSI beneficiary has gross earnings higher than the threshold 
amount for his or her state, SSA can calculate an individual threshold 
amount if he or she has medical or impairment-related work expenses 
above the state amount.

[G] Under section 1818A of the Social Security Act, a disabled 
individual who has lost entitlement to premium-free Medicare part A 
solely because of SGA may be able to enroll in part A as long as the 
disability continues. The individual is responsible for paying the 
premiums.

[End of table]

Medicaid Buy-In Program Designed to Expand Coverage for Working 
Individuals with Disabilities:

The Ticket to Work Medicaid Buy-In builds on an earlier effort to 
expand Medicaid eligibility for individuals with disabilities who 
desire to work. Through the Balanced Budget Act of 1997 (BBA) (Pub. L. 
No. 105-33, 111 Stat. 251), the Congress gave states the option of 
implementing a coverage category for working individuals with 
disabilities. For these individuals, the BBA authorized states 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. States electing the BBA option 
may require beneficiaries to pay premiums or may use other cost-sharing 
provisions as long as they are set on a sliding scale based on income. 
As of December 2002, 12 states had implemented a BBA option for working 
individuals with disabilities.[Footnote 13]

The Ticket to Work Medicaid Buy-In legislation expands the availability 
of Medicaid coverage for individuals with disabilities who desire to 
work by allowing them to gain or maintain Medicaid eligibility as they 
enter the workforce or to increase their earnings if they are in the 
workforce. 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--Basic Coverage Group and Medical 
Improvement Group--for working individuals with disabilities. (For a 
comparison of the two programs, see table 2.):

Table 2: Comparison of Criteria for the Ticket to Work Buy-In and the 
BBA Option:

Criteria: Who can be covered; Ticket to Work Buy-In: Basic Coverage 
Group: Working disabled individuals, aged 16-64 (SSI disability 
definition).[A]; Medical Improvement Group: Employed Individuals 
losing Basic Coverage because they no longer meet the SSI disability 
definition, but still have severe impairment; BBA Option: Working 
disabled individuals of any age (SSI disability definition).[A].

Criteria: Income standard; Ticket to Work Buy-In: For both the Basic 
Coverage and Medical Improvement groups, the state establishes its own 
standard or chooses not to have an income standard; BBA Option: Up to 
250 percent of the FPL, and unearned income must meet SSI income 
test.[B].

Criteria: Asset standard; Ticket to Work Buy-In: For both the Basic 
Coverage and Medical Improvement groups, the state establishes its own 
standard or chooses not to have one; BBA Option: SSI asset standard 
($2,000/person, $3,000/couple).[B].

Criteria: Premiums and cost sharing; Ticket to Work Buy-In: For both 
the Basic Coverage and Medical Improvement groups, the state may 
require premiums and other cost-sharing mechanisms on an income-based 
sliding scale; For annual incomes less than 450 percent of the FPL, 
state may charge premiums and use other cost-sharing mechanisms of up 
to 7.5 percent of income; States must charge the highest amount of 
premium under the states' premium structure for those with adjusted 
gross annual incomes exceeding $75,000; BBA Option: State may require 
premiums and other cost-sharing mechanisms on an income-based sliding 
scale.

Criteria: States using this option as of December 2002[C]; Ticket to 
Work Buy-In: Basic Coverage Group: Arkansas, Connecticut, Illinois, 
Indiana, Kansas, Minnesota, Missouri, New Hampshire, New Jersey, 
Pennsylvania, Washington, Wyoming; Medical Improvement Group: 
Connecticut, Indiana, Missouri, Pennsylvania, Washington; BBA Option: 
Alaska, California, Iowa, Maine, Mississippi, Nebraska, New Mexico, 
Oregon, South Carolina, Utah, Vermont, Wisconsin.

Source: CMS.

Note: GAO analysis of CMS documents, as of December 2002.

[A] For those individuals who have not been determined disabled by SSA, 
the state must do a disability determination to ensure that the 
individual would meet the definition of disability under the SSI 
program. The disability test must be identical to the SSI or DI 
disability test except that employment activity, earnings, and SGA 
cannot be considered in determining whether the individual meets the 
definition of disability.

[B] Under usual eligibility rules, states are required to use the 
processes used by SSI and the former Aid to Families with Dependent 
Children program in determining eligibility for Medicaid. However, 
section 1902(r)(2) of the Social Security Act, 42 U.S.C. 1396a(r)(2), 
allows states to disregard (not include) additional kinds and amounts 
of income and assets beyond what is allowed under these programs. For 
example, a state could disregard a select amount of earned or unearned 
income or income used for home maintenance or repair.

[C] Florida received approval for a Ticket to Work Medicaid Buy-In 
program in June 2002; however, the state had not implemented the 
program as of December 31, 2002. Arizona received approval for a Ticket 
to Work Medicaid Buy-In program in December 2002. The program was 
implemented in January 2003, which was after the cut-off date of 
December 2002 for inclusion in this study.

[End of table]

The Basic Coverage Group allows states to cover people aged 16 to 64 
who, except for the amount of their earned income, would be eligible to 
receive SSI benefits. States may establish their own income and asset 
standards or elect to have no standards at all.[Footnote 14] As with 
the BBA option, states electing the Basic Coverage Group may require 
participants to pay monthly premiums or may impose other cost-sharing 
mechanisms if they are set on an income-based sliding scale. However, 
for individuals with annual incomes less than 450 percent of the FPL, 
states may not impose premiums that exceed 7.5 percent of income. 
Additionally, if the individual's adjusted gross income for federal 
income tax purposes exceeds $75,000, the state must require the 
individual to pay the highest amount of premiums that an individual 
would be required to pay under the state's premium structure, although 
a state is allowed to subsidize this cost with its own funds. While the 
Basic Coverage Group Buy-In participants must have earnings, the Ticket 
to Work legislation does not specify a minimum level of employment for 
this group. Since states cannot adopt rules defining employment for 
this group that are more restrictive than those in federal law, states 
cannot establish 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 their conditions have improved to the point that they no 
longer meet the SSI definition of disability but still have "a severe, 
medically determinable impairment." The same premium requirements apply 
as for the Basic Coverage Group. If a state elects to cover the Medical 
Improvement Group, it must also cover the Basic Coverage Group. While 
the Ticket to Work legislation does not set an employment standard for 
the Basic Coverage Group, it provides a definition and also allows a 
state to define employment for the Medical Improvement Group. According 
to the legislation, an individual qualifying for the Medical 
Improvement Group is considered employed if the individual is 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 Secretary of Health and Human 
Services approves the definition.

