Improving the Medicaid Buy-In for Workers with Disabilities
The Bipartisan Policy Center’s Health Program is building on its previous report, Improving Opportunities for Working People with Disabilities (January 2021), to address barriers to employment for Medicaid beneficiaries with disabilities who often rely on Medicaid’s unique services, such as home and community-based services (HCBS), to live independently in the community and work.
The Medicaid Buy-In (MBI) for Workers with Disabilities refers to three eligibility groups within Medicaid that allow states to cover working individuals with disabilities who, excluding earned income, generally meet Social Security’s definition of disability. The MBI for Workers with Disabilities therefore allows individuals with disabilities to work and retain their Medicaid coverage, or to use their Medicaid coverage to access wraparound services that are not covered under employer-sponsored insurance or Medicare. As described in more detail in the MBI for Workers with Disabilities Today subsection below, enrollment in the MBI for Workers with Disabilities eligibility groups is associated with increased employment and earnings, while also having a positive impact on the economy, state Medicaid agencies, employers, and state and federal governments.
Notably, states and stakeholders often refer to the MBI for Workers with Disabilities eligibility groups as a program, and many states have state-specific program names. BPC uses the term “MBI for Workers with Disabilities” to refer to the eligibility groups as well as state programs that cover those groups.
Congress passed bipartisan-supported laws in the late 1990s establishing the three optional eligibility groups through Section 4733 of the Balanced Budget Act (BBA) of 1997 and Section 201 of the Ticket to Work and Work Incentives Improvement Act (Ticket to Work Act) of 1999. Each of those authorities, in combination with other Medicaid authorities such as Section 1902(r)(2) of the Social Security Act or Section 1115 Waivers, provides states with significant flexibility in the design of their MBI for Workers with Disabilities programs. For example, states can charge income-related premiums or other cost-sharing to beneficiaries who qualify for Medicaid through the MBI for Workers with Disabilities eligibility groups. The three optional Medicaid eligibility groups established by the BBA and Ticket to Work Act include:
- The Work Incentives group;
- The Ticket to Work Basic group; and
- The Ticket to Work Medical Improvements group.
Today, 46 states cover the MBI for Workers with Disabilities eligibility groups. Accordingly, a cumulative total of more than 400,000 individuals with disabilities were able to work and retain Medicaid coverage between 1997 and 2011. The most recent, publicly available enrollment data are from 2011, when almost 193,000 individuals were enrolled in MBI for Workers with Disabilities programs across 35 states. During fiscal year 2011, approximately 66 million individuals were enrolled in Medicaid, including almost 10 million adults and children eligible based on disability. Because BPC was unable to find more recent data on enrollment in MBI for Workers with Disabilities programs, we recommend in this report that the Centers for Medicare & Medicaid Services (CMS) and states improve data reporting on this population (see Recommendation II.C.). Out of the 83 million people enrolled in Medicaid during FY2019, nearly 10 million adults and children were eligible based on disability.
Across all age groups, individuals with disabilities are much less likely to be employed than those with no disabilities. Only 1 in 5 adults with disabilities was employed or looking for employment in 2021, versus more than two-thirds of adults with no disability. In that same year, 24.5 million individuals with disabilities were not in the labor force and the unemployment rate was 10%, or double the rate of those with no disability. Improving access to MBI for Workers with Disabilities programs would help address a barrier to employment among individuals with disabilities who might want to work but worry about losing their Medicaid coverage.
BPC interviewed and convened stakeholders and policy experts—including federal and state stakeholders, consumer advocacy organizations, Medicaid beneficiaries, researchers, and others—to identify challenges and bipartisan policy solutions that will improve access to the MBI for Workers with Disabilities eligibility pathways. Although enrollment data are limited, the information available suggests a notably low take-up of this option by the target population and a similarly modest success in making states and eligible individuals with disabilities aware of the MBI for Workers with Disabilities eligibility pathways. BPC’s research also suggests that current federal law effectively grants significant flexibility to state Medicaid programs to support individuals with disabilities who want to work and increase their earnings. However, federal implementation of those laws and states’ clarity on the program flexibilities have limited the program’s reach. We identified three key challenges for states adopting or optimizing their MBI for Workers with Disabilities programs:
- Inadequate federal guidance on the flexibilities available to states designing their MBI for Workers with Disabilities programs—such as options to remove barriers for adults with disabilities over 65 who wish
to continue to work; this lack of guidance limits states’ take-up and workforce participation.
