In the late 1990’s Congress recognized that federal policy not only established low expectations for people with disabilities to live and work independently, but also that the Medicaid program created disincentives for those with disabilities who wished to work. Congress, along with the Clinton administration, enacted laws creating two optional Medicaid 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 (TWWIA) of 1999.
While Medicaid is the primary source of health insurance for people with disabilities, the program provides much more than health care services. Medicaid allows individuals with disabilities to live independently in the community. In addition to health services, Medicaid covers case management services, transportation, specialized medical equipment and supplies, and home and community-based services—including personal care assistant services—among other services not covered by Medicare or private health insurance. BBA and TWWIIA provided additional flexibility for states to offer Medicaid coverage to higher income working individuals with disabilities who—excluding income—meet the Social Security definition of disability. Together, these programs are referred to as Medicaid Buy-in (MBI) for Workers with Disabilities. Separate and distinct from recently implemented Medicaid Community Engagement Demonstrations with work-requirements, the Medicaid Buy-in eligibility option allows workers with disabilities access to Medicaid community-based services not available through other insurers.
Nationally, 46 states have MBI for working individuals with disabilities—allowing more than 400,000 individuals to work and retain Medicaid coverage over the last decade. MBI states have allowed individuals with disabilities to live and work independently in their communities, resulting in increased earnings, savings, and career opportunities. The positive results of MBI for workers with disabilities include increased enrollee income; increased number of hours worked; and a greater opportunity to accrue savings for home purchases, retirement, and other needs. An analysis of Social Security Administration (SSA) earnings data by Mathematica Policy Research, Inc. determined an average of 40% of participants increased their wages after enrollment in the MBI for workers with disabilities.
Research has shown that promoting employment for workers with disabilities is also cost-effective policy for state Medicaid agencies. MBI participants have better health outcomes and lower Medicaid utilization rates than their non-working peers with disabilities. Employers also benefit from hiring workers with disabilities— demonstrated by increased profits and cost-effectiveness, higher employee retention, increased reliability and punctuality, employee loyalty, and improved company image.
Despite these successes, less than half of working-age people with disabilities (30.9%) were employed in 2019. This compares to an employment rate of 74.6% for people without disabilities. States and workers with disabilities face challenges understanding MBI, its opportunities and complexities, and the information to appropriately mobilize its value making strategic data-driven decisions. For example, a state may set income and asset limits very low, not realizing they can use waivers to raise those limits. Since enactment of these MBI programs, no regulations have been issued; the Centers for Medicare & Medicaid Services (CMS) issued only four guidance documents from 1997-2000 and no additional guidance for the past 20 years. With better information and leadership, states could make informed decisions about the buy-in and ways to promote employment for workers with disabilities.
Over the last year, the Bipartisan Policy Center has identified recommendations to improve availability of the MBI for workers with disabilities. As part of that effort, BPC reached out to stakeholders and hosted public and private discussions with experts on the topic. Participants included current and former state and federal officials, consumers, and other experts. Based on those discussions, BPC developed recommendations to improve Medicaid Buy-in programs for working people with disabilities.
The recommendations that follow include ways to make the Medicaid Buy-in for workers with disabilities more understandable, more accessible, and more relevant as states seek to ensure pathways to successful employment outcomes for these workers. The role of strong leadership at the federal and state level is key to the success of these recommendations.
Improving Medicaid Buy-in for workers with disabilities will require both administrative and legislative action. In the near-term, providing additional agency guidance on the combined authorities—Section 4733 of BBA ’97 and Section 201 of TWWIIA—and issuing regulations on the two programs will help clarify the range of flexibility available to states. Over the long-term, Congress should enact legislation to combine authorities to streamline and simplify the programs. Specific recommended actions include:
I. Issue an Executive Order That Clarifies and Simplifies the Current Medicaid Buy-in for Workers With Disabilities
- Direct the Department of Health and Human Services Centers for Medicare & Medicaid Services to issue agency guidance identifying the full range of authority available to states to design, improve, and expand MBI programs for workers with disabilities. Note: The incoming Biden administration has also identified enhanced Social Security work incentives, MBI, and improving competitive integrated employment for people with disabilities. While BPC has yet to take a formal position on those issues, addressing them through a combined Executive Order would underscore the president’s commitment to expanding opportunities for workers with disabilities.
- Instruct the Centers for Medicare & Medicaid Services to change the name “Medicaid Buy-in” to “Medicaid for Workers with Disabilities.” Note: The term “Medicaid Buy-in” has been applied more broadly across the Medicaid program in recent years. This has caused confusion and the need for more precise language when referring to Medicaid benefits provided to workers with disabilities.
II. Issue Regulations on Medicaid Buy-in Programs
While CMS released informal agency guidance between 1997 and 2000, no regulations have been issued, nor has there been additional guidance in the last 20 years.
- HHS/CMS should issue a Notice of Proposed Rule Making (NPRM) to give the agency the opportunity to address topics not addressed through informal agency guidance. Examples include retaining Medicaid when a beneficiary experiences a medical leave from work, increasing eligibility age beyond age 65 to conform with the Social Security retirement age of 67, treatment of assets after enrollment, or more controversial issues such as how work is defined. This process would solicit input from consumer organizations, states, and other experts, and require HHS to address relevant comments or questions arising from the NPRM, providing further clarification to help guide states.
III. Develop and Pass Legislation
While it is possible to formulate MBI programs for the working disabled by combining multiple statutory authorities with waivers, it should be easier for states to implement these programs.
- Congress should enact legislation to update, consolidate, and streamline existing authorities into a single state option. This option should permit states to offer the full range of Medicaid benefits, a subset of Medicaid benefits designed to supplement employer-sponsored insurance, or other private health insurance coverage.
- Congress should reauthorize and appropriate funding to states to assist in the development of programs and draw from other states to learn and convey best practices in promoting successful MBI options. This would include reauthorization of TWWIIA-funded Medicaid Infrastructure Grants to promote outreach and education about the MBI and successful employment outcomes for people with disabilities. The program should convene stakeholders to address barriers to earnings and employment experienced by people with disabilities, who often rely on home and communitybased services to allow them to work. Services include addressing transportation barriers, skills training, and employer outreach.
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