Individuals with Disabilities Had Lower Employment, Education, and 
Income--and More Insurance Coverage--than the General Population:

Compared with the rest of the working-age population, 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. Specifically, 82 percent of working-age individuals with 
disabilities, or about 5.5 million individuals, reported that they were 
not working. (See fig. 1.) Nearly three-fourths of working-age 
individuals with disabilities reported they had a high school education 
or less. Furthermore, these individuals were nearly three times more 
likely than individuals without disabilities to have incomes below the 
FPL. At the same time, individuals with disabilities were less likely 
to be uninsured compared with the rest of the working-age U.S. 
population, with just 9 percent of those with disabilities reporting 
being uninsured, compared with 15 percent for the rest of the working-
age population. Nearly half of individuals with disabilities who 
reported having health insurance obtained coverage through public 
sources, such as Medicaid and Medicare.

Figure 1: Selected Characteristics of Working-Age Individuals with 
Disabilities Compared with the Rest of the General Working-Age 
Population:

[See PDF for image]

Note: GAO analysis of AHRQ's MEPS household component, 1997 and 1998.

[A] Individuals reported income levels from either 1997 or 1998. The 
FPL in 1997 was $7,890 for an individual; the FPL in 1998 was $8,050 
for an individual.

[B] Individuals reported being uninsured during the entire year for 1 
of the 2 years.

[C] Public health insurance coverage primarily includes Medicaid and 
Medicare.

[End of figure]

Working-age individuals with disabilities were far more likely to have 
public health coverage than working-age individuals in the general 
population. Specifically, working-age individuals with disabilities 
were about eight times more likely to have public health insurance 
coverage than other working-age individuals. Generally, the lower the 
income level, the more likely an individual with disabilities was to 
have public health insurance coverage. For example, 75 percent of 
individuals with disabilities who had incomes below the FPL had public 
health insurance, while fewer than 20 percent of those with incomes at 
or exceeding 400 percent of the FPL had public coverage.

The extent of their health care costs underscores the need for 
individuals with disabilities to maintain some type of health insurance 
coverage to help cover the costs of their care. Health care 
expenditures for working-age individuals with disabilities were about 
five times the expenditures for other working-age individuals, annually 
averaging about $7,600 and $1,500, respectively.[Footnote 15]

States' Buy-In Programs Expanded Eligibility and Increased Cost Sharing 
for More Workers with Disabilities:

The 12 states that opted to implement the Ticket to Work Medicaid Buy-
In program as of December 2002 set income and asset levels for 
eligibility that provided new opportunities for working individuals 
with disabilities to secure and maintain Medicaid coverage. DI-eligible 
individuals benefited particularly because states' broader eligibility 
categories under the Buy-In allowed individuals to become eligible for 
Medicaid without spending down their incomes and to remain eligible 
when their incomes rose to higher levels. In addition to expanding 
income eligibility and asset limits, all states took advantage of the 
flexibility of the statute to charge premiums or copayments to ensure 
that Buy-In participants shared in the cost of their health care 
coverage.

Twelve States Expanded Medicaid Eligibility Levels for Working 
Individuals with Disabilities:

Across the 12 states that opted to implement Ticket to Work Medicaid 
Buy-In programs, all set eligibility requirements that expanded 
eligibility for working individuals with higher incomes or more assets 
than usually allowed under their Medicaid programs. 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. (See table 3.) Eleven of the 12 states set 
Buy-In eligibility limits for income at twice the FPL or higher--or 
$17,720 per year for an individual in 2002--thereby expanding 
opportunities for individuals to secure and maintain Medicaid coverage. 
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,[Footnote 16] while the remaining two states--Washington and 
Wyoming--imposed no asset limits.

Table 3: Enrollment and Eligibility Characteristics of 12 States With 
Ticket to Work Medicaid Buy-In Programs:

State: Missouri; Enrollment[A]: 8,461; Buy-In start date: July 2002; 
Income limit as a percentage of FPL[B]: 250%; Asset limits[C]: $999.99 
individual[D].

State: Minnesota; Enrollment[A]: 6,178; Buy-In start date: July 
2001[E]; Income limit as a percentage of FPL[B]: No limit; Asset 
limits[C]: $20,000 individual.

State: Indiana; Enrollment[A]: 3,318; Buy-In start date: July 2002; 
Income limit as a percentage of FPL[B]: 350%; Asset limits[C]: $2,000 
individual;; $3,000 couple.

State: Connecticut; Enrollment[A]: 2,433; Buy-In start date: Oct. 2000; 
Income limit as a percentage of FPL[B]: $6,250 monthly gross income, or 
$3,082 monthly net income[F]; Asset limits[C]: $10,000 individual;; 
$15,000 couple.

State: Pennsylvania; Enrollment[A]: 1,325; Buy-In start date: Jan. 
2002; Income limit as a percentage of FPL[B]: 250%; Asset limits[C]: 
$10,000 couple.

State: New Hampshire; Enrollment[A]: 968; Buy-In start date: Feb. 2002; 
Income limit as a percentage of FPL[B]: 450%; Asset limits[C]: $20,000 
individual;; $30,000 couple.

State: New Jersey; Enrollment[A]: 551; Buy-In start date: Feb. 2001; 
Income limit as a percentage of FPL[B]: 250% (earned) and; 100% 
(unearned); Asset limits[C]: $20,000 individual;; $30,000 couple.

State: Kansas; Enrollment[A]: 489; Buy-In start date: July 2002; Income 
limit as a percentage of FPL[B]: 300%; Asset limits[C]: $15,000 couple.

State: Illinois; Enrollment[A]: 323; Buy-In start date: Jan. 2002; 
Income limit as a percentage of FPL[B]: 200%; Asset limits[C]: $10,000 
individual;; $10,000 couple.

State: Washington; Enrollment[A]: 144; Buy-In start date: Jan. 2002; 
Income limit as a percentage of FPL[B]: 220%; Asset limits[C]: No 
limit.

State: Arkansas; Enrollment[A]: 65; Buy-In start date: Feb. 2001; 
Income limit as a percentage of FPL[B]: 250%; Asset limits[C]: $4,000 
individual;; $6,000 couple[G].

State: Wyoming; Enrollment[A]: 3; Buy-In start date: July 2002; Income 
limit as a percentage of FPL[B]: 100%; Asset limits[C]: No limit.

Source: State-reported data.

Note: GAO analysis of state-reported data, as of December 2002.

