**[The Effectiveness of Medicaid Buy-in Programs in Promoting the
Employment of People with Disabilities]{.smallcaps}**

*[Briefing Paper Prepared for the:]{.smallcaps}*

![](media/image1.wmf)**[Ticket to Work and Work Incentives Advisory
Panel]{.smallcaps}**

*[Prepared by:]{.smallcaps}*

**[Nanette Goodman, MS]{.smallcaps}**

**[Gina A. Livermore, PhD]{.smallcaps}**

**[Cornell University Institute for Policy Research]{.smallcaps}**

**[4301 Connecticut Ave NW, Suite 330]{.smallcaps}**

**[Washington, DC 20008]{.smallcaps}**

**[www.cuipr.cornell.edu]{.smallcaps}**

**[July 28, 2004\*]{.smallcaps}**

This paper was prepared for the Ticket to Work and Work Incentives
Advisory Panel under a Social Security Administration contract to The
Urban Institute. The opinions, conclusions, and errors in this paper are
the sole responsibility of the authors, and do not represent the
official views of the Social Security Administration, The Ticket to Work
and Work Incentives Advisory Panel, The Urban Institute, or Cornell
University.

\*Errata corrected October 29, 2004

**The Effectiveness of Medicaid Buy-in Programs in Promoting the
Employment of People with Disabilities**

**Table of Contents**

[Acknowledgements ii](#acknowledgements)

[Executive Summary iii](#executive-summary)

[I. Introduction 1](#i.-introduction)

[A. Purpose of the Paper 1](#a.-purpose-of-the-paper)

[B. Sources of Information 1](#b.-sources-of-information)

[C. Organization 2](#c.-organization)

[II. What Medicaid Buy-in Programs Are Supposed to Do
2](#ii.-what-medicaid-buy-in-programs-are-supposed-to-do)

[A. Relationship between Health Insurance and Employment
3](#a.-relationship-between-health-insurance-and-employment)

[B. Intent of the Ticket to Work and Work Incentives Improvement Act
4](#b.-intent-of-the-ticket-to-work-and-work-incentives-improvement-act)

[C. How Buy-in Programs Might or Might Not Promote Employment
6](#c.-how-buy-in-programs-might-or-might-not-promote-employment)

[III. Buy-in Program Design and other Factors affecting enrollment and
Outcomes
9](#iii.-buy-in-program-design-and-other-factors-affecting-enrollment-and-outcomes)

[A. Overview 9](#a.-overview)

[B. Program Design Features 12](#b.-program-design-features)

[C. Administrative Factors 20](#c.-administrative-factors)

[D. Other Factors 25](#d.-other-factors)

[IV. Characteristics of Buy-in Enrollees
27](#iv.-characteristics-of-buy-in-enrollees)

[A. Disability Benefit Categories of Enrollees
27](#a.-disability-benefit-categories-of-enrollees)

[B. Health Insurance Status of Enrollees
28](#b.-health-insurance-status-of-enrollees)

[C. Demographic and Disability Characteristics of Enrollees
29](#c.-demographic-and-disability-characteristics-of-enrollees)

[D. Earnings 30](#d.-earnings)

[E. Service Utilization and Costs 31](#e.-service-utilization-and-costs)

[V. Evidence of Effectiveness 33](#v.-evidence-of-effectiveness)

[A. Evidence of De-Linking Health Insurance and SSI/DI Eligibility
33](#a.-evidence-of-de-linking-health-insurance-and-ssidi-eligibility)

[B. Evidence of Providing Needed Supports
39](#b.-evidence-of-providing-needed-supports)

[C. Evidence of Increasing Employment
44](#c.-evidence-of-increasing-employment)

[VI. Suggestions for Increasing the Effectiveness of Buy-in Programs
50](#vi.-suggestions-for-increasing-the-effectiveness-of-buy-in-programs)

[A. States 50](#a.-states)

[B. CMS 51](#b.-cms)

[C. Other Federal Agencies 53](#c.-other-federal-agencies)

[D. Congress 53](#d.-congress)

[References 55](#references)

**AppendiX A: Buy-in Program Design Features by State**

**Appendix B: Demographic Characteristics of Buy-in Enrollees in
Selected States**

# Acknowledgements

This paper was prepared for the Ticket to Work and Work Incentives
Advisory Panel under a Social Security Administration contract to The
Urban Institute. Bernard Wixon was the Project Officer.

We greatly appreciate the assistance of the state officials and other
staff associated with the Medicaid Infrastructure Grants and Buy-in
programs in 20 states who allowed us to interview them for this paper,
and provided us with data and other documents with information about
their state programs. We also appreciate the useful information provided
by: Carey Appold and Steve Knapp of the Center for Medicaid and State
Operations; Peter Baird and Melissa Wittman of the National Consortium
for Health Systems Development; and Martha Roherty and Gail Stefl of the
Center for Workers with Disabilities.

Useful comments on an early draft of this paper were provided by David
Miller, Bonnie O'Day, Amy Porter, David Stapleton, David Wittenburg,
Melissa Wittman, and Bernard Wixon.

The opinions, conclusions, and errors in this paper are the sole
responsibility of the authors, and do not represent the official views
of the Social Security Administration, The Ticket to Work and Work
Incentives Advisory Panel, The Urban Institute, or Cornell University.

# Executive Summary

The 1999 Ticket to Work and Work Incentives Improvement Act (Ticket Act)
expanded state authority originally granted under the 1997 Balanced
Budget Act (BBA) to provide Medicaid coverage to working people with
disabilities who, because of income and assets, would not otherwise
qualify for Medicaid coverage. Both the BBA and the Ticket Act
authorized states to charge premiums for this coverage, and thus, allow
working individuals with disabilities to "buy in" to Medicaid. These
programs are commonly referred to as Medicaid Buy-in programs. In
addition to the expanded state authority, the Ticket Act also
appropriated funds for Medicaid Infrastructure Grants (MIGs) to states
for purposes of developing Buy-in program infrastructure and conducting
a variety of activities designed to promote the employment of people
with disabilities. As of May 2004, 29 states had implemented Buy-in
programs. Collectively, these programs are serving approximately 64,000
people with significant disabilities. Of the 29 states that have
implemented Buy-in programs, 15 have been implemented under the
authority of the Ticket Act.

The purpose of this paper is to provide the Ticket to Work and Work
Incentives Advisory Panel with information about the features of the
existing Medicaid Buy-in programs, and the potential effectiveness of
these programs in promoting the employment of people with disabilities.
We base our assessment on information obtained from existing data and
documents on the Buy-in programs, and on information collected through
interviews with staff from: selected states with Buy-in programs; states
considering adoption of Buy-in programs; the Centers for Medicare and
Medicaid Services (CMS); and the two Technical Assistance centers
serving Medicaid Infrastructure Grantees.

***A. Findings***

**There is considerable variation across states in the eligibility
criteria used by Buy-in programs.** State rules regarding income
(earned, unearned, and spousal income) vary dramatically. The maximum
gross income permitted for Buy-in eligibility ranges from about \$23,000
to no income limit at all. In most states, the maximum gross income for
purposes of eligibility is about \$48,000. State eligibility rules
regarding assets also vary, but most Buy-in programs apply rules that
are less restrictive than the SSI standard. Three states do not apply
any limitations to assets.

**Premiums charged by Buy-in programs also vary substantially.** The
percentage of Buy-in enrollees required to pay a premium ranges from 2%
to 100% across states. Differences in the methods used by states to
calculate premiums leads to significant differences across states in the
premiums that would be paid by individuals in like circumstances. For
example, an individual with gross income of \$1,400 (\$600 unearned and
\$800 earned) per month will be ineligible in three states, and will pay
between \$0 and \$81 per month for coverage in the others. If more of
the \$1400 in gross income is unearned versus earned (\$1,100 unearned
and \$300 earned), the individual would be ineligible in six states and
pay between \$0 and \$536 per month for coverage in the others.

**There is considerable variation in enrollment across states.** Buy-in
enrollment as of March 2004 ranged from 2 in Wyoming to 16,508 in
Missouri. While state eligibility criteria and premium structures will
affect the number and types of individuals who enroll, many other
factors will also affect Buy-in enrollment: the procedures used by
states to verify disability and work activity; whether the enrollment
process is automated; the level of knowledge about the program on the
part of eligibility workers; the amount and nature of outreach
conducted; state eligibility criteria used for other categories of
Medicaid; the general system of supports for people with disabilities in
the state; and the general economy.

**The majority of Buy-in participants in most programs are DI
beneficiaries, and most participants were covered by Medicaid prior to
Buy-in enrollment.** While there are some inconsistency regarding how DI
status is measured, it appears that about 75% of Buy-in enrollees in 21
of the Buy-in states are DI beneficiaries. It also appears that about
75% of Buy-in enrollees in these same states were enrolled in another
Medicaid category prior to Buy-in enrollment.

**Earnings of participants tend to be relatively low.** In 19 states
that reported Buy-in enrollee earnings for the year 2002, 52% of
participants had earnings. This percentage ranged from 25% in New Mexico
to 93% in Indiana. In six of the 19 states, fewer than 50% of Buy-in
enrollees had earnings, and in four states over 80% of enrollees had
earnings. Among Buy-in enrollees with some reported earnings, the
earnings tended to be low. Over three-quarters of those with earnings
had earnings of less than \$800 per month. The low earnings may be due
to the incentives inherent in the DI program. Despite the provision of
health insurance, many DI beneficiaries are unable or unwilling to forgo
all of their benefits for earnings. This was frequently cited by
interviewees as a barrier to the effectiveness of the Buy-in programs.

**Buy-in programs break the link between health insurance and SSI/DI
eligibility and increase employment incentives for some.** For those
without health insurance coverage and not enrolled in the federal
disability programs, Buy-in programs reduce incentives to stop working
in order to qualify health insurance benefits via the disability
programs. The higher the gross income eligibility limit, the more this
type of incentive is reduced. In all but a few states, the Buy-in income
eligibility threshold is substantially higher than the 1619(b)
threshold, suggesting that the Buy-in successfully de-links health
insurance from SSI eligibility and increases work incentives for some
former SSI recipients in those states. Most Buy-in programs also
increase work incentives among DI beneficiaries participating in
Medicaid via spend down or poverty programs. For these individuals, the
Buy-in reduces restrictions on earnings and allows them to earn at
higher levels and maintain Medicaid coverage.

**The treatment of unearned income for purposes of Buy-in eligibility
and premium determinations has consequences for promoting employment
among DI beneficiaries through Buy-ins.** In states that use the SSI
methodology for counting income and in states where unearned income
limits are applied, DI beneficiaries with above average DI benefits will
not be eligible for the Buy-in, or will be subject to stricter income
limits than similar individuals without DI benefits. Some states are
purposefully limiting Buy-in eligibility with these criteria. Others
treat unearned income unfavorably in premium calculations in an effort
to target Buy-in eligibility only to those willing and able to work, as
demonstrated by their willingness to give up all or most of their DI
benefits in the form of premiums and cost-sharing. In many states, it is
likely that the implications of the treatment of unearned income for DI
beneficiaries was not considered in the design of the program. The
effect of these policies on the ability of a Buy-in to promote
employment among DI beneficiaries is uncertain. These policies do,
however, clearly restrict access to the Buy-in to only those with low DI
benefits or low earnings.

**Consumer awareness of Buy-in programs could be improved.** Surveys and
interviews conducted with Buy-in enrollees in several states indicate
that there is confusion and lack of knowledge about the program among
many enrollees. Lack of consumer awareness and/or trust that health
insurance will be maintained under a Buy-in if earnings increase will
significantly undermine any potential effects of Buy-in programs on
employment.

**Buy-ins appear to provide important and necessary supports for people
with disabilities.** Most notable are prescription drugs and personal
assistance services. The need for prescription drug and more complete
outpatient mental health service coverage by Medicare beneficiaries with
severe mental impairments may be one reason why a large proportion of
Buy-in enrollees in a number of states are DI beneficiaries with mental
health conditions. As Medicare assumes prescription drug coverage in the
future, it is possible that the value of the Buy-in will decline for
many and the composition of program enrollees could change
substantially.

**While a number of studies indicate that Buy-in enrollees increase
their earnings, on average, after enrollment in the Buy-in, no strong
evidence exists that these programs *caused* the increase in employment
because of the absence of data on suitable comparison groups.** The
studies to date yield a number of interesting findings related to
employment, however:

-   Descriptive cross-state comparisons of enrollee earnings suggest
    that program design affects average enrollee earnings substantially,
    but this may reflect variation in who enrolls rather than induced
    changes to their earnings.

