Federal laws/regulations;

OLR Research Report

November 22, 1999





By: Robin Cohen, Principal Analyst

You asked which states opted to create a Medicaid buy-in program, as authorized by Section 4733 of the federal 1997 Balanced Budget Act. You also wanted to know (1) how long the programs have been in place, (2) how many clients will be served, (3) the costs and any offsetting savings (e.g., reduced public assistance payments), (4) if federal funding is available for the program, and (5) eligibility criteria and client contributions. Finally, you asked how many people in Connecticut are currently receiving Social Security Disability Income (SSDI) benefits.

Most of the information in this report comes from draft materials provided to us by Allen Jensen, a Medicaid expert at George Washington University. There are many nuances to these highly complex programs, many of which we have omitted for clarity and because it is highly likely that some of the information will change as states go through the Medicaid state plan amendment and implementation processes.

We have some, but are awaiting additional, information on the number of clients states expect to serve in these programs. We will continue to update you as we receive the information. We have given a copy of this report to the Office of Fiscal Analysis. It will provide the financial information you requested under separate cover.


According to George Washington's Jensen, 11 states are at various stages of initiating Medicaid buy-in programs; currently only three appear to be up and running. Most states have passed enabling legislation. Some are amending their Medicaid state plans, as permitted by Section 4733; others are including this Medicaid category as part of a Section 1115 demonstration waiver. Since this is a new Medicaid coverage category, Connecticut would be eligible for the usual 50% federal financial participation.

These programs offer Medicaid to working people (or those wishing to work) who meet the federal or state definition of disability and have incomes higher than those allowed under traditional Medicaid. (Section 4733 allows a maximum net income of 250% of the federal poverty level (FPL), which is currently $20,600 per year for one person. Some also have more generous asset limits and “disregards. ” Most require the payment of premiums when income reaches a threshold level.

The Department of Social Services (DSS) estimates that there are currently 10,915 state residents between the ages of 18 and 64 who are receiving SSDI or some other income but not Supplemental Security Income (SSI) or State Supplement. The department is using this figure for its projections as it looks at ways to serve the working disabled. (The Social Security Administration (SSA) reports that in December 1998, 49,330 “disabled workers” in Connecticut received SSDI benefits; this figure includes at least some people who were also receiving SSI or State Supplement. It also includes people whose incomes were too high to qualify for public assistance.)

Table 1 presents the states that have initiated Medicaid buy-in programs, some eligibility criteria, and client contribution provisions.

Table 1. State Medicaid Buy-In Programs


Income Level for Premium

Asset Limit

Income Disregards

Client contribution


200% of FPL

$12,000; approved accounts (for items such as assistive technology)

Employment and Indep. Expenses, Impairment Related Work Expenses (IRWE)

Unearned income over and above state SSI supplement; 2-10% of earnings above 200% of FPL


200% of FPL

$20,000; retirement and medical expense accounts

Spousal income and assets disregarded.

10% of any income above 200% of FPL


100% of FPL

$2,000 for single person; $3,000 for married applicant.

IRWE, 50% of earnings (apply only to initial 250% test)

Up to 10% of any income above 100% of FPL


150% of FPL

$15,000; independence accounts

SSI disregards

3.5% of earnings above 150% of FPL; unearned income after deductions


187% of FPL



$10 monthly contribution plus standard fee-for-service co-payments; some unearned income


150% of FPL

$10,000; retirement, medical savings, and assistive tech. accounts


Up to cost of private premium.



SSI limits plus $10,000; approved accounts

SSI rules, except no spousal deeming

Everyone pays something at point-of-service



IRAs, pensions, usual Medicaid disregards

All unearned income disregarded.

$20 to $250 monthly premium


200% of FPL

$4,000 (single); $6,000 (married)

Unearned income if applicant in a trial work period; SSI disregards

2% to 10% of earnings above 200% of FPL


200% of FPL


No income limit

Premium based on income, family size, and other health insurance




No income limit



States That Have Begun Implementing Buy-In Programs

Oregon. Oregon began implementing its Employed Persons with Disabilities (EPD) program on February 1, 1999. EPD targets people receiving SSDI alone or those getting both SSDI and SSI who are over age 18 and are currently working and receiving Medicaid coverage but would lose it without intervention. The state anticipates that between 300 and 600 people will participate in the program over the next three years. A person's net income cannot exceed 250% of the FPL and countable assets are limited to $12,000 (a $2,000 limit and $10,000 disregard). The program allows clients to disregard employment and independence expenses (EIE) from earnings, in addition to the impairment related work expenses (IRWE) that can already be deducted from earnings under SSI and SSDI. EIEs are expenses not directly related to work but are necessary to enhance or maintain one's independence.