[A] States' enrollment data represent either the number of participants 
enrolled on a specific day in December 2002 or the total number who 
were ever enrolled during that month. Also, some states included 
individuals who were retroactively enrolled for that month.

[B] In 2002, the FPL for an individual was $8,860 annually; for a 
family of three, the FPL was $15,020. Not all income is counted in 
order to calculate "countable" income. Income exclusions include $20 
per month of most income, $65 per month of wages and one-half of wages 
over $65, food stamps, and home energy and housing assistance.

[C] Not all assets are counted in order to calculate "countable" 
assets. Assets excluded are the home a person lives in; a car, 
depending on its use or value; certain burial spaces and burial funds 
up to $1,500; and life insurance with a face value of up to $1,500.

[D] Missouri allowed the spouse of an individual with disabilities to 
retain assets up to $100,000 and excluded one-half of the participant's 
marital assets.

[E] Minnesota originally opted to cover workers with disabilities 
through the BBA option, implemented in July 1999, and amended its 
program to follow Ticket to Work Buy-In requirements.

[F] Connecticut uses a two-step method that is not based on the FPL to 
determine income eligibility. First, an applicant's individual gross 
income must be $6,250 a month or less ($75,000 maximum per year). If 
the applicant's income is higher than $6,250, the state applies a 
second test whereby the SSI income disregards and impairment-related 
work expenses are excluded; if an individual's adjusted income (after 
applying these exclusions) is less than or equal to $3,082 per month, 
the individual is income-eligible for the Medicaid Buy-In.

[G] Arkansas increases the asset limit by $200 for each additional 
family member.

[End of table]

States generally allowed Ticket to Work participants to exclude certain 
assets from the asset limits. In addition to excluding the value of 
certain assets that applied to most individuals with disabilities in 
the Medicaid program when determining eligibility,[Footnote 17] 10 of 
the 12 states allowed Buy-In participants to save money in retirement 
accounts such as Individual Retirement Accounts, Keoghs, and 401(k)s; 
medical savings accounts; or special accounts that allow individuals to 
save for expenses such as modifications for job or home and education 
costs. These accounts are not considered when determining asset limits 
for participants. Two states--Arkansas and Indiana--set $10,000 and 
$20,000 limits, respectively, on the amount of savings participants can 
accumulate in these accounts. State officials in a few states said 
allowing participants to exclude these retirement accounts and other 
assets helped support states' goals of affording working individuals 
with disabilities greater independence and self-sufficiency. For 
example, under these rules, participants can save to buy cars or homes 
and can set aside money for retirement.

Buy-In Programs May Offer Greatest Benefit to DI Participants:

In most of the 12 states, the Buy-In programs were especially 
beneficial for DI-eligible individuals who, in contrast to most SSI 
individuals, were not always eligible for Medicaid coverage. Prior to 
the Ticket to Work legislation, DI individuals in 11 of the 12 states 
could qualify for Medicaid by spending down their incomes to specified 
levels (Wyoming did not offer a spend-down option).[Footnote 18] In 
these 11 states, the spend-down income eligibility levels ranged from 
15 percent to 100 percent of the FPL. Under the new Buy-In programs, 
the income eligibility levels significantly exceeded those established 
under the spend-down categories (see fig. 2), thus allowing individuals 
to qualify for the Medicaid Buy-In directly--rather than spending down 
their incomes to qualify for Medicaid coverage. For example, an 
individual receiving DI in Arkansas could obtain Medicaid coverage 
through the Buy-In program with an income up to 250 percent of the FPL; 
prior to the Buy-In, the individual would have had to incur medical 
expenses that reduced his or her income to approximately 15 percent of 
the FPL in order to qualify for the spend-down category of Medicaid. 
This allows an individual with disabilities in Arkansas to maintain an 
income of up to $22,150 per year under the Buy-In, whereas that person 
would have had to spend down to an income of $1,300 a year to qualify 
for Medicaid.

Figure 2: Twelve States' Medicaid Buy-In, SSI Work Incentive, and 
Spend-Down Income Eligibility Levels, as a Percentage of the FPL:

[See PDF for image]

Note: GAO analysis of states', SSA's, and the Kaiser Family 
Foundation's data, as of December 2002.

[A] Connecticut uses a two-step method that is not based on the FPL to 
determine Medicaid Buy-In income eligibility. First, an applicant's 
individual gross income must be $6,250 a month or less ($75,000 maximum 
per year). If the applicant's income is higher than $6,250, the state 
applies a second test whereby SSI income disregards and impairment-
related work expenses are excluded; if an individual's adjusted income 
(after applying these exclusions) is less than or equal to $3,082 per 
month, the individual is income-eligible for the Medicaid Buy-In.

[B] SSI's work incentive program, known as Section 1619(b), 42 U.S.C. 
1382h(b), provides for continued Medicaid eligibility for individuals 
whose incomes are too high to qualify for an SSI cash payment but are 
not high enough to offset the loss of Medicaid or publicly funded 
attendant care.

[C] Spend-down refers to two approaches to Medicaid eligibility. First, 
most states offer spend-down coverage through their medically needy 
category of eligibility, where individuals deduct incurred medical 
expenses from their income to spend down into Medicaid coverage. 
Second, 209(b) states that use their 1972 state assistance eligibility 
rules in determining Medicaid eligibility for individuals with 
disabilities must allow individuals who are aged, blind, or disabled 
(including SSI and DI individuals) to spend down their incomes by 
incurred medical expenses, regardless of whether they offer a medically 
needy eligibility category in Medicaid. Of the six 209(b) states with 
Ticket to Work Medicaid Buy-In programs, two states--Indiana and 
Missouri--do not offer medically needy coverage, but these states must 
allow individuals with disabilities to spend down into Medicaid.

[D] Wyoming does not provide a spend-down option.

[End of figure]

Buy-In programs afforded DI beneficiaries more immediate--and sometimes 
expanded--Medicaid coverage. In addition to relieving individuals of 
the requirement to spend down their income to qualify for Medicaid, DI 
individuals, who are not entitled to receive Medicare coverage until 
they have been receiving DI cash benefits for 24 months, also received 
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.[Footnote 19]

However, when considering participation in the Buy-In program, DI 
beneficiaries must weigh the benefits of the higher earnings allowed 
under the program against the possible loss of DI cash benefits and 
Medicare coverage if their earnings increase beyond a certain 
threshold. Specifically, 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. The loss of entitlement for 
Medicare may be of concern for those individuals with disabilities who 
would not reach age 65 by the end of the 8-1/2-year time 
period.[Footnote 20] To the extent that a state reduced its Medicaid 
Buy-In eligibility level, or discontinued its Buy-In program, these 
former DI-eligible Buy-In participants could potentially be without 
health care coverage until they reached age 65.