-   Anecdotal evidence from consumer surveys, interviews, and focus
    groups indicate that many Buy-in enrollees view the Buy-in as
    critical to their own ability to work or sustain their earnings.

-   Descriptive data from a number of states show that average earnings
    increase after enrollment, and this increase may reflect the Buy-in
    inducing increases in employment and earnings. These data also show
    that the earnings paths of enrollees vary substantially after
    enrollment.

-   The most rigorous analysis of the impact on employment, one
    employing a comparison group design, shows no statistically
    significant effect, but may be limited by a short observation
    period, and the newness of the program at the time the evaluation
    was conducted.

**Medicaid Infrastructure Grant (MIG) funding appears to have been
instrumental in helping states to develop Buy-in programs**, but also in
helping states develop systems and cross-agency collaborations that
represent, in many cases, a first attempt at addressing employment
issues in a more comprehensive fashion. The funding has also made
state-level policy analysis and program evaluation efforts possible.

***B. Suggestions for Improvement***

A number of ideas for improving the effectiveness of Buy-in programs
were offered by state officials interviewed. Others arise out of our
qualitative review of the programs. These are listed below by the
entity(ies) authorized to pursue them:

**States:**

-   Assess the Buy-in program to determine if program features are
    inhibiting the state's ability to meet the goals of its Buy-in, and
    the goals of the broader state system of supports for people with
    disabilities.

-   Identify and address administrative and consumer awareness issues
    that might be inhibiting Buy-in effectiveness.

**The Centers for Medicare and Medicaid Services (CMS):**

-   Provide guidance on the disability determination process, or
    guarantee states that they will not be penalized by CMS for
    incorrect decisions.

-   Provide guidance to states on eligibility grace periods when
    employment is lost, and define grace periods in the State Plan
    Amendment template.

-   Maintain flexibility in the use of MIG funding.

-   Continue to support TA and information-sharing opportunities.

-   Continue to engage in national-level evaluation efforts, and support
    more rigorous efforts to estimate Buy-in program impacts and
    determine the factors that contribute to effectiveness.

**Other Federal Agencies:**

-   Provide leadership for interagency coordination at the federal
    level.

-   Allow data sharing between programs for purposes of program
    evaluation.

-   Increase funding for benefits counseling to consumers with
    disabilities participating in state and federal programs.

**Congress:**

-   Allow states to define work.

-   Remove the upper age limit (age 64) for Buy-in programs implemented
    under the Ticket Act.

-   Give CMS more control over MIG eligibility requirements.

-   Implement a benefit offset program for DI similar to SSI, and change
    the definition of disability.

***C. Conclusions***

It is likely too early to expect dramatic employment outcomes from
Buy-in programs given the newness of the programs and the fact that many
were implemented during a recession when jobs were hard to find. Many
programs are still experiencing growing pains, and both participants and
eligibility workers are still learning how to make use of them. The
programs are clearly providing needed medical supports to many DI
beneficiaries who do not have access to those supports under Medicare.
As the Buy-in programs mature, we may see greater participation by
individuals who want to increase their earnings significantly.

The Buy-in provisions of the BBA and the Ticket Act cannot be deemed a
success or failure in isolation from other factors affecting the
employment of people with disabilities. The Buy-in represents a
relatively small, incremental change in policy occurring within a very
complex system of supports for people with disabilities. Given the
nature of the current system, with eligibility for federal disability
benefits so closely tied to a definition of disability that precludes
work, it is likely that the Buy-in is having a large impact on providing
needed services, but a small impact on reducing work disincentives.
Thus, even if states are successful in removing employment barriers and
providing needed supports to people with disabilities, it is unclear
whether this will be sufficient to significantly increase employment in
the absence of more fundamental changes to the way in which we provide
income support to people with disabilities.

# I. Introduction

## A. Purpose of the Paper

The 1999 Ticket to Work and Work Incentives Improvement Act (Ticket Act)
expanded state authority originally granted under the 1997 Balanced
Budget Act (BBA) to provide Medicaid coverage to working people with
disabilities who, because of income and assets, would not otherwise
qualify for Medicaid coverage. Both the BBA and the Ticket Act
authorized states to charge premiums for this coverage, and thus, allow
working individuals with disabilities to "buy in" to Medicaid. These
programs are commonly referred to as Medicaid Buy-in programs. In
addition to the expanded state authority, the Ticket Act also
appropriated funds for Medicaid Infrastructure Grants (MIGs) to states
for purposes of developing Buy-in program infrastructure and conducting
a variety of activities designed to promote the employment of people
with disabilities.

The purpose of this briefing paper is to provide the Ticket to Work and
Work Incentives Advisory Panel with information about the effectiveness
of the existing Medicaid Buy-in programs in promoting the employment of
people with disabilities, based on a comprehensive assessment of
information available to date. The primary focus of the assessment is on
the following:

-   features of state Buy-in programs likely to affect Buy-in enrollment
    and employment of people with disabilities, including specific
    strategies being used by states to target Buy-ins in ways that
    promote employment;

-   evidence of the effectiveness of Buy-in programs in promoting
    employment of people with disabilities; and

-   factors that potentially inhibit the effectiveness of Buy-in
    programs in promoting the employment of people with disabilities.

## B. Sources of Information

We used data and information obtained from several sources in developing
this paper:

***Interviews with staff in selected Buy-in states.*** We conducted
interviews with staff associated with the state's Buy-in program and/or
activities conducted under the state's MIG from 14 of the 29 states that
have implemented Buy-in programs.[^1] In most cases, we interviewed the
MIG director. The MIG director was selected because we believe that this
individual would have the most general knowledge about the status of the
Buy-in program and the factors that might affect enrollment and the
employment of participants.

***Interviews with staff in selected states without Buy-in programs.***
We conducted interviews with staff in six non-Buy-in states, including
the District of Columbia (District of Columbia, Florida, Maryland,
Michigan, North Dakota, and Virginia). These states were selected
because: they have MIGs and were undertaking activities with the
intention of implementing Buy-in programs (District of Columbia,
Maryland, North Dakota, and Virginia); do not have a MIG but in the
past, had intended to implement a Buy-in program (Florida); or do not
have a MIG but plan to implement a Buy-in in the future (Michigan). In
three of the four states with MIGs, the MIG directors were interviewed.
In the other three states, advocates and consultants involved in the
Buy-in related activities were interviewed.

***Interview with Centers for Medicare and Medicaid Services (CMS)
staff.*** We conducted an interview with the two staff persons most
closely involved in the administration of the MIGs from the CMS Center
for Medicaid and State Operations.

***Interviews with staff of the MIG Technical Assistance Centers.*** We
interviewed two staff from each of the two technical assistance (TA)
centers supporting states in their MIG-related initiatives. The two TA
centers are the Center for Workers with Disabilities within the National
Association of State Medicaid Directors, and the National Consortium for
Health Systems Development.

***Existing data and documents with information about Medicaid Buy-in
programs.*** We collected numerous documents and information on the
Buy-in programs. Some of these are widely available reports, while
others are less-widely available reports and analyses conducted by
specific states that were identified and collected during our interviews
with state and MIG-related officials.

## C. Organization

The paper is organized into the following sections:

In ***Section II***, we briefly describe the relationship between health
insurance and employment. We then discuss the intent of the Ticket Act,
and provide a theoretical discussion of how Buy-in programs might or
might not promote employment among various subgroups of people with
disabilities to whom they are targeted.

In ***Section III***, we describe features of the Buy-in programs and
other factors believed to affect the number and types of individuals who
enroll.

In ***Section IV***, we describe what is known about the characteristics
of Buy-in enrollees.

In ***Section V***, we present information about the effectiveness of
the Buy-in programs. The discussion focuses on the effectiveness of
these programs in terms of: de-linking health insurance from DI and SSI
eligibility; providing needed supports for people with disabilities; and
increasing employment.

In ***Section VI***, we conclude with a discussion of ideas for
improving the effectiveness of Medicaid Buy-in programs. Some represent
suggestions obtained during the interviews with state officials and
other staff involved in implementing these programs, while others arise
out of the qualitative assessment of Buy-in programs conducted for this
paper. The discussion is organized around issues that might be addressed
by states, CMS, other federal agencies, and Congress.

# II. What Medicaid Buy-in Programs Are Supposed to Do

In this section, we briefly discuss the purpose of Medicaid Buy-in
programs, and the rationale supporting their existence. We begin with a
brief discussion of the relationship between health insurance and
employment among people with disabilities. We then note the purpose of
the Ticket Act with respect to the general issue of health insurance and
employment, and the provisions related specifically to Buy-in programs.
We conclude this section with a theoretical discussion of how, and for
whom, Buy-in programs might promote employment.

## A. Relationship between Health Insurance and Employment

Many people with chronic conditions and disabling impairments require a
variety of medical services and supports. Health care expenditures for
working-age people with disabilities are on the order of five times the
expenditures of their counterparts without disabilities, averaging about
\$7,600 per year, compared to \$1,500 per year (GAO 2003). Thus, health
insurance coverage is extremely important to those with disabilities who
might face substantial out-of-pocket costs, or risk not being able to
afford needed care, in the absence of such coverage.

Because of the importance of health insurance, access to insurance
coverage is likely to figure heavily in the employment decisions of
people with disabilities. Employment-related health insurance has the
potential to induce labor market entry by people with disabilities*,* as
employment can potentially provide access to private insurance, often
funded by the employer, at least in part*.* Public health insurance,
however, may be a disincentive to employment. Many working-age people
with disabilities are eligible to participate in the Social Security
Disability Insurance (DI) and Supplemental Security Income (SSI)
disability programs, which provide cash benefits to people with
disabilities, but also provide public health insurance through Medicare
and Medicaid. Because SSI and DI eligibility requires a participant's
earnings to be below a certain, low threshold, employment can mean the
potential loss of health benefits for many working-age people with
disabilities covered by Medicare and/or Medicaid.

About half of working-age people with disabilities receive health
insurance through the public programs, primarily, Medicare and Medicaid
(GAO 2003). The likelihood of being covered by Medicare or Medicaid
increases substantially among those with lower incomes and those with
more severe disabilities (GAO 2003; Livermore et al. 2001). In all but a
few states, SSI recipients are automatically eligible for Medicaid
coverage. Further, they can maintain that coverage, even after cash
benefits cease, if earnings increase up to a certain threshold, known as
the section 1619(b) income threshold.[^2] All DI beneficiaries that have
been on the rolls for 24 months or longer are eligible for Medicare
coverage and can maintain that coverage after cash benefits cease due to
earnings for up to 96 months. After that point, some may be eligible to
purchase Part A and Part B Medicare coverage. Additionally, states have
the option to offer Medicaid to several other categories of people with
disabilities including those with incomes up to 100% of the Federal
Poverty Level (FPL) and those with incomes in excess of Medicaid
eligibility levels who have substantial Medical expenses. These
individuals "spend-down" to Medicaid eligibility levels by incurring
high medical bills which reduce the individual's income below the
state-determined income eligibility limit. [^3]

A substantial amount of anecdotal evidence exists on the importance of
health insurance in the employment and program participation decisions
of people with disabilities. Fear of losing health insurance, or
inadequate employer-sponsored health insurance, is frequently cited as a
barrier to work in focus groups and surveys conducted with people with
disabilities (President's Committee 1994; Hanes 2000; Porter 2004).

A few empirical studies have also demonstrated that the availability of
health insurance affects the employment decisions of people with
disabilities. Kreider and Riphahn (2000) found that adults age 50 to 61
who had health insurance through their most recent employer were less
likely to apply for DI, presumably because those with employment-related
health insurance would be less likely to quit their jobs and become
uninsured. Stapleton et al. (1998) found evidence that some employed SSI
recipients substantially increase their earnings as the 1619(b)
eligibility threshold increases, suggesting that some SSI recipients, in
fact, keep earnings sufficiently low to maintain their Medicaid
eligibility.

Two other studies focused on Medicaid benefit generosity, using mean
health expenditures as a measure of benefit generosity. Yelowitz (1998)
examined the effect of Medicaid benefit generosity on SSI participation
among those with characteristics considered to make them among those
most likely eligible for Medicaid by reason of disability. Yelowitz
estimated that the effect of increases in Medicaid expenditures on this
subpopulation explains 20 percent of the growth in SSI rolls over time.
Stapleton et al. (1995) studied the number of applicants for SSI, which
should be more sensitive than the SSI participation rates used by
Yelowitz, but found that Medicaid had no effect on SSI participation
rates (and hence, withdrawal from the labor force). Both studies had
difficulty in detecting effects, perhaps because studies using mean
expenditures as a measure of benefit generosity are biased toward
finding no effect (Gruber and Madrian 2002).