In addition to the $12,000 in assets, the state disregards any monies in “approved accounts.” These funds can be used to save for goods or service that will increase the individual's employment and independence opportunities, such as van modification or assistive technologies. Retirement and medical savings accounts are also disregarded.

The client contribution consists of two parts: the cost-share and the monthly premium. The cost share is the amount of any unearned income above the state's supplement to the SSI program, after certain deductions. Clients must pay a premium if their income is between 200% and 250% of the FPL after taxes and other expenses are deducted. Monthly premiums range from $10 to $275.

Minnesota. The Minnesota legislature passed a Medicaid buy-in bill earlier this year. There is no upper income limit, but clients must contribute 10% of any income over and above 200% of the FPL, up to the cost of coverage. Spousal income and assets are totally disregarded and there is a $20,000 liquid asset limit. Retirement and medical expense accounts are totally excluded. The state submitted a state plan amendment to the federal Health Care Financing Administration (HCFA), which was recently approved according to HCFA officials.

Nebraska. Earlier this year the Nebraska legislature enacted its Medicaid buy-in program for working people with disabilities. The program is available to people whose net family income does not exceed 250% of the FPL. Premiums are required once income reaches 200% of the FPL; these range from 2% to 10% of income above 200% of the FPL. The legislation included an emergency clause requiring the program to be up and running on June 1, 1999. Program administrators expect to bring 100 new clients into the Medicaid system through this initiative.

A memorandum to local administrators and caseworkers provides further details on the program. In addition to the work requirement, participants must meet either the federal, or state review team disability definition. Assets are limited to $4,000 for a single person and $6,000 if the applicant is married.

An applicant must pass two income eligibility tests before he can be determined eligible. Under Test A, the state disregards all of the disabled person's earnings. It also disregards unearned income if he is in a trial work period. (A trial work period is the period during which someone receiving federal disability benefits is trying to work, and his earnings do not affect his eligibility for benefits.) All other unearned income is counted, as well as the spouse's income, less $65 plus one half of the remainder. These amounts are totaled. If the total is more than the Federal Benefit Rate ($500 for single; $751 for a married couple), the person fails eligibility. If it is less, the applicant passes and moves on to the next test.

In Test B, the state looks at both the applicant's and his spouse's earnings. From this amount it subtracts the $65 and one-half remainder. Then it calculates all gross unearned income, taking only a $20 general disregard and $10 interest and dividend disregard. These amounts are then totaled. If the sum is equal to or greater than 250% of the FPL, the applicant is not eligible. If it is less than 200% of the FPL, the applicant is eligible and is not required to pay a premium. These people would also be eligible for the state's Medicare Part B buy-in program (Medicaid pays Medicare Part B premiums and co-payments). Individuals with incomes between 200% and 250% of the FPL must pay a premium and are not eligible for the Part B premium.

States with State Plan Amendments--Approved or Pending

Alaska. Alaska's legislature passed buy-in legislation in 1998, the first of its kind in the country. The program was to have been implemented on July 1, 1999, with a retroactive start date of April 1, 1999. (HCFA approved the plan.) It targets individuals with disabilities who are ineligible for the state's SSI supplement program (Adult Public Assistance) and related Medicaid due to their own or their spouse's excess earnings. Net family income may not exceed 250% of the FPL (which is higher in Alaska than the rest of the country). Net income is determined by subtracting certain disregards, including IRWE and 50% of earnings.

If a family meets the first test, it must pass a second, unearned income test. All earnings are disregarded, but unearned income is counted. This is compared to the limits for SSI and the state's SSI supplement ($929 if single; $1,117 for married couples). Assets may not exceed the SSI limit ($2,000 for single, $3,000 for married couples).

Clients with net income above 100% of the FPL must pay a premium of up to 10% of any income over that amount.

Wisconsin. The 1999 Wisconsin legislature passed a law authorizing a state plan amendment for a Medicaid buy-in with a proposed January 1, 2000 implementation date. (HCFA has apparently approved the amendment.) To be eligible for Pathways, net family income may not exceed 250% of the FPL. Net income is calculated using the SSI disregards. In addition to having a disability, applicants must be working or participating in approved work and health counseling programs and have countable assets under $15,000. In addition, they may open Independence Accounts, enabling them to save up to 50% of their earnings.