In contrast, SSI beneficiaries have different considerations than those 
weighed by DI beneficiaries in deciding whether to enroll in the 
Medicaid Buy-In program. Most SSI beneficiaries were assured 
eligibility for Medicaid and thus did not need the Buy-In program or to 
spend down their incomes in order to qualify for Medicaid. SSI 
beneficiaries in Medicaid would receive the same benefit package as 
those in a Buy-In program. Even SSI beneficiaries who worked could 
remain eligible for Medicaid as participants in a work incentive 
program, which allowed individuals to increase their incomes while 
maintaining their Medicaid coverage. In 5 of the 12 states, Buy-In 
income eligibility levels were lower than the Medicaid eligibility 
levels for individuals in the SSI work incentive program, and Buy-In 
eligibility levels only slightly exceeded those for the SSI work 
incentive beneficiaries in another 5 states. Additionally, 
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.

All States' Buy-In Programs Required Cost Sharing:

States may require Buy-In participants to share in the cost of their 
health care coverage. All 12 states adopted cost-sharing mechanisms, 
primarily premiums or copayments, for Buy-In participants. States 
calculated premiums for Buy-In participants using various methods. For 
example, Pennsylvania and Washington set premiums as a percentage of 
allowable income, while Indiana and Kansas established varying premium 
levels for different incomes. (See table 4.) Generally, states assessed 
premiums when income was at 100 percent of the FPL or higher. 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. Two states--Arkansas and New Jersey--did not charge 
premiums as of December 2002. Stating that premiums were difficult to 
administer and collect, Arkansas chose not to impose a premium 
requirement. New Jersey has a premium requirement for participants with 
incomes greater than 150 percent of FPL; however, the state did not 
assess premiums because only about 5 percent of beneficiaries owed a 
payment.

Table 4: Twelve States' Premium Requirements for Ticket to Work 
Medicaid Buy-In Programs:

State: Arkansas[A]; Percentage of FPL at which state assesses premiums: 
N/A; Monthly premium: N/A; Participant's average monthly premium: N/A; 
Percentage of participants charged premiums: N/A.

State: Connecticut; Percentage of FPL at which state assesses premiums: 
200%; Monthly premium: 10% of family's income that exceeds 200% of the 
FPL for the appropriate family size; not to exceed 7.5% of net family 
income for families with incomes less than 450% of the FPL. Family 
includes the participant and his or her spouse.[B]; Participant's 
average monthly premium: $50[C]; Percentage of participants charged 
premiums: 12%.

State: Illinois; Percentage of FPL at which state assesses premiums: 
100%; Monthly premium: 24 premium levels based on the participant's 
earned and unearned income, ranging from $6 to $100. Premiums increase 
as income increases; Participant's average monthly premium: $48; 
Percentage of participants charged premiums: 99.7%.

State: Indiana; Percentage of FPL at which state assesses premiums: 
150%; Monthly premium: Six premium levels based on the participant's 
income, ranging from $48 to $187, and six premium levels based on 
participant's and spouse's income, ranging from $65 to $254. Premiums 
increase as income increases; Participant's average monthly premium: 
$82[C]; Percentage of participants charged premiums: 22%.

State: Kansas; Percentage of FPL at which state assesses premiums: 
100%; Monthly premium: Eight premium, levels based on the participant's 
income, ranging from $55 to $152, and eight premium levels, based on 
participant's and spouse's income, ranging from $74 to $205. Premiums 
increase as income increases; Participant's average monthly premium: 
$68; Percentage of participants charged premiums: 57%.

State: Minnesota; Percentage of FPL at which state assesses premiums: 
100%; Monthly premium: Premium begins at 1% of income and the 
percentage of the premium increases as income increases, up to a 
premium of 7.5% of participant's income; Participant's average 
monthly premium: $57; Percentage of participants charged premiums: 77%.

State: Missouri; Percentage of FPL at which state assesses premiums: 
150%; Monthly premium: Four premium levels, ranging from approximately 
$48 to $123. Premiums increase as income increases; Participant's 
average monthly premium: [D]; Percentage of participants charged 
premiums: 16%.

State: New Hampshire; Percentage of FPL at which state assesses 
premiums: 150%; Monthly premium: Six premium levels, ranging from $80 
to $220. Premiums increase as income increases; Participant's average 
monthly premium: $26[E]; Percentage of participants charged premiums: 
15%.

State: New Jersey; Percentage of FPL at which state assesses premiums: 
[F]; Monthly premium: [F]; Participant's average monthly premium: [F]; 
Percentage of participants charged premiums: [F].

State: Pennsylvania; Percentage of FPL at which state assesses 
premiums: N/A; Monthly premium: 5% of countable income (premiums under 
$10 are not collected); Participant's average monthly premium: $43; 
Percentage of participants charged premiums: 95%.

State: Washington; Percentage of FPL at which state assesses premiums: 
N/A; Monthly premium: The lesser of; 50% of unearned income above $571, 
plus 5% of total unearned income, plus 2.5% of earned income minus $65, 
or; (2) 7.5% of total income; Participant's average monthly premium: 
$70; Percentage of participants charged premiums: 100%.

State: Wyoming; Percentage of FPL at which state assesses premiums: N/
A; Monthly premium: 7.5% of earned income plus 7.5% of unearned income 
over $600 per year; Participant's average monthly premium: $44; 
Percentage of participants charged premiums: 100%.

Source: State-reported data.

Legend: N/A = not applicable:

Note: GAO analysis of state data, as of December 2002.

[A] Arkansas' Medicaid Buy-In program did not impose premiums.

[B] The FPL calculation is dependent upon family size. For example, 100 
percent of the FPL for an individual in 2002 was $8,860 annually, while 
100 percent of the FPL for a family of three was $15,020.

[C] State reduces a participant's premium liability by any amount the 
participant pays for employer-sponsored coverage.

[D] Missouri does not collect data on average monthly premiums.

[E] Although premiums in New Hampshire begin at $80 per month, nearly 
half of the participants have premiums reduced because the state allows 
deductions for the costs of premiums that participants pay for Medicare 
and employee-sponsored health insurance for family members.

[F] New Jersey has a premium requirement for participants with incomes 
greater than 150 percent of FPL; however, as of December 31, 2002, the 
state was not assessing premiums because only about 5 percent of 
beneficiaries owed a payment.