## B. Intent of the Ticket to Work and Work Incentives Improvement Act

Despite a dearth of "hard" evidence, policymakers and advocates for
people with disabilities have generally agreed that the Medicare and
Medicaid programs create substantial work disincentives for people with
disabilities because of the programs' links to DI and SSI, where
eligibility is contingent on insubstantial work activity. In recent
years, the disability community and policymakers have developed a
variety of options for de-linking health insurance benefits from
disability benefits. This was the motivation behind several provisions
of the Ticket Act, which includes the state option to eliminate income
and asset restrictions in creating Medicaid Buy-in programs for people
with disabilities. In the Ticket Act itself, Congress notes the
following findings related to health insurance and people with
disabilities:

> *(3) Health care is particularly important to individuals with
> disabilities and special health care needs who often cannot afford the
> insurance available to them through the private market, are
> uninsurable by the plans available in the private sector, and are at
> great risk of incurring very high and economically devastating health
> care costs.*
>
> *(4) Americans with significant disabilities often are unable to
> obtain health care insurance that provides coverage of the services
> and supports that enable them to live independently and enter or
> rejoin the workforce. Personal assistance services (such as attendant
> services, personal assistance with transportation to and from work,
> reader services, job coaches, and related assistance) remove many of
> the barriers between significant disability and work. Coverage for
> such services, as well as for prescription drugs, durable medical
> equipment, and basic health care are powerful and proven tools for
> individuals with significant disabilities to obtain and retain
> employment.*
>
> *(5) For individuals with disabilities, the fear of losing health care
> and related services is one of the greatest barriers keeping the
> individuals from maximizing their employment, earning potential, and
> independence.*
>
> *(6) Social Security Disability Insurance and Supplemental Security
> Income beneficiaries risk losing medicare or medicaid coverage that is
> linked to their cash benefits, a risk that is an equal, or greater,
> work disincentive than the loss of cash benefits associated with
> working.* (Ticket Act, Section 2(a)).

The stated purposes of the Ticket Act provisions that specifically
relate to Medicaid Buy-in programs include the following:

> *(1) To provide health care and employment preparation and placement
> services to individuals with disabilities that will enable those
> individuals to reduce their dependency on cash benefit programs.*
>
> *(2) To encourage States to adopt the option of allowing individuals
> with disabilities to purchase Medicaid coverage that is necessary to
> enable such individuals to maintain employment.* (Ticket Act, Section
> 2(b)).

Section 201 of the Act loosened restrictions on states regarding who is
eligible to buy into the Medicaid program. Medicaid Buy-in programs
allow working people with disabilities, otherwise ineligible for
Medicaid, to purchase Medicaid coverage. Under the Ticket Act, states
have the option to eliminate all income, assets, and resource
limitations for workers with disabilities who buy into Medicaid. States
may also continue to offer the Medicaid Buy-in to workers with
disabilities who participate in the Buy-in, even if they no longer meet
SSA medical criteria for disability due to medical improvement. States
are authorized to require individuals to pay premiums, or other
cost-sharing charges, on a sliding scale.

Buy-in programs can offer people with disabilities the opportunity to
increase their earnings and accumulate assets without losing their
health insurance. The Ticket Act requires that Buy-ins be limited to
*working* people ages 16-64 with *disabilities.*[^4] Beyond this, the
legislation gives states wide breadth in defining eligibility
requirements and premium structures and, as a result, allows each state
to define its own goals and priorities. Note also that the Buy-in
program is an optional Medicaid category that can be exercised or
eliminated at the state's discretion.

Section 203 of the Act established a mechanism by which states could
receive grants from the Department of Health and Human Services (DHHS)
that would provide support for states to develop Medicaid Buy-in
programs and, more generally, develop the infrastructure necessary to
address work incentive issues in their state systems. These grants for
infrastructure and outreach, now called Medicaid Infrastructure Grants
(MIG), would be awarded to states meeting certain criteria established
by the DHHS. The Ticket Act specifically notes that no state may receive
a MIG unless it demonstrates to the satisfaction of DHHS that it is
making personal assistance services available to the extent necessary to
enable individuals with disabilities to remain employed. The specific
levels of personal assistance services necessary, and other criteria for
receiving a MIG, have been established and are being administered by the
Centers for Medicare and Medicaid Services (CMS), Center for Medicaid
and State Operations.

## C. How Buy-in Programs Might or Might Not Promote Employment

The Ticket Act gave states the ability to broaden access to health
insurance for people with disabilities through a Medicaid Buy-in option
in order to pursue two implicit goals:

-   De-link eligibility for public health insurance from eligibility for
    SSI and DI to enable people with disabilities to reduce their
    dependence on cash benefit programs without the risk of losing
    health insurance; and

-   Provide access to medical supports needed to maintain employment.

It is important to note that a state may have other objectives for
implementing a Buy-in program. Most notably, even though every state
pays a share of the Medicaid claims costs under the Buy-in program, it
is possible that the state can obtain relief from other expenditures by
introducing a Buy-in. Other state objectives might not conflict with the
employment objectives of the legislation, but they might cause a state
to implement a Buy-in in a way that does not optimize the employment
objective.

If a Medicaid Buy-in program achieves the above goals, it should, in
theory, create greater incentives for employment among *some* people
with disabilities. The issue, however, is very complex. The effect of
de-linking insurance from SSI/DI eligibility will depend on a variety of
factors, including:

-   the means of de-linking;

-   the availability of insurance from other sources;

-   the benefits provided by various types of insurance;

-   the individual's current employment or disability program
    participation status;

-   the individual's eligibility for other public programs that provide
    medical assistance;

-   the individual's healthcare needs; and

-   the individual's other characteristics, such as age, skills, work
    experience, and education.

The strength of the employment incentives created by a Medicaid Buy-in
program will therefore vary depending on individual circumstances and
the reasons why a person might be induced to participate in the Buy-in.
In theory, five broad types of individuals might have incentives to
enroll in a Buy-in. These 'types', and the associated incentives for
employment potentially created by a Buy-in program, are as follows:

1.  **Former recipients of SSI cash benefits participating in section
    1619(b) with earnings at or near the section 1619(b) income
    threshold.** With a Buy-in, these individuals can increase their
    earnings without losing Medicaid coverage. The employment incentive
    is expected to be strong, but the increase in earnings for many
    might not be very large -- they already have substantial earnings,
    and earnings increases might be limited by other factors.

2.  **People with disabilities enrolled in Medicaid under a medically
    needy, spend down, or poverty level category** who, if enrolled in
    the Buy-in, could work more and/or retain more of their income and
    assets without losing Medicaid coverage. This group might include
    both DI beneficiaries and non-beneficiary workers who meet the SSA
    medical disability criteria. The employment incentive for this group
    is mixed.

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```
a.  For those purposefully constraining earnings to maintain Medicaid
    coverage, the Buy-in will create strong employment incentives,
    although effects on earnings, like those for 1619(b) participants,
    could be small for many.

b.  For those only seeking to avoid spend down requirements to retain
    more income and assets, the Buy-in creates weak or no employment
    incentives. The Buy-in simply represents a lower price and/or
    administratively simpler alternative to current coverage for those
    whose spend down is greater than the premium/cost sharing required
    under the Buy-in. Thus, the Buy-in might only induce those who are
    not working to begin working at very minimal levels in order to
    qualify for the lower-cost coverage.

> The above categories of individuals will be most evident during the
> initial implementation of the program. Once a (presumably more
> expansive) Buy-in is implemented, there is no longer a reason for
> working individuals with disabilities requiring health insurance to
> enroll in the spend down or poverty categories. Thus, assuming that
> individuals and Medicaid eligibility staff have knowledge of the
> Buy-in and are working in the individuals' best interests, in the
> years after initial implementation, these individuals would fall into
> categories 3, 4, or 5 below, rather than being considered as former
> 'other Medicaid' covered individuals.

3.  **People with disabilities who lack, or expect to lose, other
    sources of health insurance.** This group might include DI
    beneficiaries in the 24-month waiting period before receiving
    Medicare, working DI beneficiaries nearing the end of an extended
    period of Medicare coverage who will soon experience a loss of
    Medicare,[^5] and non-beneficiaries who meet the SSA medical
    disability criteria who lack or expect to lose private or public
    health insurance coverage. The employment incentives for this group
    are mixed.

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```
a.  A Buy-in might induce some working people with disabilities who lack
    (or expect to lose) health insurance to remain employed; that is, it
    reduces the value of leaving the workforce to go on SSI/DI benefits
    because it is no longer necessary to do so in order to obtain health
    insurance. Thus, for these individuals, the Buy-in creates a strong
    employment incentive.

b.  For DI beneficiaries in the 24-month waiting period for Medicare
    with no other insurance, the Buy-in might create an incentive to
    engage in some work activity for purposes of qualifying for the
    Buy-in, but that activity is likely to be minimal among those who do
    not wish to jeopardize their eligibility for DI (because of work
    activity) before completing the 24-month waiting period and
    qualifying for Medicare. In addition, many new DI beneficiaries may
    be unable to work at significant levels (or at all) if their
    disabling conditions are of recent onset and they are still in the
    process of adjustment. For these reasons, the Buy-in might only
    provide incentives to work at very minimal levels, to gain coverage
    during the 24-month waiting period for Medicare.

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```
4.  **People with disabilities whose premiums/cost sharing for other
    private or public insurance coverage** (e.g., through private
    insurance, COBRA, spouses, or Medicare)[^6] **exceed the
    premiums/cost sharing required by the Buy-in program.** This group
    might include both DI beneficiaries and non-beneficiaries who meet
    the SSA medical disability criteria. For this group, the Buy-in
    creates weak or no employment incentives. The Buy-in represents a
    lower price alternative to current coverage. Thus, the Buy-in
    provides no additional work incentives among those already working,
    and might only provide incentives to work at very minimal levels in
    order to qualify for the lower-cost coverage among those who are not
    working. In essence, the Buy-in is "crowding" out other forms of
    insurance because it is a lower cost alternative.

5.  **People with disabilities whose private and/or public (Medicare)
    coverage does not provide needed medical supports, but which are
    covered by the Buy-in.** Two primary examples of such supports are
    pharmaceuticals (not currently covered by Medicare) and long-term
    personal assistance services (not widely covered by any source
    except Medicaid). This group might include both DI beneficiaries and
    non-beneficiary workers who meet the SSA medical disability
    criteria. For these individuals, the Buy-in might create an
    incentive to engage in minimal work activity among those not
    working, for purposes of qualifying for the Buy-in, but provides no
    additional incentives to increase work activity among those already
    working, or to work at higher levels among those only seeking
    coverage.

The above discussion focuses on the likely effects of a Buy-in on
employment behavior in terms of whether the Buy-in represents the
creation of a "reward" that induces people to work, or the elimination
of a "penalty" that punishes people for working. For non-working
individuals with expensive or inadequate coverage, or lacking coverage
altogether (groups 2b, 3b, 4, and 5), the Buy-in may be a reward that
induces them to work, but only minimum levels are required to obtain the
reward. Thus, we would not expect to see large increases in earnings due
solely to the Buy-in. For those purposefully reducing or constraining
earnings in order to obtain or maintain health insurance coverage
(groups 1, 2a, and 3a), the Buy-in eliminates the penalty of losing (or
not gaining) coverage due to work, leaving them free to work at high or
increasing levels with no health insurance penalty. We would expect to
see greater increases in earnings attributed to the Buy-in for this
group.

In addition to the reward and penalty effects, a Buy-in might have an
indirect effect on employment. The provision of needed medical supports
to individuals who previously lacked them (groups 3b, 4, and 5) may lead
to improvements in functioning and employment/earnings potential (i.e.,
an increase in human capital), and thereby increase the likelihood and
value of working. For instance, this might be the case for DI
beneficiaries whose Medicare coverage does not include prescription
drugs, and whose symptoms and functioning can be greatly ameliorated by
access to prescription drug treatments (e.g., treatments for psychiatric
conditions, HIV, multiple sclerosis). It might also be the case for
persons with severe physical disabilities who require personal
assistance services to work, but do not have coverage for such services
through their private insurance or Medicare.