Families with incomes above 150% of the FPL must pay a premium, which is 3.5% of income earned above that level plus all unearned income after deducting a $597 living allowance (the state's SSI income standard) and medical and work expenses.

Vermont. Vermont is awaiting HCFA approval to begin its Medicaid buy-in program for 600 SSDI recipients, plus 2,200 SSI recipients who are in either the vocational rehabilitation system or in community mental health centers. (In addition to the Medicaid changes, the state hopes to waive certain SSA rules to ensure continued eligibility for those programs (e.g., allowing clients to earn above the substantial gainful activity level ($700 monthly) without losing eligibility for SSDI). To be eligible for the buy-in, an applicant must be age 18 or over, meet the SSA disability definition, and have adjusted net income of less than 250% of the FPL and countable resources of no more than $12,000.

A $10 monthly contribution is required from people earning over 187% of the FPL. They must also pay standard Medicaid fee-for-service co-payments. A client may also have to pay a portion of his unearned income.

Iowa. In 1999 the Iowa legislature passed a law establishing a buy-in program and directing the Medicaid agency to seek a state plan amendment. That program will be available to families with net income under 250% of the FPL. Anyone with income above 150% of the FPL will have to pay a premium up to the cost of a private plan's premium. Up to $10,000 in assets will be disregarded, in addition to retirement, medical savings, and assistive technology accounts. The program is supposed to go into effect on April 1, 2000.

Arkansas. The Medicaid Program for Low-Income Disabled Working Persons program was created by the 1999 Arkansas General Assembly. The legislation authorizes the Department of Human Services to apply to HCFA for a state plan amendment or waiver to create a buy-in program for disabled working people whose family income is less than 250% of the FPL. The legislation requires a cost share, based on a sliding scale, but does not specify at what income level the premium kicks in.

Joey Wallace of the state's Medicaid agency said her agency hopes to submit its state plan amendment in the next two to three weeks. The state has had problems coming up with a budget estimate, since it has been difficult to project the number of new clients who will take advantage of the new coverage category. For example, some clients may convert from the SSI-eligible coverage group to this new category. And many clients with developmental disabilities or mental illness would not have to be factored into the cost.

The plan includes an approved account to which a client could contribute up to $10,000 for items such as adaptive equipment. This would be a disregard on top of the SSI standard for assets ($2,000 and $3,000). The SSI income rules will prevail, except the state will not deem the income of an applicant's spouse. The program will not charge a premium, but clients will have to pay co-payments at the point-of-service.

California. The California legislature passed buy-in legislation earlier this year which will enable working people with disabilities to enroll in the state's Medi-Cal program if their countable income does not exceed 250% of the FPL. The state will exempt all unearned income, as well as IRAs, pensions, and other typically exempted resources under the Medicaid program, including funds in Plans to Achieve Self Sufficiency. Participants must pay monthly premiums ranging from $20 to $250. (The legislation does not specify at what income level premiums are required.) The legislative budget committee must approve any changes to the premiums before they can be adjusted.

The legislation was scheduled to go into effect on April 1, 1999. It terminates on April 1, 2005 unless the legislature enacts an extension.

States Using 1115 Waivers to Implement Buy-Ins

Massachusetts. As part of its 1997 1115 waiver, Massachusetts provides Medicaid coverage to children with disabilities and adults with disabilities who (1) work at least 40 hours a month, (2) are not working or (3) are working and meet certain state and federal rules. Before the state began the demonstration, this coverage was provided to the working disabled and children under a state-funded program.) The CommonHealth plan is available regardless of income, and families with incomes below 200% of the FPL pay nothing. Those with higher incomes must pay a monthly premium based on income, family size, and whether they have other health insurance.

In addition to the premium, clients must pay a one-time deductible, which is essentially the same as the traditional spend-down of excess medical bills over a six-month period. But the difference, according to Althea Glick of the Massachusetts Division of Medical Assistance, is that once they meet the spend-down, they do not have to do it again.

The state also has a buy-in program for clients who go to work and have employer-sponsored coverage. We are still attempting to get information on this program and will get it to you as soon as we do.

Colorado. In 1997, the Colorado legislature directed the state's Medicaid agency to prepare and submit a Section 1115 waiver request to HCFA for a work incentive pilot program for 150 people. It will enable a person who (1) is unemployed and (2) is receiving SSI, SSDI, or both, and Medicaid to buy into the Medicaid program, with no income limit. But once an individual becomes employed and the employer offers insurance, the client must accept the coverage which the Medicaid program continues to pay for as "wrap around" coverage. The waiver request was submitted in August 1998; HCFA had yet to approve the request as of this writing.