- A lack of clear, consistent, and accessible consumer information and educational resources about MBI for Workers with Disabilities programs; this contributes to Medicaid beneficiaries not seeking out or declining employment opportunities (including new jobs or promotions) due to fear of losing critical Medicaid benefits, such as HCBS.
- A lack of technical assistance, limited program data such as recent enrollment and service utilization data, and an absence of state-to-state learning opportunities; this makes it difficult for states to identify and adopt promising state practices.
In this report, BPC identifies federal policy reforms that will encourage more states to cover or optimize their coverage of the MBI for Workers with Disabilities eligibility groups. These reforms will improve access to the MBI for Workers with Disabilities programs and, thus, allow more Medicaid beneficiaries with disabilities to work and achieve their employment potential. More specifically, BPC has identified a set of federal policy recommendations that Congress and the administration should advance. These federal policy reforms will clarify existing flexibilities that states can adopt when designing their MBI for Workers with Disabilities programs while also strengthening outreach, data, and interagency coordination.
I. Clarify Existing Options States Can Adopt When Designing Their MBI for Workers with Disabilities Programs
- Congress should direct CMS to issue agency guidance, no later than 12 months after legislation is enacted, identifying the full range of options available to states under current law for covering or modifying their coverage of the MBI for Workers with Disabilities eligibility groups.
- Congress should direct CMS to issue a Notice of Proposed Rulemaking (NPRM) to codify the MBI for Workers with Disabilities eligibility groups in regulation and clarify that the eligibility group names are as identified within the Medicaid and CHIP Program (MACPro) system used by state Medicaid agencies (i.e., Work Incentives group, Ticket to Work Basic group, and Ticket to Work Medical Improvements group). Congress should direct CMS to issue the NPRM following stakeholder engagement and no later than 18 months after legislation is enacted.
- CMS should improve the State Plan Amendment (SPA) template that states use to establish or amend their MBI for Workers with Disabilities programs. The revised SPA template should make it easier for states to understand their options to adopt program flexibilities allowed under current law.
II. Strengthen Outreach, Data, and Interagency Coordination
- Congress should authorize and appropriate $5 million per year, over five years, in resources to CMS to establish a national technical assistance center. The center should support states that seek to adopt or optimize their MBI for Workers with Disabilities programs by providing technical resources, including education on promising state practices and data on MBI for Workers with Disabilities programs. CMS should manage the technical assistance center, provide ongoing program support to states, and collaborate with the Social Security Administration and other federal agencies to improve outreach to beneficiaries and benefits counseling.
- CMS and the Social Security Administration should collaborate on annual updates to materials detailing work incentives, including the Social Security Administration’s Red Book; the updates should include accurate and more detailed information on the MBI for Workers with Disabilities programs and every state that offers the program.
- Congress should establish an eight-year grant program that builds on lessons learned from the Medicaid Infrastructure Grant (MIG) program, and that authorizes and appropriates $260 million over eight years to CMS. CMS should annually award grants to up to 56 states or territories amounts that gradually reduce in the final three years of the program: up to $4 million per awardee in years 1-5, and up to $1 million per awardee in year 8. These grants should provide funding to states or territories to build or improve infrastructure to:
- Enhance outreach, interagency coordination, and benefits counseling to educate consumers about the opportunity to continue working while receiving Medicaid benefits, including HCBS, through the MBI for Workers with Disabilities eligibility pathways;
- Conduct data collection, analysis, and research; and/or
- Establish or improve MBI for Workers with Disabilities programs.
In the program’s final three years, awardees must use the funds more narrowly to support consumer outreach and benefits counseling.
Congress should also appropriate $3 million in resources to CMS for procuring an independent contractor to evaluate the grant program, and CMS should submit a Report to Congress describing the evaluation.
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