The discussion above is couched in very general terms, holds other
factors that might affect employment or Buy-in participation constant,
and assumes that individuals know about the programs well enough to make
rational choices. These simplifications are intended to provide a basic
framework for understanding the degree to which Buy-in programs are able
to promote employment. In reality, the impact of the Buy-in on the
employment outcomes for people with disabilities will depend on a number
of factors. One important factor is the Buy-in program design. The
design of the program will affect who enrolls and for what reasons.
Other factors will also affect enrollment and employment outcomes of
participants. In the next section, we discuss the nature of the state
Buy-in programs and the many factors likely to affect the success of
Buy-in programs in promoting the employment of people with disabilities.

# III. Buy-in Program Design and other Factors affecting enrollment and Outcomes

## A. Overview

States choose to develop and implement Buy-in programs because they
provide a valuable social service to their populations. There may be
other benefits to the state, such as offsetting costs from programs that
are state funded (such as mental health, pharmacy programs, or
subsidized high risk pools). In addition, there may be indirect economic
benefits to the state associated with additional people working such as
increased tax revenues and increased cash flow to the local economy.
States have used these arguments to gain political support for the
adoption of Buy-in programs. Fiscal considerations have, however, made
it difficult in some states to gain political support to implement
Buy-in programs. Several states are working on developing Buy-ins, but
are trying to develop them in ways that are "budget neutral." This has
proven difficult, if not impossible. Other states are trying to develop
Buy-in demonstration waivers that would allow the state to define
additional program parameters and set enrollment limits that would limit
fiscal liability. CMS is, however, discouraging states from implementing
Buy-in programs under Medicaid waivers.[^7]

As of May 2004, 29 states had implemented Buy-in programs under an 1115
waiver (1), the BBA (12), or the Ticket Act (16). Another four states
(Michigan, Nevada, North Dakota, and West Virginia) are expected to
become operational in the near future.[^8] As shown in ***Exhibit
III.1***, about half of the Buy-in states began their programs after
implementation funds became available through the Medicaid
Infrastructure Grants (MIGs) following the passage of the Ticket Act.
Three states with Buy-in programs do not have MIGs (Arizona, Arkansas,
South Carolina) and of the 43 states with MIGs, 13 do not have Buy-in
programs (Alabama, Colorado, Delaware, District of Columbia, Florida,
Georgia, Hawaii, Idaho, Maryland, Rhode Island, South Dakota, Texas, and
Virginia).

Each of the states with Buy-in programs has implemented the program in
its own unique manner and within the context of other existing programs
and the general state economy. While the intent of Buy-in programs is to
improve the employment outcomes of people with disabilities, it is
likely that a multitude of other political, fiscal, and philosophical
considerations and compromises went into the actual selection of the
design features of each state's program.

Most states have been facing a fiscal crisis since 2001. Because
spending on Medicaid represents such a large portion of the state
budget, legislatures have been looking at Medicaid cuts as a way to
balance their budgets. Medicaid programs have reduced or frozen provider
reimbursements, cut spending on pharmaceuticals,[^9] and eliminated or
limited some covered services. Despite fiscal pressures, many states
have been able to implement Buy-in programs. Fiscal considerations have
undoubtedly played a large role in the eligibility requirements and
premium structures developed by states that have recently implemented
programs. Moreover, some states with Buy-in programs have been forced to
make or consider changes that would reduce program enrollment and/or
costs, such as reducing asset limits, shortening grace periods for
spells of unemployment, and increasing premiums.[^10]

Exhibit III.1

Number of Medicaid Buy-in Programs by Year

![](media/image2.wmf){width="4.3694444444444445in"
height="3.109722222222222in"}

Sources: CMS (2004), Carr et. al (2003).

In addition to fiscal considerations, a state's Buy-in eligibility
requirements and premium structures will reflect different views of the
intent of the BBA and Ticket Act. Who should be eligible? Should anyone
who could benefit from the program be included, or should the program be
used specifically to assist people engaged in a minimum level of work?
Should it be available to people with very high incomes? Officials in
different states answer these questions differently. A primary example
of how views differ is with respect to the large number of people in
Medicaid spend-down categories that move to the Buy-in after its
implementation. Some administrators consider providing more stable
access to health care to people who would otherwise be in a spend-down
program a legitimate goal of their Buy-in programs. They argue that when
people are in spend down, they lack consistent access to medications and
treatment which can be so destabilizing that employment cannot be
considered. Officials in other states reluctantly accept that this
population meets the Buy-in eligibility criteria, but would like to
impose eligibility requirements that would prevent people from using the
Buy-in as "just a way to avoid spend down."[^11] Above and beyond the
intent of the federal of legislation authorizing Buy-in programs, are
equity and political considerations with respect to other populations in
the state that might or might not be covered by Medicaid. All of these
factors will influence the specific Buy-in program design features
selected by states.

As of March 2004, there were 63,867 Buy-in participants. Three-quarters
of all Buy-in enrollees are concentrated in six states, with one-quarter
in Missouri alone (***Exhibit III.2***). The variation in enrollment
across states is driven to some degree by the size and characteristics
of the state's population, but enrollment is also affected by a number
of program-related factors (such as eligibility and premium features),
as well as other factors that are external to the Buy-in programs. These
factors will have important impacts on the number, characteristics, and
employment outcomes of enrollees, and therefore, play a large role in
determining how well Buy-in programs promote employment among people
with disabilities.

In the sections below, we describe a number of program-related and other
factors that will affect who and how many people enroll in the Buy-in
programs, and potentially, their employment outcomes.

Exhibit III.2

Medicaid Buy-in Enrollment by State, March 2004

+-----------------+----------+-----------+--------+--------+---------+
| **State**       | **Implem | **BBA or  | **Enro | **P    | **Cum   |
|                 | entation | Ticket    | llment | ercent | ulative |
|                 | Year**   | Act**     | March  | of     | Pe      |
|                 |          |           | 2004** | T      | rcent** |
|                 |          |           |        | otal** |         |
+-----------------+----------+-----------+--------+--------+---------+
| Missouri        | 2002     | Ticket    | 16,508 | >      | > 25.8% |
|                 |          | Act       |        |  25.8% |         |
+-----------------+----------+-----------+--------+--------+---------+
| Massachusetts   | 1988     | 1115      | 6,947  | >      | > 36.7% |
|                 |          | waiver    |        |  10.9% |         |
+-----------------+----------+-----------+--------+--------+---------+
| Iowa            | 2000     | BBA       | 6,520  | >      | > 46.9% |
|                 |          |           |        |  10.2% |         |
+-----------------+----------+-----------+--------+--------+---------+
| Minnesota       | 1999     | Ticket    | 6,221  | > 9.7% | > 56.7% |
|                 |          | Act\*     |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| Wisconsin       | 2000     | BBA       | 6,096  | > 9.5% | > 66.2% |
+-----------------+----------+-----------+--------+--------+---------+
| Indiana         | 2002     | Ticket    | 5,391  | > 8.4% | > 74.7% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| Connecticut     | 2000     | Ticket    | 3,011  | > 4.7% | > 79.4% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| Pennsylvania    | 2002     | Ticket    | 2,852  | > 4.5% | > 83.8% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| New Hampshire   | 2002     | Ticket    | 1,294  | > 2.0% | > 85.9% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| New York        | 2003     | Ticket    | 1,146  | > 1.8% | > 87.7% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| New Jersey      | 2001     | Ticket    | 1,061  | > 1.7% | > 89.3% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| New Mexico      | 2001     | BBA       | 977    | > 1.5% | > 90.9% |
+-----------------+----------+-----------+--------+--------+---------+
| California      | 2000     | BBA       | 960    | > 1.5% | > 92.4% |
+-----------------+----------+-----------+--------+--------+---------+
| Kansas          | 2002     | Ticket    | 704    | > 1.1% | > 93.5% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| Maine           | 1999     | BBA       | 600    | > 0.9% | > 94.4% |
+-----------------+----------+-----------+--------+--------+---------+
| Oregon          | 1999     | BBA       | 564    | > 0.9% | > 95.3% |
+-----------------+----------+-----------+--------+--------+---------+
| Illinois        | 2002     | Ticket    | 556    | > 0.9% | > 96.1% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| Mississippi     | 1999     | BBA       | 512    | > 0.8% | > 97.0% |
+-----------------+----------+-----------+--------+--------+---------+
| Vermont         | 2000     | BBA       | 497    | > 0.8% | > 97.7% |
+-----------------+----------+-----------+--------+--------+---------+
| Arizona         | 2003     | Ticket    | 432    | > 0.7% | > 98.4% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| Washington      | 2002     | Ticket    | 312    | > 0.5% | > 98.9% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| Utah            | 2001     | BBA       | 228    | > 0.4% | > 99.3% |
+-----------------+----------+-----------+--------+--------+---------+
| Alaska          | 1999     | BBA       | 206    | > 0.3% | > 99.6% |
+-----------------+----------+-----------+--------+--------+---------+
| Nebraska        | 1999     | BBA       | 111    | > 0.2% | > 99.7% |
+-----------------+----------+-----------+--------+--------+---------+
| Louisiana       | 2004     | Ticket    | 64     | > 0.1% | > 99.8% |
|                 |          | Act       |        |        |         |
+-----------------+----------+-----------+--------+--------+---------+
| South Carolina  | 1998     | BBA       | 51     | > 0.1% | > 99.9% |
+-----------------+----------+-----------+--------+--------+---------+
| Arkansas        | 2001     | Ticket    | 44     | > 0.1% | >       |
|                 |          | Act       |        |        |  100.0% |
+-----------------+----------+-----------+--------+--------+---------+
| Wyoming         | 2002     | Ticket    | 2      | > 0.0% | >       |
|                 |          | Act       |        |        |  100.0% |
+-----------------+----------+-----------+--------+--------+---------+
| **Total**       |          |           | **63   |        | > **1   |
|                 |          |           | ,867** |        | 00.0%** |
+-----------------+----------+-----------+--------+--------+---------+

Source: CMS (2004).

\* Minnesota originally implemented the Buy-In under the BBA but is
currently under the Ticket Act

## B. Program Design Features

### 1. Implementation Authority

While a number of states implemented their Buy-in programs prior to the
passage of the Ticket Act, states now have a choice of implementing a
Buy-in program under either the authority of the BBA or the Ticket
Act.[^12] Depending on the choice of legislative authority, states will
be subject to different restrictions with respect to the designs of
their programs.

**Income Restrictions.** Under the BBA, states are required to limit
Buy-in eligibility to those with "net family income" no higher than 250%
of FPL for a given family size, and resources not exceeding the SSI
resource limits (\$2,000 for an individual/\$3,000 couple). Section
1902(r)2 of the Social Security Act allows states to disregard
additional kinds and amounts of income and assets beyond what is
generally allowed.[^13] As a result, the income and asset restrictions
under the BBA are less restrictive than they may appear. In addition,
states are required to use the SSI income counting methodology in
determining eligibility for the program. That methodology defines income
as equal to unearned income minus \$20 plus one-half of all earned
income above \$65. In contrast, the Ticket Act puts no restrictions on
income or assets for purposes of eligibility.

**Definition of Disability.** The Ticket Act allows states to establish
up to two optional Medicaid eligibility categories. States may cover
working individuals with disabilities, ages 16 to 64, who, except for
earned income, would be eligible for SSI (Basic Coverage Group) and
individuals whose medical conditions have improved and are determined to
be no longer eligible for SSI or DI, but who still have a severe
impairment (Medically Improved Group). The BBA restricts eligibility to
those meeting the criteria for the Basic Coverage Group only.

**Cost Sharing Restrictions.** Both the BBA and the Ticket Act allow
states to establish a mechanism to share the costs of the program with
participants. States may charge participants premiums set on a sliding
scale based on income. Under the Ticket Act, premiums may not exceed
7.5% of income. The BBA specifies no such restrictions on premiums.

**Age Restrictions.** The Ticket Act restricts enrollment in the Buy-in
to people ages 16 to 64. There is no age restriction specified in the
BBA.

The restrictions on Buy-in programs specified in the BBA and the Ticket
Act are summarized in ***Exhibit III.3***.