[End of table]

Three states--Connecticut, Indiana, and New Hampshire--reported 
discounting the Buy-In premium if participants also paid premiums for 
Medicare part B, for employer-sponsored insurance coverage, or for 
individual insurance coverage. For example, New Hampshire deducted the 
Medicare part B premium from a participant's total Buy-In premium. If a 
Buy-In participant were paying a Medicare part B premium of $54 a 
month, his or her Medicaid Buy-In premium would be discounted by that 
amount. Thus, if a participant's Buy-In premium were $80 a month, the 
monthly premium for the Buy-In program would be discounted to $26 a 
month. In Connecticut, any amount that participants pay for Medicare 
part B premiums, employer-sponsored coverage, or other out-of-pocket 
medical insurance is deducted from their premium liability. For 
example, if a participant owes a Buy-In premium of $100 a month and 
also is paying an employer $80 a month for private coverage, the 
individual's Buy-In premium liability would be reduced to $20.

Participants in 8 of the 12 states also were required to pay copayments 
for health care services, such as $0.50 to $3 for an office visit or 
prescription drugs. Copayments for inpatient hospital care generally 
varied from $3 per day in Illinois to $48 per hospital stay in Kansas. 
In 7 of these states, copayments were the standard cost-sharing 
requirements for Medicaid. The remaining state--Arkansas--imposed a 
two-level copayment system for participants. Arkansas Buy-In 
participants with incomes below 100 percent of the FPL had the same 
copayment requirements and were charged the same amounts for pharmacy 
and inpatient hospital services as usually prescribed under the state's 
Medicaid program. Participants with incomes of 100 percent of the FPL 
or greater were charged additional copayments for services and 
equipment such as physician services ($10 per visit), outpatient mental 
and behavioral health services ($10 per visit), and prosthetic devices 
(10 percent of the maximum Medicaid payment).

Buy-In Participants in Four States Generally Had Prior Medicaid 
Coverage and Worked in Low-Wage Jobs:

In the four states in which we conducted more detailed work--
Connecticut, Illinois, Minnesota, and New Jersey--Buy-In programs 
enrolled many individuals who previously were enrolled in Medicaid, 
often in eligibility categories with more restrictive income limits, 
such as the medically needy category. Buy-In participants in the four 
states generally also had Medicare coverage. Across the four states, 
few Buy-In participants had coverage from private insurance at the time 
of their enrollment in the Medicaid Buy-In programs. Based on the 
limited participation in private insurance, officials in several states 
did not believe that "crowd-out"--the substitution of newly available 
public coverage for private health insurance--was a concern for the 
Medicaid Buy-In programs. The limited employment information available 
for participants from two of the four states--Connecticut and 
Minnesota--showed that Buy-In participants generally were employed in 
low-wage jobs--many making less than the SGA threshold, which at the 
time was $780 per month. These four states, however, had little 
information regarding the extent to which the Buy-In programs fostered 
employment among individuals with disabilities.

Buy-In Participants Often Had Previous Coverage under Medicaid and 
Medicare:

Across these four states, the share of Buy-In participants with 
previous Medicaid coverage was 53 percent in Connecticut, 81 percent in 
Illinois, 61 percent in Minnesota, and 58 percent in New Jersey. 
Whereas previous Medicaid coverage was largely due to eligibility 
through spend-down provisions, Buy-In participation allowed them to 
retain more of their income or assets and still qualify for Medicaid. 
Of those who switched from existing Medicaid coverage to the Buy-In 
program, Illinois and Minnesota estimated that 79 percent and 51 
percent of participants, respectively, were beneficiaries who 
originally had spent down their income to qualify for Medicaid. While 
not offering a specific estimate, a New Jersey official indicated that 
most of the Buy-In participants who were enrolled in Medicaid before 
switching to the Buy-In category also had spent down their income to 
qualify for Medicaid. Buy-In eligibility was particularly beneficial 
for individuals in New Jersey because the state's Medicaid coverage for 
medically needy beneficiaries did not include prescription drugs or 
community-based long-term care services, both of which were covered 
under 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.[Footnote 21] (See table 5.) State officials 
reported that those with Medicare relied on the Medicaid Buy-In for 
purposes of obtaining outpatient prescription drug coverage since 
Medicare generally does not cover this benefit. Few participants--less 
than 10 percent of participants in any of the four states--reported 
having employer-sponsored coverage at the time of their enrollment into 
the Medicaid Buy-In programs. For example, Connecticut, which requires 
Buy-In applicants who have access to employer-sponsored insurance 
coverage to apply for this coverage, found that less than 6 percent of 
Buy-In applicants had health care coverage through their workplace. For 
Buy-In participants with private health insurance coverage, which often 
has more limited benefits than those covered by Medicaid, the Buy-In 
can serve as a "wrap around" to private coverage by providing such 
services as home health and personal care, and items such as durable 
medical equipment.[Footnote 22]

Table 5: Number of Buy-In Participants Reporting Other Sources of 
Health Care Coverage in Four States:

State: Connecticut; Participants with other sources of coverage[A] 
(percentage of total enrollment): Medicare: 1,870 (82%); Participants 
with other sources of coverage[A] (percentage of total enrollment): 
Employer-sponsored coverage: 128 (5.6%); Participants with other 
sources of coverage[A] (percentage of total enrollment): Other[B]: 34 
(1.5%).

State: Illinois; Participants with other sources of coverage[A] 
(percentage of total enrollment): Medicare: [C]; Participants with 
other sources of coverage[A] (percentage of total enrollment): 
Employer-sponsored coverage: 4 (1.6%); Participants with other sources 
of coverage[A] (percentage of total enrollment): Other[B]: 3 (1.2%).

State: Minnesota; Participants with other sources of coverage[A] 
(percentage of total enrollment): Medicare: 5,394 (90%)[D]; 
Participants with other sources of coverage[A] (percentage of total 
enrollment): Employer-sponsored coverage: 459 (7%)[E]; Participants 
with other sources of coverage[A] (percentage of total enrollment): 
Other[B]: 367 (6%)[E].

State: New Jersey; Participants with other sources of coverage[A] 
(percentage of total enrollment): Medicare: 408 (82%); Participants 
with other sources of coverage[A] (percentage of total enrollment): 
Employer-sponsored coverage: 38 (7.3%); Participants with other sources 
of coverage[A] (percentage of total enrollment): Other[B]: 8 (1.5%).

Source: State-reported data.