Exhibit III.3

Buy-in Restrictions under the BBA and the Ticket Act

+-----------------+--------------------------+-------------------------+
| **Criteria**    | **BBA Restrictions**     | **Ticket Act            |
|                 |                          | Restrictions**          |
+-----------------+--------------------------+-------------------------+
| Income          | Family Net income up to  | No restrictions         |
|                 | 250% of FPL and unearned |                         |
|                 | income must be less meet |                         |
|                 | SSI test                 |                         |
+-----------------+--------------------------+-------------------------+
| Income Counting | SSI disregards\*         | No restrictions         |
| Methodology     |                          |                         |
+-----------------+--------------------------+-------------------------+
| Assets          | SSI asset limits         | No restrictions         |
|                 | (\$2,000                 |                         |
|                 | individual/\$3000        |                         |
|                 | couple)                  |                         |
+-----------------+--------------------------+-------------------------+
| Premium         | No restriction           | Maximum premium is 7.5% |
|                 |                          | of income.              |
|                 |                          |                         |
|                 |                          | States must charge 100% |
|                 |                          | of premiums for any     |
|                 |                          | individual whose        |
|                 |                          | adjusted gross annual   |
|                 |                          | income exceeds \$75,000 |
+-----------------+--------------------------+-------------------------+
| Age             | No restrictions          | 16-64                   |
+-----------------+--------------------------+-------------------------+
| Definition of   | Cannot define minimum    | Same as BBA             |
| Employment      | earnings or hours        |                         |
+-----------------+--------------------------+-------------------------+
| Definition of   | Who, but for earnings"   | Same as BBA             |
| Disability      | in excess of the limit   |                         |
|                 | established under        |                         |
|                 | section 905(q)(2)(B),    |                         |
|                 | would be considered to   |                         |
|                 | be receiving             |                         |
|                 | supplemental security    |                         |
|                 | income                   |                         |
+-----------------+--------------------------+-------------------------+
| Medical         | Not available            | Optional to the States  |
| Improvement     |                          |                         |
| Group           |                          |                         |
+-----------------+--------------------------+-------------------------+

> \*Based on HCFA Letter to State Medicaid Directors March 9, 1998.

### 2. Program Eligibility Criteria

States have considerable flexibility in determining the eligibility
criteria for their Buy-in programs. It is through these eligibility
criteria that a state can, to some degree, target the program to certain
groups. It is also through these criteria that states can provide very
expansive programs, or limit enrollment by imposing very restrictive
eligibility criteria. Below, we briefly describe the Buy-in eligibility
criteria selected by states, and discuss their implications for
enrollment and the employment outcomes of participants. These criteria
include those related to income, assets, and the inclusion of the
"medical improvement" category available under the Ticket Act. The
eligibility criteria used by each of the Buy-in states is summarized in
***Exhibit III.4***. A more detailed description of the criteria used by
each state is provided in ***Appendix A***.

Exhibit III.4

Eligibility Criteria Used by Medicaid Buy-in Programs

+-------------------------------------+----------+----------+---------+
| **Feature**                         | **BBA**  | **Ticket | **      |
|                                     |          | Act**    | Total** |
+-------------------------------------+----------+----------+---------+
| **Income limit**                    |          |          |         |
+-------------------------------------+----------+----------+---------+
| 100% or 200% of FPL                 | 0        | 1        | 1       |
+-------------------------------------+----------+----------+---------+
| 250% of FPL                         | 12       | 7        | 19      |
+-------------------------------------+----------+----------+---------+
| 300% or 350% of FPL                 | 0        | 2        | 2       |
+-------------------------------------+----------+----------+---------+
| 450% of FPL                         | 0        | 2        | 2       |
+-------------------------------------+----------+----------+---------+
| Income limits not tied to the FPL   | 0        | 2        | 2       |
+-------------------------------------+----------+----------+---------+
| Unlimited                           | 0        | 1        | 2\*     |
+-------------------------------------+----------+----------+---------+
| **Treatment of Spousal Income**     |          |          |         |
+-------------------------------------+----------+----------+---------+
| Spousal income not counted          | 2        | 8        | 10      |
+-------------------------------------+----------+----------+---------+
| Spousal income counted              | 10       | 4        | 14      |
+-------------------------------------+----------+----------+---------+
| > Spousal Income counted only under | 0        | 2        | 2       |
| > certain circumstances             |          |          |         |
+-------------------------------------+----------+----------+---------+
| Not applicable (unlimited income)   | 0        | 1        | 2\*     |
+-------------------------------------+----------+----------+---------+
| **Income Counting Methodology**     |          |          |         |
+-------------------------------------+----------+----------+---------+
| Standard SSI                        | 10       | 10       | 20      |
+-------------------------------------+----------+----------+---------+
| Gross Income                        | 1        | 2        | 3       |
+-------------------------------------+----------+----------+---------+
| Other (including unlimited income)  | 1        | 3        | 5\*     |
+-------------------------------------+----------+----------+---------+
| **Treatment of Unearned Income**    |          |          |         |
+-------------------------------------+----------+----------+---------+
| No separate unearned income limit   | 5        | 12       | 18\*    |
+-------------------------------------+----------+----------+---------+
| Less than 100% of FPL               | 2        | 2        | 4       |
+-------------------------------------+----------+----------+---------+
| Over 100% of FPL                    | 4        | 1        | 5       |
+-------------------------------------+----------+----------+---------+
| > Unearned income limit imposed     | 1        | 0        | 1       |
| > under certain circumstances       |          |          |         |
+-------------------------------------+----------+----------+---------+
| **Asset limit (Individual)**        |          |          |         |
+-------------------------------------+----------+----------+---------+
| SSI standard (\$2,000) or less      | 3        | 2        | 5       |
+-------------------------------------+----------+----------+---------+
| \$4,000-\$9,999                     | 2        | 2        | 4       |
+-------------------------------------+----------+----------+---------+
| \$10,000-19,999                     | 5        | 5        | 10      |
+-------------------------------------+----------+----------+---------+
| \$20,000-25,000                     | 2        | 4        | 6       |
+-------------------------------------+----------+----------+---------+
| Unlimited                           | 0        | 2        | 3\*     |
+-------------------------------------+----------+----------+---------+
| **Coverage of Medically Improved    | **0**    | **7**    | **7**   |
| Group**                             |          |          |         |
+-------------------------------------+----------+----------+---------+

> \* Total includes Massachusetts (the only state implementing a Buy-in
> under an 1115 waiver). Wyoming is not included in the table.
> Eligibility criteria for that state are not yet finalized.

**a. Income**

There are a number of Buy-in program eligibility criteria that relate to
income. All affect the maximum level of earnings a participant may have
and remain eligible for the Buy-in, and thus, will affect both the
number of enrollees and the observed earnings of participants. All else
constant, one would expect that less restrictive income eligibility
criteria would lead to greater enrollment and higher earnings observed
among enrollees. In reality, however, all else is not constant and the
many factors that affect enrollment and the observed earnings of
participants are difficult to disentangle and attribute to the income
eligibility criteria alone. But one can say with certainty that with
less restrictive income eligibility criteria, more people will be
eligible to participate in the program, and participants will be
permitted to earn higher amounts without losing Medicaid coverage.

The income eligibility criteria used by the Buy-in programs include the
following:

**Income Limits:** Although the Ticket Act allows states to offer a
broad-based program, most of the Buy-in states limit income to 250% of
FPL. MIG directors in several of these states report that they were
trying to develop low-cost programs with limited enrollment in order to
garner political support. Others indicate that their states were "just
following the lead" of the early implementers who developed programs
under the BBA. A few states have set relatively high income limits, and
two states do not impose any limit at all.

**Treatment of Spousal Income:** States have choices regarding how to
treat spousal income. The BBA defines the income limit in terms of net
*family* income, but two BBA states have used the flexibility offered by
Section 1902(r)(2) of the Medicaid statute to disregard spousal income
in the eligibility determination. The Ticket Act makes no reference to
spousal income. Eight states do not count it in determining Buy-in
eligibility. Although counting spousal income can be a confounding
factor in determining whether it makes sense for an individual to work,
four states count it in order to remain consistent with other Medicaid
eligibility categories. Two states count spousal income only if it is
above a certain threshold (\$100,000 in Missouri, and half of the SSI
standard in Washington). In general, counting spousal income in the
eligibility determination will serve to restrict eligibility for the
Buy-in, and limit the maximum earnings permissible among Buy-in
enrollees with working spouses relative to other participants.

**Income Counting Methodology:** The BBA requires that states count
income using the SSI income counting methodology. As noted previously,
that methodology calculates countable income as unearned income minus
\$20 plus one-half of all earned income above \$65. Most of the states
that implemented programs under the Ticket Act authority also use this
approach in order to be consistent with their other Medicaid eligibility
groups. Use of the SSI income counting methodology will restrict Buy-in
eligibility among DI beneficiaries. Those with high DI benefits will, in
some cases, not be eligible for the Buy-in or will not be able to earn
at higher levels and remain eligible for the Buy-in if they retain their
DI benefits. In addition, excluding from participation in the Buy-in
those with high DI benefits may also exclude those with the highest
earnings potential if past earnings are any indicator of an individual's
current earnings potential, because DI benefits are a function of an
individual's earnings history. Three states have chosen to disregard
federal disability income in determining eligibility in an effort to
allow a broader range of DI beneficiaries to have access to the
program.[^14] In an attempt to make their programs less confusing for
participants, three states have opted to define their income limits in
terms of gross income.

**Treatment of Unearned Income:** Nine states specify an unearned income
limit that is separate from and in addition to other income eligibility
criteria. By setting an unearned income limit, states can limit
enrollment, particularly among DI beneficiaries. By setting the unearned
limit at the level allowed by other Medicaid eligibility groups, the
state can severely limit the number of Buy-in enrollees who are new to
the Medicaid program and would therefore cause Medicaid to incur new
costs. One state with an unearned income limit (Nebraska) is unique in
that it disregards unearned income if the individual is in a Trial Work
Period. This permits DI beneficiaries attempting to return to work to
participate in the program and earn at higher levels than would
otherwise be permissible.

The net impact of the above criteria on eligibility, the maximum
allowable gross income, and the maximum allowable earnings, can be seen
in ***Exhibit III.5*** for individuals with different income-related
characteristics in each of the Buy-in states. While the SSI counting
methodology has a large impact on the maximum income and earnings of DI
beneficiaries (and others with unearned income) in most states, the
states with separate unearned income limits that are set below the
poverty level (Arkansas, Nebraska, South Carolina, and West Virginia)
appear to have the most restrictive programs. In those states, even a
lower-than-average monthly DI benefit of \$600 per month would make an
individual ineligible for the Buy-in program.[^15]

**Exhibit III.5**

**Buy-in Program Gross Income and Earnings Limits for Persons with
Selected Income-Related Characteristics, by State**

![](media/image3.wmf){width="6.965972222222222in"
height="5.280555555555556in"}

Source: Authors' calculations based on information contained in
***Appendix A***.

**b. Asset Limits**

SSI and most Medicaid programs require that participants have less than
\$2,000 in assets (with certain exclusions).[^16] While asset limits
will restrict enrollment in the program, they may also restrict the
ability of participants to achieve self-sufficiency. An often-cited
barrier to independence for people who rely on Medicaid is the inability
to accumulate sufficient assets for a down payment on a house, a
vehicle, or to pay for education. Perhaps for these reasons, all but
five Buy-in programs allow participants to accumulate assets at levels
higher than the SSI standard. Ten states allow individuals to accumulate
additional assets in state-approved accounts, the details of which vary
by state.

**c. Medical Improvement**

Under the Ticket Act, states have the option to continue Buy-in coverage
for enrollees who lose DI eligibility as a result of a continuing
disability review finding that they are "medically improved." To
continue to be eligible for the Buy-in, these individuals must continue
to have a "severe, medically determinable impairment."

Seven states have opted to cover this group but to date, there have been
no enrollees in this category. Although several state officials
expressed confusion over how to interpret the Ticket Act eligibility
criteria for this category, it has not been viewed as a large issue
because no one has applied for the category. It may remain a small issue
if Buy-in enrollees who go to work participate in SSA's Ticket to Work
program. The Ticket Act prohibits the initiation of a continuing
disability review for any SSI or DI beneficiary using a Ticket and
making timely progress toward their employment goals.

### 3. Premiums and Cost Sharing

Both the BBA and the Ticket Act allow states to share the cost of the
program with enrollees. Most states require some or all enrollees to pay
a premium.[^17] Individuals will only enroll in the Buy-in if the cost
of doing so is less than their expected out-of-pocket health care
expenditures in the absence of the program. In general, the higher the
premium, the less likely individuals will enroll in the program, and at
very high premium levels, only those with very high health care expenses
would be expected to enroll. There are three aspects of the premium
calculation that can affect program enrollment: the income level below
which the participant does not pay any premium; the treatment of earned
and unearned income; and the amount of the premium.