Note: GAO analysis of state data, as of December 2002.

[A] These categories are not mutually exclusive, as individuals may 
have more than one source of coverage.

[B] "Other" may include coverage held through a spouse or other family 
member, or Medicare supplemental coverage. Most Medicare beneficiaries 
purchase Medicare supplemental coverage (known as Medigap) to protect 
themselves against large out-of-pocket costs and help fill Medicare's 
coverage gaps.

[C] Illinois was unable to identify Buy-In participants who had 
Medicare.

[D] Minnesota's Medicare data are as of September 2002.

[E] Minnesota's employer-sponsored and other coverage data are as of 
December 2001.

[End of table]

According to officials in several states, crowd-out was not a concern 
for Buy-In programs because most participants did not report having 
private health insurance coverage at the time of their enrollment into 
the Medicaid Buy-In programs. For example, Minnesota and New Jersey 
state officials said they did not view crowd-out as a significant issue 
for this population because many of the participants worked part-time 
and were rarely offered private insurance coverage. Additionally, both 
Minnesota and Connecticut required individuals to either enroll or 
remain enrolled in employer-sponsored coverage if it was offered. As of 
December 2002, these states had not formally analyzed whether Buy-In 
participants withdrew from private health insurance coverage prior to 
obtaining Medicaid coverage. New Jersey officials plan to monitor 
whether employees are deciding to or are being urged to pursue the Buy-
In program rather than their employer-sponsored coverage.

Available Employment Information Shows Participants Worked in Low-Wage 
Jobs and Experienced Minimal Increases in Earnings:

In the three states with data available, working individuals with 
disabilities who qualified for the Medicaid Buy-In program generally 
worked in low-wage jobs. (See table 6.) 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, 61 percent of participants in Illinois, and 77 percent of 
participants in Minnesota had earned income well below the SGA limit. 
None of these states had asked participants to identify their 
occupation or the industry in which they were employed on their 
Medicaid Buy-In applications; however, some states may conduct broader 
analyses of participants' employment as part of required evaluations 
under a related Ticket to Work grant program.[Footnote 23]

Table 6: Average Monthly Income for Ticket to Work Buy-In Participants 
in Four States:

[See PDF for image]

[End of table]

Two of the four states we reviewed could identify whether participants 
had increased their earnings once enrolled in the Buy-In. Forty percent 
of Minnesota participants and 28 percent 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.[Footnote 24] Average monthly increases over previous 
earnings were $306 in Minnesota and $332 in Connecticut. New Jersey and 
Illinois were not able to provide this information. Minnesota found 
that 64 percent 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.[Footnote 25] Minnesota officials cautioned that 
the analysis was limited by the lack of detail in the state database; 
for example, they did not know whether participants were disabled 
during this entire period, or whether individuals were consistently 
employed.

Agency and State Comments:

We provided a draft of this report for comment to CMS and the 12 states 
in our sample. In its comments, CMS said that, in addition to the 
states with existing BBA and Ticket to Work Buy-In programs, at least 
three more states are planning to implement a Medicaid Buy-In program 
within the coming year, which would result in over half of the states 
offering health insurance to workers with disabilities. CMS noted that 
the expansion of Medicaid coverage to these individuals is encouraging 
particularly because states are experiencing fiscal budget constraints. 
CMS also said that it is collecting information on Medicaid Buy-In 
participants' earnings and Medicaid costs for the first 2 years of 
operation. In addition, CMS expects to complete an extensive study of 
states' experiences for 2001 and 2002 with the Buy-In programs 
authorized under both the BBA and the Ticket to Work and Work 
Incentives Improvement Act of 1999 in the fall of 2003 and to report 
its findings in 2004.

CMS also suggested that, in view of general concerns over racial 
disparities and access to care in rural areas, it might be helpful for 
us to comment on these demographic factors as part of our findings. We 
did not include these factors in our scope of work, even for the four 
states where we did more detailed work, and therefore cannot comment on 
them. CMS provided technical comments, which we have incorporated as 
appropriate. The full text of CMS's written comments appears in 
appendix II.

Eleven of the 12 states responded with technical comments, which we 
incorporated where appropriate.

We will send copies of this report to the Administrator of the Centers 
for Medicare & Medicaid Services and other interested parties. We also 
will make copies available to others upon request. In addition, the 
report will be available at no charge on the GAO Web site at http//
www.gao.gov.

If you or members of your staffs have any questions regarding this 
report, please contact me on (202) 512-7118 or Carolyn Yocom at (202) 
512-4931. Other major contributors to this report were Catina Bradley, 
Karen Doran, Kevin Milne, and Elizabeth T. Morrison.

Kathryn G. Allen 

Director, Health Care--Medicaid and Private Health Insurance Issues:

Signed by  Kathryn G. Allen

[End of section]

Appendix I: Methodology for Developing Estimates and Characteristics of 
Working-Age Individuals with Disabilities:

To develop a national estimate and compare the characteristics of 
working-age individuals with disabilities with those for working-age 
individuals in the rest of the population, we analyzed data available 
from the Medical Expenditure Panel Survey (MEPS) household component, 
which provides data on individuals' demographics, employment, health 
characteristics, and medical spending.

MEPS, conducted by the Agency for Healthcare Research and Quality 
(AHRQ), consists of four surveys and is designed to provide nationally 
representative data on health care use and expenditures for U.S. 
civilian noninstitutionalized individuals. For our analysis, we used 
one of the four surveys--the Household Component. The Household 
Component is a survey of individuals regarding their demographic 
characteristics, health insurance coverage, and health care use and 
expenditures. The 1997 and 1998 versions of the MEPS Household 
Component were the most recently available at the time of our analysis 
that had both (1) a pooled estimation file published by AHRQ that 
allows pooling 2 or 3 years of data, and (2) complete demographic, 
health insurance, and health care expenditure data. We pooled data from 
1997 and 1998 in order to increase our sample sizes for individuals 
with disabilities. Using the Medical Care Consumer Price Index from the 
Bureau of Labor Statistics, we inflated 1997 medical care expenditures 
to 1998 values.

Our estimate of working-age individuals with disabilities includes 
individuals aged 16 to 64 with one or both of these conditions: (1) 
needing help or supervision in performing activities of daily living 
(ADL) or instrumental activities of daily living (IADL) because of an 
impairment or a physical or mental health problem[Footnote 26] or (2) 
being completely unable to work at a job, do housework, or go to 
school.

Our analyses of working-age individuals with disabilities are based on 
a sample size of 1,680, representing a population of 6.68 million 
individuals with disabilities. Table 7 shows the unweighted and 
weighted sample sizes on which our analyses are based.