**Income level below which the participant does not pay any premium:**
Several states charge a premium to all enrollees regardless of income.
Most states, however, exempt individuals with incomes below some level
(usually between 100% and 200% of FPL). As shown in ***Exhibit III.6***,
the percentage of participants required to pay premiums varies widely
across states, from 2% in Oregon to 100% in California.

**Amount of premium:** Most states have developed a sliding scale based
on income for premiums, but the range of those premiums varies
dramatically. The average monthly premium for those required to pay
premiums varies from \$12 per month in Maine to \$321 per month in Utah
(***Exhibit III.6***).

**Treatment of earned and unearned income in premium determination:** In
states that calculate premiums based on countable income as defined by
the SSI income counting methodology, all else equal, those with DI
benefits or other unearned income will pay higher premiums relative to
others. Three states (Oregon, Washington and Wisconsin) further
distinguish between earned and unearned income by requiring those with
unearned income to give up, in the form of a premium, all or part of
their unearned income in excess of either the SSI level or a basic
living allowance. The effect of this is that DI beneficiaries with above
average benefits are required to pay substantially higher premiums
relative to others.

A description of each state's cost-sharing provisions is provided in
***Appendix A***.

Exhibit III.6

Percent of Buy-in Enrollees Required to Pay Premiums and Average Monthly
Premium,

by State, 2002

  --------------------- -------------------------- ----------------------
  **State**             **Percent of Participants  **Average Monthly
                        Required to Pay Premiums** Premium**

  California            100%                       \$35

  Washington            100%                       \$81

  Illinois              99%                        \$48

  Pennsylvania          93%                        \$43

  Minnesota             83%                        \$40

  Utah                  82%                        \$321

  Massachusetts         74%                        \$44

  Kansas                59%                        \$67

  Alaska                49%                        \$43

  Indiana               44%                        \$64

  Iowa                  29%                        \$35

  Connecticut           17%                        \$40

  Maine                 16%                        \$12

  Wisconsin             13%                        \$131

  Vermont               12%                        \$18

  Missouri              11%                        \$65

  New Hampshire         11%                        \$34

  Nebraska              3%                         \$72

  Oregon                2%                         \$30

  **Total**             **44%**                    **\$64**
  --------------------- -------------------------- ----------------------

> Source: Ireys et al. (2003). Average monthly premiums calculated for
> participants who paid premiums.

The premiums charged to individuals in identical circumstances can vary
substantially across states. ***Exhibit III.7*** illustrates eligibility
and premiums for four hypothetical Buy-in enrollees. For simplicity, we
have assumed that all four are unmarried, have no children, meet the
asset limits set by the state and have no unearned income except SSI or
DI benefits.

Alfred has \$600 in DI benefits (unearned income) and earns \$300 per
month. His unearned income precludes him from participation in several
states and his monthly premium ranges from \$0 to \$56 depending on
where he lives. Bonnie and Carla have the same gross income (\$1,400 per
month) but for Bonnie, more of the income is from earnings rather than
DI benefits. Depending on the state, this distinction could have a large
impact on eligibility and premiums. Bonnie (with a \$600 DI benefit and
\$800 earnings) will pay between \$0 and \$81 per month while Carla
(with a \$1,100 DI benefit and \$300 in earnings) will pay between \$0
and \$536.

Exhibit III.7

Eligibility and Premiums for Four Hypothetical Buy-in Enrollees, by
State

  ------------------------ ------------ ------------- ------------- -------------
                           **Alfred**   **Bonnie**    **Carla**     **Dwayne**

  Unearned Income          \$600        \$600         \$1,100       \$1,100

  Earned Income            \$300        \$800         \$300         \$800

  **Total Gross Income**   **\$900**    **\$1,400**   **\$1,400**   **\$1,900**

  **Income with SSI        **\$698**    **\$948**     **\$1,198**   **\$1,448**
  disregards**                                                      

  **Premiums**                                                      

  Alaska                   \$0          \$10          Not eligible  Not eligible

  Arkansas                 Not eligible Not eligible  Not eligible  Not eligible

  Arizona                  Co-pay       Co-pay        Co-pay        Co-pay

  California               \$20         \$20          \$20          \$35

  Connecticut              \$0          \$0           \$0           \$0

  Illinois                 \$38         \$44          \$75          \$81

  Indiana                  \$0          \$0           \$48          \$69

  Iowa                     \$0          \$38          \$38          \$92

  Kansas                   \$0          \$69          \$83          \$110

  Louisiana                \$0          \$0           \$80          \$80

  Maine                    \$0          \$0           Not eligible  Not eligible

  Massachusetts            \$0          \$37          \$37          \$77

  Minnesota                \$38         \$56          \$58          \$118

  Missouri                 \$0          \$71          \$71          \$130

  New Hampshire            \$0          \$0           \$80          \$80

  New Jersey               \$0          \$0           \$25          \$25

  New Mexico               Co-pay       Co-pay        Co-pay        Not eligible

  New York                 \$0          \$0           \$85          \$92

  Oregon                   \$36         \$36          \$536         \$536

  Pennsylvania             \$35         \$48          \$60          \$73

  South Carolina           Not eligible Not eligible  Not eligible  Not eligible

  Utah                     \$0          \$27          \$65          \$102

  Vermont                  \$0          \$0           Not eligible  Not eligible

  Washington               \$56         \$81          \$105         \$142

  West Virginia            Not eligible Not eligible  Not eligible  Not eligible

  Wisconsin                \$0          \$0           \$454         \$469
  ------------------------ ------------ ------------- ------------- -------------

Source: Authors' calculations based on state premium structure
information presented in ***Appendix A***.

## C. Administrative Factors

### 1. Operational Definition of Work

With the exception of Massachusetts, states are not allowed to define
"work" for purposes of Buy-in eligibility. But some of the
administrative rules and procedures implemented by states can constitute
a defacto eligibility requirement. A few states have implemented rules
that intentionally include populations who are not currently working in
their programs (e.g., New Mexico covers non-working DI beneficiaries in
the two-year waiting period for Medicare eligibility, and Wisconsin
covers people enrolled in the Health and Employment Counseling program
who are preparing to work). Officials in many states, however, would
like to define work in a manner that would allow them to target their
programs to people engaged in significant work efforts. Officials in
several states report that they have people who are "walking the
neighbor's dog" or "doing a little yardwork" and claiming that they are
working based on those activities. One disability advocacy website touts
the absence of a definition of work as a "huge loophole" that can "get
Medicaid for just about any person with a disability."[^18] States have
responded to this predicament is several ways:

-   **Requiring proof of employment.** While in some states the
    applicant must simply attest that they are working, in others they
    must verify that they are working and paying Federal Insurance
    Contributions Act (FICA) taxes by presenting a pay stub, tax return,
    or a letter from an employer (the requirements for each state are
    described in ***Appendix A***). Verifying legitimate self-employment
    has been problematic for many states.

-   **"Pushing the envelope" on defining employment.** One state
    (Minnesota) is in the process of establishing a \$65 per month
    earnings minimum by requiring participants to have earned income,
    and then disregarding the first \$65 in earnings in the eligibility
    determination. As noted previously, Nebraska has a low unearned
    income limit but waives the limit if the applicant has earnings
    sufficient to be in a Trial Work Period (\$580 per month in 2004).
    In other words, many DI beneficiaries will be eligible for the
    Buy-in only if they have earnings over \$580 per month.

-   **Using administrative rules to set parameters.** Rather than
    defining work, one state (New Hampshire) is in the process of
    defining what employment is NOT in its administrative rules.

Several MIG directors view the inability to set a work requirement as a
major flaw in their Buy-in programs. They argue that it is difficult to
control the size of enrollment and to target the program as a work
incentive. In addition, they believe that the political support for the
program is based on its pro-work approach. The Buy-in risks losing this
support if the program is viewed as a way to avoid spend down or "just
another poverty program." Others regard the lack of a work definition as
an opportunity because it provides them the flexibility to offer
consistent and affordable Medicaid coverage to a wider range of people
with disabilities who need it, and to offer the program to people who
are taking "baby steps" into the workforce.

Although most MIG directors interviewed indicated that they would like
the states to have the ability to define employment, few want the
definition to be dictated by CMS. States envision defining employment in
a variety of ways including, for example: working at least 40 hours per
month and earning at least minimum wage (the definition specified in the
Ticket Act for the medical improvement group, and used by Massachusetts
under its 1115 waiver); or a tiered system where earnings can be very
low in the first year of eligibility, but must increase in subsequent
years.

### 2. Operational Definition of Disability

Another defacto eligibility requirement that varies by state is how
accessible the program is to people who have not had their disabilities
determined for purposes of SSI or DI eligibility. This population
includes people with significant disabilities who do not qualify for SSI
or DI because they are working above SGA.

The Ticket Act defines disability for purposes of Buy-in eligibility as:

> *"..who, but for earnings in excess of the limit established under
> section 1905(q)(2)(B), would be considered to be receiving
> Supplemental Security Income..."* (the Ticket Act, Title II, Section
> 201 (a)(1)(C)).

Although the Ticket Act requires that the programs be available to
people who meet the SSA definition of disability "but for earnings," the
way a state interprets and applies this definition can affect
enrollment. Because the SSA definition of disability is based on the
inability to work, states struggle with the inherent contradiction in
making a disability determination if the individual is working. Most
Buy-in applicants are DI beneficiaries so there is no need to assess
their disability status. But Buy-in applicants who have not participated
in the DI or SSI programs must go through a determination process, and
the entity that makes the determination and how that entity interprets
the law will affect whether the applicant is found to be eligible for
the program.

Most states use either the Disability Determination Service (DDS) or the
Medical Review Team (MRT) to conduct disability determinations for the
Buy-in. Both groups have experience performing disability
determinations. The DDS is the state entity that determines disability
for the SSA disability programs. State MRTs perform interim disability
determinations while individuals are awaiting DDS review, as well as
determinations for some Medicaid Medically Needy programs. There is some
evidence that non-DDS adjudicators making disability determinations
specifically for the Buy-in apply somewhat looser standards of
disability than when DDS adjudicators are used to make these
determinations (Fishman and Cooper 2002).

In either case, the disability standard can be difficult to establish.
Many states interpreted the "but for earnings" language to mean that
they should apply SSA's five-step disability determination process, but
ignore earnings. The five sequential steps of the process are:

1.  Is the applicant working and earning over SGA?

2.  Is the applicant's condition "severe?"

3.  Is the condition found in the list of disabling conditions?

4.  Does the applicant have the residual functional capacity to do the
    work he or she did previously?

5.  Does he or she have residual functional capacity to do any other
    type of work?

State officials report that it is straightforward to ignore the first
step in the process, but believe that the last two steps create
confusion when the applicant is working.

Because the number of applicants requiring disability determinations
specifically for the Buy-in is relatively small, most can be adjudicated
on a case-by-case basis. States are not completely comfortable with what
they are doing, however. As one MIG director explained "We'd like some
sort of guidance, but we're muddling through." There are potential
downsides to "muddling through." First, it is likely that there are
significant inconsistencies across states. Second, states worry that
their interpretations and processes will not hold up under appeal.
Third, these determinations are not portable across states or across
programs.

### 3. Grace Periods

About half of the Buy-in programs allow participants who lose their jobs
to continue participating in the program for a period of time. This
"grace period" is usually defined as lasting from six to 12 months. For
a population that might be highly prone to spells of unemployment, the
length of the grace period can be an important factor affecting both the
total number of people enrolled in the program and the proportion of
enrollees with no earnings.

### 4. Automation

State Medicaid agencies use a computerized eligibility system that needs
to be modified to fully automate a Buy-in program. The automated system
allows the eligibility worker to input relevant client data, and based
on that data, the software will return information on the programs for
which the client is eligible. State officials report that modifying
their automated systems to include the Buy-in can cost upwards of
\$250,000. Because of cost and other considerations, some states have
had to implement their Buy-in programs without updating the systems. In
the absence of an automated system, enrollment in the Buy-in requires
the local eligibility worker to manually determine eligibility, compute
premium payments, and forward the paper work to the state Medicaid
agency.