Table 7: MEPS Sample and Estimated Population Sizes, 1997 and 1998:

Sample size (unweighted); Individuals with disabilities aged 16-64: 
1,680; Rest of the general population aged 16-64: 32,068.

Estimated population size (weighted); Individuals with disabilities 
aged 16-64: 6,682,106; Rest of the general population aged 16-64: 
166,509,028.

Source: Agency for Healthcare Research and Quality.

Note: GAO's analysis of AHRQ's MEPS household component, 1997 and 1998.

[End of table]

[End of section]

Appendix II: Comments from the Centers for Medicare & Medicaid Services:

DEPARTMENT OF HEALTH & HUMAN SERVICES	Centers for Medicare & Medicaid 
Services:

Administrator Washington, DC 20201:

DATE: JUN 10 2003:

TO: Kathryn G. Allen:

Director, Health Care-Medicaid General Accounting Office:

FROM: Thomas A. Scully,
Administrator
Centers for Medicare & Medicaid Services:

SUBJECT: General Accounting Office (GAO) Draft Report TICKET TO WORK: 
States' Early Efforts to Cover Working Individuals with Disabilities, 
(GAO-03-587):

Thank you for the opportunity to review and comment on the above-
referenced draft report. The GAO draft report is very clear and 
provides useful information on the characteristics of individuals with 
disabilities, including their health care costs and health insurance 
coverage, as well as conveying states' progress in designing and 
implementing the Medicaid Buy-In program. We believe that the GAO 
report provides the most comprehensive treatment to date on this 
complex subject.

Prior to the passage of the Ticket to Work legislation, a total of 
eight states offered Medicaid coverage to disabled workers under the 
Balanced Budget Act (BBA) of 1997. This enabled disabled workers to 
retain their health insurance while still maintaining employment. Since 
the passage of the Ticket to Work legislation in 1999, four more states 
have implemented a Medicaid Buy-In under the BBA and a total of 12 
states have implemented a Medicaid Buy-In under the this legislation. 
We note that at least three more states are planning to implement a 
Medicaid Buy-In, and we expect that over half the states nationally 
will offer health insurance to disabled workers within the coming year. 
The expansion of health coverage to disabled workers is encouraging 
particularly in view of the tight fiscal budgets that states are 
currently experiencing.

We believe it is important to include the fact that CMS is also 
collecting information on Medicaid Buy-In participants' earnings and 
costs. By fall of 2003, we expect to complete an extensive study of the 
experience of the Buy-in programs authorized by both the BBA and the 
Ticket to Work and Work Incentives Improvements Act of 1999. 
Information on the years 2001 and 2002 will be available in early 2004.

It may also be helpful for GAO to comment on any of its findings 
relative to two demographic factors that were not included in the 
report-race and urban/rural differences. Given concerns that exist over 
racial disparities and rural residents' access to health care services, 
this information may help to inform future Congressional discussions.

We look forward to working with GAO on this and other issues.

[End of section]

FOOTNOTES

[1] SSI beneficiaries also include individuals who are blind or aged. 
References to the SSI program throughout this report address 
individuals who are disabled, not blind or aged, except where noted.

[2] DI beneficiaries also include certain other persons, including 
dependents and survivors of workers with disabilities. References to 
the DI program throughout this report address only workers with 
disabilities, not dependents or survivors.

[3] MEPS identifies ADLs as basic physical activities such as bathing, 
dressing, or getting around the house and identifies IADLS as cognitive 
or social functions such as using the telephone, paying bills, taking 
medications, preparing light meals, doing laundry, or going shopping. 
MEPS offers a relatively expansive definition of disability in that it 
does not distinguish the number of ADLs or IADLs with which an 
individual may require assistance. Other national surveys that provided 
details on the number of ADLs and IADLs with which an individual 
required assistance--such as the National Health Interview Survey 
(NHIS) Disability Supplement--were based on older data--1994 and 1995. 
As of March 2003, the NHIS Disability Supplement had not been updated.

[4] The DI program and SSI program are authorized under titles II and 
XVI, respectively, of the Social Security Act. The definition of 
disability for the DI program is in section 223(d) of the Social 
Security Act. The definition of disability for the SSI program is in 
section 1614(A)(3). In all material respects, the two definitions are 
similar and have been interpreted by the Social Security Administration 
(SSA) similarly.

[5] Under the Social Security Act, the Commissioner of Social Security 
has the authority to set the SGA level for individuals who have 
disabilities other than blindness. SSA has increased the SGA level 
several times over the past decade, to $500 per month in 1990 and to 
$700 per month in July 1999. In December 2000, SSA finalized a rule 
calling for the annual indexing of the nonblind SGA income limit to the 
average wage index (AWI) and on this basis increased the SGA income 
limit to $780 in January 2002. The SGA income limit for individuals who 
are blind is set by statute and indexed to the AWI. For 2002, the SGA 
income limit for blind individuals was $1,300 of countable earnings. In 
January 2003, the SGA limit increased to $800 per month for nonblind 
individuals and to $1,330 per month for blind individuals. To calculate 
countable earnings for SGA, SSA deducts from gross earnings the cost of 
items that, because of the impairment, a person needs to work (for 
example, attendant care services performed in a work setting, 
wheelchairs, or Braille devices).

[6] SSA uses a series of steps to evaluate the applicant's level of 
disability. As part of the steps, SSA compares the applicant's 
condition to a Listing of Impairments that describes medical conditions 
that are severe enough to prevent a person from engaging in SGA. If an 
applicant's impairment is cited in the Listing of Impairments or the 
applicant's impairment is as severe as or more severe than those 
impairments in the Listing of Impairments, then the applicant would be 
considered disabled and awarded benefits without any further evaluation 
to determine whether he or she has vocational limitations that, when 
combined with the medical impairment, prevents work. 

[7] These work incentive provisions can help individuals pay for 
services or items that they need in order to work or enable individuals 
to maintain or increase their cash benefits until they are stable in 
employment. Other work incentives allow individuals with disabilities 
to recover impairment-related work expenses, such as attendant care 
services and transportation costs.