Many states eventually are able to automate their Buy-in programs, some
using MIG funding to make the changes, and others because they were
already in the process of updating their systems, making the additional
cost of adding the Buy-in negligible. Automating the Buy-in eligibility
process can lead to an increase in program enrollment. Wisconsin
provides a dramatic example. The state initially implemented the Buy-in
prior to changing the system, then made the modifications the following
year. A formal process evaluation found that, prior to automation,
eligibility workers were hesitant to enroll participants because of the
complexity of the manual enrollment process (APS 2002). After
automation, Buy-in enrollment tripled during the two years following the
change.[^19]

### 5. Staff Knowledge and Outreach Efforts

Buy-in enrollment, and the employment outcomes of participants, will be
affected by the amount and nature of outreach conducted, and the level
of knowledge eligibility workers have about the program. States have
taken very different approaches to promoting their programs and
educating potential enrollees and eligibility workers. Some states are
purposefully limiting their outreach activities in order to keep their
Buy-in programs small. Others are using MIG funds to market their Buy-in
programs to potential enrollees through a variety of means, including:

-   Collaborations with local Social Security Administration field
    offices, the State Vocational Rehabilitation Agency, and the
    SSA-funded Benefits Planning, Assistance and Outreach (BPAO)
    programs to reach out directly to DI beneficiaries;

-   Written information sent to individuals with earned income who
    participated in the state's spend-down program during the past year;

-   Written materials and workshops developed for disability stakeholder
    groups (e.g., Developmental Disability Councils, Centers for
    Independent Living);

-   Training for state agencies, employment service providers and
    employers;

-   Public awareness campaigns implemented via radio advertising and
    brochure distribution;

-   Videos, brochures and interactive CDs created by professional media
    firms; and

-   Small grants to community organizations to develop outreach
    activities.

No state has evaluated the impact of specific outreach activities on
Buy-in enrollment, but several states have surveyed program participants
and asked where they learned about the Buy-in.[^20] Each survey of
Buy-in participants offered a different set of options to answer the
question so it is difficult to compare findings across states.
Nonetheless, there are a few notable findings. In one state, 33% of
enrollees cited the state Vocational Rehabilitation agency as the source
of information, compared to less than 10% in two other states. Community
organizations accounted for 20% of responses in one state compared to
only 1% in another.

Generally, between one-third and two-thirds of Buy-in enrollees learn
about the program from their Medicaid eligibility worker, but training
these workers and convincing them to promote the program has proven to
be a significant challenge in many states for a variety of reasons:

-   The Buy-in is a new aid category and there will be a learning
    period.

-   Buy-in participants make up a tiny proportion of Medicaid enrollees
    (one-quarter of one percent of all Medicaid enrollees in states with
    Buy-in programs),[^21] so it is easy for eligibility workers to
    overlook the program.

-   Buy-in eligibility rules are often complex and difficult to grasp.

-   In some states, enrollment in the Buy-in requires additional forms,
    which may intimidate some eligibility workers (Jee and Menges 2003).

-   Eligibility workers are focused on determining eligibility, rather
    than promoting employment and thus, may not see the value of the
    program and/or are unable to offer advice on how best to use the
    program.

In some states, eligibility worker training for the Buy-in is performed
in the same way as training for other Medicaid programs---dissemination
of written materials. In other states, MIG staff members provide
in-person training and ongoing technical assistance to eligibility
workers.

When the onus of marketing the program is left to the eligibility worker
or to an automated system, clients may be automatically enrolled in the
Buy-in when it is the best available option. The downside of providing
this "seamless" coverage is that people do not know that they are in the
program, and therefore do not take advantage of the work incentives it
offers.

## D. Other Factors

### 1. Other Medicaid Categories for People with Disabilities 

Aside from the Buy-in programs, eligibility for Medicaid varies
considerably by state. The eligibility requirements of the state's other
disability-related Medicaid categories will affect the number and
characteristics of people enrolling in the Buy-in.

Federal law requires states to provide coverage to SSI recipients and
four groups of former SSI recipients: 1619(b) participants, and three
groups who lose their SSI because of increases in DI payments (Cost of
Living increases in DI, entitlement to disabled widow(er) or entitlement
or increase in Childhood Disability Benefits). In addition, states have
the option to cover the following groups:

-   State Supplementary Payment Group: In some states, anyone receiving
    a state SSI supplemental payment is eligible for Medicaid.

-   Poverty Level Group: States may provide Medicaid to people with
    disabilities with incomes up to 100% FPL.

-   Medically Needy or Spend down: Individuals with incomes above other
    Medicaid eligibility groups can "spend down" to a state determined
    income eligibility limit. In addition, the eleven 209(b) states are
    required to allow all aged, blind, and disabled residents to
    spend-down to Medicaid eligibility levels. In some states, the
    medically needy group is not eligible for the full range of Medicaid
    services.

-   People in long-term care settings or participating in home and
    community based waiver programs and who have incomes below 300% of
    the SSI standard.

Because the Buy-in serves people with disabilities who do not qualify
for a "free" Medicaid category, the state's highest income standard for
Medicaid eligibility in other disability-related categories will
influence enrollment in the Buy-in; all else equal, the higher the
value, the fewer individuals who would potentially use the Buy-in
program. As shown in ***Exhibit III.8*** (column C), the highest income
eligibility standard for other Medicaid varies considerably across the
Buy-in states.

### 2. Other Supports

Enrollment in the Buy-in will also be a function of the number of people
with disabilities who work, and therefore, will be affected by other
available state supports for employment. Some states have better
disability beneficiary employment statistics than others. For example,
17% of SSI recipients in Iowa work, compared to 3% in Mississippi
(***Exhibit III.8***, column G). While many factors will influence the
employment rates of a given state's disability beneficiary population,
the state's overall environment and system of supports is likely to play
a large role. In fact, there appears to be a strong correlation between
the Buy-in participation of DI beneficiaries and the employment rate of
SSI beneficiaries.[^22] It seems likely that this positive correlation
reflects a wide range of immeasurable state attributes that affect
employment (e.g., attitudes towards people with disabilities, the job
market and employment opportunities, employment supports).[^23]

Exhibit III.8

Buy-in Enrollees and Factors Affecting Enrollment

  --------------- ------------- ----------------- ------------ --------------- --------------- ----------- ---------------
  **State**       **Buy-in      **DI              **Highest    **% of DI       **DI            **Buy-in    **% of SSI
                  Enrollees**   Beneficiaries**   monthly      beneficiaries   beneficiaries   enrollees   beneficiaries
                                                  income level with DI         not eligible    as a % of   who work (proxy
                                                  to receive   benefits over   for Medicaid    (E)**       for other
                                                  other        highest         without a spend             work-related
                                                  Medicaid**   Medicaid        down**                      factors in the
                                                               level**                                     state)**

                  **(A)**       **(B)**           **( C)**     **(D)**         **(E)**         **(F)**     **(G)**

  Iowa            6,520         53,210            \$574        72%             38,386          17%         17%

  Missouri        16,508        137,200           \$574        74%             100,933         16%         7%

  Minnesota       6,221         74,630            \$737        53%             39,223          16%         15%

  Connecticut     3,011         56,890            \$747        56%             32,036          9%          9%

  Wisconsin       6,096         91,260            \$591        71%             65,240          9%          12%

  Alaska          206           8,110             \$984        28%             2,257           9%          7%

  Massachusetts   6,947         133,310           \$678        61%             81,500          9%          8%

  New Hampshire   1,294         25,450            \$601        74%             18,731          7%          10%

  Vermont         497           13,780            \$733        53%             7,268           7%          9%

  Indiana         5,391         119,440           \$574        74%             88,844          6%          6%

  New Mexico      977           35,460            \$574        73%             25,753          4%          5%

  Maine           600           38,580            \$776        42%             16,318          4%          8%

  Pennsylvania    2,852         242,990           \$776        52%             127,249         2%          6%

  Kansas          704           45,290            \$574        73%             32,969          2%          11%

  Utah            228           24,050            \$776        48%             11,507          2%          11%

  New Jersey      1,061         134,980           \$776        57%             77,133          1%          7%

  Oregon          564           65,490            \$576        73%             47,831          1%          8%

  Nebraska        111           28,230            \$776        44%             12,467          1%          15%

  Arizona         432           97,760            \$776        53%             52,219          1%          4%

  Mississippi     512           94,250            \$574        73%             68,746          1%          3%

  New York        1,146         355,400           \$661        67%             237,631         0%          6%

  Illinois        556           189,620           \$660        66%             125,566         0%          6%

  Washington      312           100,830           \$574        74%             74,923          0%          6%

  California      960           474,520           \$790        50%             238,921         0%          5%

  South Carolina  51            111,370           \$776        50%             55,957          0%          5%

  Louisiana       64            97,970            \$574        74%             72,151          0%          4%

  Arkansas        44            84,890            \$574        73%             61,712          0%          5%
  --------------- ------------- ----------------- ------------ --------------- --------------- ----------- ---------------

Sources: (A)CMS 2004; (B) SSA 2003 Table 5.J2; (C) Authors' computations
based on information from <http://www.nasmd.org/eligibility/>; (D)
Computed based on DI benefit levels SSA 2003 Table 5,J8; (E.F) Computed.
(G) SSA 2003.

### 3. The Economy

Enrollment, and the ultimate success of the Buy-in, is predicated on the
ability of people with disabilities to find jobs. The Ticket Act was
passed in 1999 when the economy and state budgets were strong. By 2001,
the country was in a recession. Even as the economy started to grow in
late 2001, it was dubbed the "jobless recovery" as the unemployment rate
hovered at 6.4%\--a nine-year high---and total employment did not
increase. As a result, the traditional difficulties that people with
disabilities face when finding employment were compounded by the lack of
jobs and increased competition for those that were available. In fact,
the employment rate of working-age people with disabilities fell from
33% in 2000 to 31% in 2002.[^24]

# IV. Characteristics of Buy-in Enrollees

As the discussion of ***Section III*** points out, there are numerous
factors that influence the number and types of individuals who will
enroll in a Buy-in, and these factors appear to vary considerably across
states. Here, we briefly describe what is known about the
characteristics of the individuals participating in Buy-in programs.

## A. Disability Benefit Categories of Enrollees

As discussed in ***Section II***, Buy-in enrollees are likely to fall
into one of several categories of people with disabilities, depending on
their program participation and health insurance status prior to
enrollment. Buy-in participants may be former recipients of SSI cash
payments, DI-only beneficiaries, or working non-SSI/DI beneficiaries. Of
the latter two groups, some will be former members of other Medicaid
enrollment categories (e.g., medically needy and spend down), and others
will not.

Complete information on the benefit status of Buy-in enrollees across
states is not available. But 2002 enrollment data from 21 Buy-in states
provide some indication. These data indicate that three-quarters of
Buy-in participants are DI beneficiaries (Ireys et al. 2003). These data
also show substantial variation across states in the percentage of
enrollees who are DI beneficiaries. In 10 states, over 80% of Buy-in
participants were DI beneficiaries at enrollment, and in four states,
fewer than 50% were DI beneficiaries. Some of this reflects true
variation in the proportion of DI beneficiaries who enroll in the
Buy-in, and some of it reflects differences across states in data
availability and the ways in which DI beneficiaries are identified among
Buy-in enrollees.

The high proportion of DI beneficiaries among Buy-in enrollees is not
surprising. The programs are limited to people who meet SSA's medical
disability criteria. Given that current SSI recipients and former SSI
recipients who exceed eligibility limits because of earnings can qualify
for Medicaid though other pathways (categorical eligibility and section
1619(b)), only DI beneficiaries and people not participating in either
SSI or DI would potentially enroll. Former SSI recipients exceeding
1619(b) income thresholds represent another potential group. States do
not report information on the numbers of former 1619(b) participants in
their Buy-in programs to CMS, but this group is likely to be very small.
[^25]

It is difficult to measure the number of people who would meet the
disability criteria but do not participate in either federal disability
benefit program. Although states were initially worried that there may
be a large number of these potential enrollees who would "come out of
the woodwork" when Buy-in programs were implemented, this has not been
the case.[^26] Although there is no generally available data source that
accurately captures the number of people who were neither DI nor
Medicaid participants prior to enrolling in the Buy-in, it appears that
they make up roughly 10% of the Buy-in participants.[^27]

## B. Health Insurance Status of Enrollees

Three-quarters of Buy-in participants were covered by Medicaid prior to
enrolling in the Buy-in (Ireys et al. 2003). While anecdotal evidence
suggests that a large proportion of these participants were spending
down to receive Medicaid services prior to the Buy-in, the only
available empirical evidence suggestions that only 39% of Buy-in
enrollees previously covered by Medicaid were in a spend down
category.[^28]

Over three-quarters of Buy-in participants in 21 states have some
insurance in addition to Medicaid---usually Medicare (***Exhibit
IV.1***). Given the large percentage of enrollees who are DI
beneficiaries, it is not surprising that a large portion of Buy-in
enrollees have Medicare coverage. In the 21 states collectively, 7% have
private insurance but the percentage varies dramatically by state. In
Indiana, 25% of enrollees have private coverage compared to less than 1%
in New Mexico, Washington, and Missouri. It is important to note that
the 7% of Buy-in enrollees with private coverage do not all receive full
employer-based coverage. The figure includes people with private medigap
policies, dental insurance, or coverage through a spouse.