[8] Under Section 1902(f) of the Social Security Act, 42 U.S.C. 
1396a(f), states may use their 1972 state assistance eligibility rules 
in determining Medicaid eligibility for individuals with disabilities, 
rather than SSI eligibility rules, and 11 states do so. The 11 states 
are Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, New 
Hampshire, North Dakota, Ohio, Oklahoma, and Virginia. These states are 
often referred to as 209(b) states because the origin of this authority 
is §209(b) of the Social Security Amendments of 1972. The 209(b) 
states' definitions of disability or their income/resource standards 
for Medicaid eligibility tend to be more restrictive than those for SSI 
but can be the same as or more liberal. If a state's 209(b) rules are 
more restrictive, it must also allow individuals to spend down into 
Medicaid eligibility by deducting incurred medical care expenses from 
income.

[9] In contrast to other Medicaid income eligibility thresholds, which 
are usually set by the state within federal guidelines, SSA sets the 
income threshold for SSI-related Medicaid eligibility annually. The 
income threshold for a particular state is based on the current SSI 
cash benefit in each state and a state's per capita Medicaid 
expenditures. If an SSI beneficiary has gross earnings higher than the 
threshold amount for his or her state, SSA can calculate an individual 
threshold amount if he or she has medical or impairment-related work 
expenses above the state amount.

[10] 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, which can be 
classified into five broad coverage groups: individuals with 
disabilities, children, pregnant women, individuals in families with 
dependent children, and the elderly. 

[11] The medically needy category refers to individuals who meet 
certain categorical requirements for Medicaid eligibility--for 
example, children, individuals with dependent children, and individuals 
who are aged, disabled, or pregnant--and have incurred medical expenses 
to the point 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. 

[12] After they have received DI cash benefits for 24 months, DI 
beneficiaries are entitled to Medicare part A coverage and are eligible 
to enroll in part B. Medicare part A helps cover inpatient care in 
hospitals, critical access hospitals, and skilled nursing facilities. 
It also covers hospice care and some home health care. Medicare part B 
helps cover physician services and outpatient hospital care.

[13] States with the BBA option as of December 2002 included Alaska, 
California, Iowa, Maine, Mississippi, Nebraska, New Mexico, Oregon, 
South Carolina, Utah, Vermont, and Wisconsin.

[14] If states establish income and asset standards, SSI income and 
asset methodologies are used to determine eligibility, including the 
SSI earned income disregard of $65, plus one-half of remaining 
earnings. Other income disregards include $20 of unearned income, and 
certain impairment-related work expenses, such as certain attendant 
care services, transportation costs, and medical devices. The SSI asset 
methodology allows for exclusion of such things as the home a person 
lives in, a car depending on its use or value, and life insurance 
valued up to $1,500. 

[15] In our MEPS analysis of health care expenditures of individuals 
with disabilities, we did not find a difference in average expenditures 
between those in and out of the workforce. 

[16] Indiana set asset requirements for a couple at $3,000, while 
Missouri allowed the spouse of a Buy-In participant to retain assets up 
to $100,000 and excluded one-half of the participant's marital assets. 

[17] For example, a home, personal property, one vehicle under certain 
conditions, a burial space, and life insurance valued at up to $1,500 
are disregarded for individuals applying for Medicaid. 

[18] States may offer spend-down coverage through an optional medically 
needy eligibility category. However, 209(b) states that do not offer a 
medically needy eligibility category must allow individuals who are 
aged, blind, or disabled (including SSI and DI individuals) to spend 
down their incomes, using their incurred medical expenses, to meet the 
209(b) category income eligibility requirements. 

[19] States may offer different sets of benefits depending on whether 
an individual's eligibility for Medicaid is considered mandatory or 
optional by federal statute; optional benefits may vary by state. Most 
adults with disabilities who receive SSI payments have mandatory 
coverage under Medicaid, while individuals who are medically needy (and 
spend down to receive Medicaid benefits) are considered to be in the 
optional category. Thus, adults with disabilities who move from 
medically needy coverage to the Medicaid Buy-In may receive additional 
benefits, depending on states' coverage policies.

[20] Under section 1818A of the Social Security Act, a disabled 
individual who has lost entitlement to premium-free Medicare part A 
solely because of SGA may be able to enroll in part A as long as the 
disability continues. The individual is responsible for paying the 
premiums. Furthermore, an individual who has lost his or her benefits 
under DI due to earning more than SGA and who then fails to earn at 
least SGA due to being disabled, could be eligible for reinstatement of 
his or her DI benefits and Medicare coverage. Section 112 of the Ticket 
to Work legislation allows certain previously entitled individuals to 
request expedited reinstatement of disability benefits under title II 
and title XVI when their disabling impairment no longer permits them to 
perform SGA.

[21] Illinois was unable to identify Buy-In participants who had 
Medicare. 

[22] Medicaid-eligible individuals enrolled in employer-sponsored 
health plans are entitled to receive full Medicaid benefits. The health 
plans become the primary payers for the services they cover. States 
must provide coverage for those Medicaid services not included in the 
employer plans.

[23] Section 203 of the Ticket to Work and Work Incentives Improvement 
Act of 1999 authorized the Medicaid Infrastructure Grant Program, which 
is an 11-year grant program beginning in fiscal year 2001 ($150 million 
for the first 5 years) that allows states to design, establish, and 
operate state "infrastructures" to facilitate the competitive 
employment of individuals with disabilities. Grant activities include 
(1) implementing Medicaid Buy-In programs, (2) developing demonstration 
programs that offer the ability to purchase Medicaid coverage for 
people with a severe impairment who do not yet meet the SSI disability 
test, (3) making significant improvements to Medicaid services that 
support people with disabilities in their competitive employment 
efforts, and (4) creating regional technical assistance centers for 
health care improvements supporting employment--known as State-to-
State Medicaid Infrastructure Partnerships. As of December 2002, 
thirty-eight states received Infrastructure Grants, including 10 of the 
12 states with Medicaid Buy-In programs (all except Arkansas and 
Indiana). Indiana was awarded an Infrastructure Grant in 2003.

[24] Connecticut officials said that as a part of their state's 
Infrastructure Grant, their primary research question will be to 
determine whether the Medicaid Buy-In, along with other factors such as 
participation in vocational rehabilitation and a new benefits 
counseling program, leads to increases in earnings among participants. 

[25] Minnesota officials used data collected by the state's Department 
of Economic Security from employers who report information on employees 
who pay federal taxes.

[26] MEPS identifies ADLs as basic physical activities such as bathing, 
dressing, or getting around the house and identifies IADLS as cognitive 
or social functions such as using the telephone, paying bills, taking 
medications, preparing light meals, doing laundry, or going shopping. 
MEPS offers a relatively expansive definition of disability in that it 
does not distinguish the number of ADLs or IADLs with which an 
individual may require assistance. 

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