Exhibit IV.1

Buy-In Enrollees with Medicaid Coverage Prior to Enrollment and Other
Health Insurance Coverage, 2002

  ---------------- ---------------- -------------- ------------- --------------
  **State**        **Medicaid prior **Medicare**   **Private     **Other
                   to enrollment**                 Insurance**   Insurance**

  Alaska           100%             51%            7%            17%

  California       98%              85%            5%            6%

  Connecticut      \*               83%            4%            0%

  Illinois         78%              86%            16%           0%

  Indiana          95%              35%            25%           0%

  Iowa             68%              83%            2%            0%

  Kansas           81%              90%            13%           0%

  Maine            61%              80%            8%            0%

  Massachusetts    81%              54%            8%            0%

  Minnesota        64%              90%            12%           1%

  Missouri         90%              80%            0%            0%

  Nebraska         94%              91%            3%            4%

  New Hampshire    74%              82%            3%            3%

  New Jersey       7%               79%            16%           0%

  New Mexico       56%              29%            1%            4%

  Oregon           77%              80%            15%           23%

  Pennsylvania     21%              84%            20%           0%

  Utah             69%              74%            2%            4%

  Vermont          91%              87%            7%\*\*        0%

  Washington       67%              86%            1%            1%

  Wisconsin        74%              83%            2%            0%

  **Total**        **74%**          **75%**        **7%**        **1%**
  ---------------- ---------------- -------------- ------------- --------------

> Source: Ireys et al. 2003.
>
> \*Prior Medicaid status was undetermined for 40% of enrollees.
>
> \*\*Ireys et al. 2003 reports 44%. In private communication, the a
> state official indicated that the published number was an error on the
> part of the state.

## C. Demographic and Disability Characteristics of Enrollees

Several states have analyzed administrative or participant survey data
and described the demographic characteristics of Buy-in enrollees.
Drawing on this information, it appears that, relative to the average DI
beneficiary, Buy-in participants tend to be younger, more likely to have
at least a high school education, less likely to be married, and more
likely to have a psychiatric disability (more detailed demographic
information by state is presented in ***Appendix B***).

It is likely that the Buy-in attracts a large number of people with
psychiatric disabilities because Medicaid provides more comprehensive
coverage for mental health services and pharmaceuticals than either
Medicare or private insurance. For example, a study of Buy-in enrollees
in California that used SSA administrative data to determine the primary
reason for disability reports that 45% of Buy-in enrollees had a primary
diagnosis (for purposes of DI eligibility) of mental illness, compared
to 28% of DI beneficiaries in the state overall. In contrast,
individuals with musculoskeletal impairments comprised a
disproportionately low percentage of Buy-in participants - 11.2% of
Buy-in participants compared to 25% of DI beneficiaries (Salahuddin
2003).

Aside from the study noted above that had access to SSA administrative
data, it is difficult to develop a profile of Buy-in participants by
disability type for purposes of comparing them to all DI beneficiaries
in the state, and making comparisons across states. This is because
states do not have access to the SSA administrative data, and must
develop their own ways of identifying, classifying and reporting
disability type. The methods for doing this differ greatly across
states.[^29] Despite the limited comparability of the disability
measures reported across states and those reported by SSA,[^30] it is
interesting to note that in seven states that have reported the primary
disabilities of enrollees in their program evaluations, the data
indicate that the Buy-in attracts a disproportionately high number of
people with psychiatric disabilities compared to the DI population
generally. The data also indicate wide variation across the seven
states: between 30% and 53% of Buy-in enrollees had a psychiatric
disability compared to 28% of DI beneficiaries;[^31] between 7% and 17%
had mental retardation compared to 5% of DI beneficiaries;[^32] and
between 40% and 60% of Buy-in enrollees have physical disabilities,
chronic conditions and sensory conditions compared to two-thirds of DI
beneficiaries.[^33]

## D. Earnings

In the 19 states that have reported enrollee earnings data, 52% of
Buy-in participants had earnings (Ireys et al. 2003). This percentage
ranged from 25% in New Mexico to 93% in Indiana. In six of the 19
states, fewer than 50% of Buy-in enrollees had earnings, and in four
states over 80% of enrollees had earnings.[^34] Although some of this
variation can be explained by program eligibility-related factors, most
cannot. For example, New Mexico has a relatively low percentage of
Buy-in participants who are working because the program is targeted to
DI beneficiaries in the two-year waiting period for Medicare. Some of
the variation may be caused by the operational definition of work, the
administrative ability to remove people from the program when they are
no longer eligible, and the length of the grace period where, the longer
the grace period, the more opportunity there is for individuals with no
earnings to remain on the program.

As ***Exhibit IV.2*** indicates, even among Buy-in enrollees with some
reported earnings, the earnings tend to be low. Over three-quarters in
the 19 states reporting earnings had earnings of less than \$800 per
month. Many MIG directors attributed this to the DI "cash cliff." In a
survey of Connecticut Buy-in enrollees, over 20% of individuals reported
that they did not work more hours, 26% had turned down a raise and 16%
had turned down a job because they were afraid they would lose cash
benefits (Porter 2004).

**Exhibit IV.2**

Distribution of Earnings of Buy-In Enrollees, 2002\*

![](media/image4.wmf){width="5.1194444444444445in"
height="3.001388888888889in"}

> Source: Ireys et al. 2003.
>
> \*Based on Individuals fourth-quarter 2002 enrollees with earnings.

## E. Service Utilization and Costs

In 2002, average per member per month (PMPM) costs for Buy-in programs
ranged from \$260 in Pennsylvania to \$2,250 in Indiana (***Exhibit
IV.3***). The large variation across states may stem from several
factors:

**Underlying health conditions of the participants.** Programs may be
attracting more or less costly participants depending on other available
avenues of Medicaid eligibility, or due to the design of the Buy-in
program. For example, the average premium in Utah was \$321, so the
state's Buy-in would likely attract only people with high expected
medical care costs. In Indiana, the program attracts a large number of
Buy-in enrollees who need high-cost waiver services (including sheltered
workshops), thus increasing the state's average Buy-in costs.

**Overall generosity of the state's Medicaid program.** Because Buy-in
participants are eligible for the same set of services as the other
Medicaid enrollees, costs vary based on reimbursement rates and the
number and types of optional services that a state offers.

**Proportion of Buy-in participants who have other health insurance
coverage.** Medicaid is the payer of last resort so, for enrollees with
other insurance, Medicaid pays only those costs not covered by the other
insurance.

We can control for some of the variation in Buy-in expenditures that is
due to differences in the generosity of state programs by looking at the
ratio of average per member per month (PMPM) Medicaid costs for Buy-in
participants to the average PMPM for disabled SSI recipients (excluding
costs for nursing homes and intermediate care facilities for people with
mental retardation).[^35] The substantial variation across states in
this ratio suggests that other factors play a role.

**Exhibit IV.3**

**Average PMPM Medicaid Costs of Buy-In Participants and SSI Recipients,
2002**

+--------------+----------+-----------+-----------------+--------------+
| **State**    | **Total  | **Average | **Average PMPM  | **Ratio of   |
|              | Buy-In   | PMPM      | Medicaid        | Buy-in PMPM  |
|              | Part     | Medicaid  | Expenditures    | to SSI       |
|              | icipants | Exp       | for SSI         | Recipient    |
|              | 2002**   | enditures | Recipients\***  | PMPM**       |
|              |          | 2002**    |                 |              |
|              | **(A)**  |           | **(C)**         | **(D)**      |
|              |          | **(B)**   |                 |              |
+--------------+----------+-----------+-----------------+--------------+
| Maine        | 617      | \$505     | \$1,301         | 0.39         |
+--------------+----------+-----------+-----------------+--------------+
| Alaska       | 186      | \$572     | \$1,377         | 0.42         |
+--------------+----------+-----------+-----------------+--------------+
| Pennsylvania | 888      | \$260     | \$550\*\*       | 0.47         |
+--------------+----------+-----------+-----------------+--------------+
| M            | 5,918    | \$441     | \$886           | 0.50         |
| assachusetts |          |           |                 |              |
+--------------+----------+-----------+-----------------+--------------+
| Nebraska     | 91       | \$605     | \$1,021         | 0.59         |
+--------------+----------+-----------+-----------------+--------------+
| Kansas       | 384      | \$609     | \$890           | 0.68         |
+--------------+----------+-----------+-----------------+--------------+
| Illinois     | 177      | \$575     | \$767           | 0.75         |
+--------------+----------+-----------+-----------------+--------------+
| California   | 651      | \$559     | \$661           | 0.85         |
+--------------+----------+-----------+-----------------+--------------+
| New          | 880      | \$1,602   | \$1,893         | 0.85         |
| Hampshire    |          |           |                 |              |
+--------------+----------+-----------+-----------------+--------------+
| Vermont      | 336      | \$980     | \$986           | 0.96         |
+--------------+----------+-----------+-----------------+--------------+
| Connecticut  | 2,075    | \$1,616   | \$1,601         | 1.01         |
+--------------+----------+-----------+-----------------+--------------+
| Minnesota    | 5,932    | \$1,467   | \$1,447         | 1.01         |
+--------------+----------+-----------+-----------------+--------------+
| New Mexico   | 712      | \$854     | \$842           | 1.01         |
+--------------+----------+-----------+-----------------+--------------+
| Iowa         | 4,811    | \$722     | \$623           | 1.16         |
+--------------+----------+-----------+-----------------+--------------+
| Wisconsin    | 3,339    | \$919     | \$751           | 1.19         |
+--------------+----------+-----------+-----------------+--------------+
| Missouri     | 4,736    | \$950     | \$791           | 1.20         |
+--------------+----------+-----------+-----------------+--------------+
| New Jersey   | 516      | \$1,128   | \$768           | 1.47         |
+--------------+----------+-----------+-----------------+--------------+
| Utah         | 138      | \$1,372   | \$679           | 1.96         |
+--------------+----------+-----------+-----------------+--------------+
| Indiana      | 2,344    | \$2,260   | \$841           | 2.69         |
+--------------+----------+-----------+-----------------+--------------+

> Sources: (A, B)\--Ireys et al. 2003; (C)\--CMS MSIS report 2001 for
> each state. (D) Authors computation based on previous columns.
>
> \*Excludes Nursing Home and ICF/MR expenditures. Expenditures are from
> 2001, inflated to 2002 dollars.
>
> \*\*2001 MSIS data was not available for Pennsylvania. Values reported
> are 2000 values inflated by 3% per year for 2 years.

As noted previously, about 75% of Buy-in participants are dually
enrolled in Medicare. Medicare has relatively comprehensive coverage of
inpatient hospital care and physician services, but has limited coverage
of outpatient mental health services and no coverage for pharmaceuticals
or community-based long term care. We would expect Medicaid costs for
the Buy-in participants to be concentrated in the categories of services
not covered by Medicare. Based on information from a small number of
states that have analyzed their Buy-in costs, spending on inpatient care
is indeed lower for Buy-in participants than for other Medicaid
disability groups, while spending on prescription drugs is higher
***(Exhibit IV.4)***. Pharmaceuticals account for between 22% and 74% of
Buy-in costs compared to 20% of Medicaid costs for other Medicaid
disability groups. Home health and personal support account for a
relatively small portion of Buy-in costs.

Exhibit IV.4

Distribution of Buy-In Costs by Type of Service

  ---------------- --------------------- --------------- ------------------------
                   **Pharmaceuticals**   **Inpatient**   **Home health/ Personal
                                                         support**

  SSI National\*   20%                   18%             15%

  California       74%                   10%             5%

  Wisconsin        46%                   9%              6%

  New Hampshire    31%                   2%              13%

  Vermont          31%                   2%              

  Minnesota        22%                                   
  ---------------- --------------------- --------------- ------------------------

> Sources: CMS-MSIS (2000), Jee and Menges (2003), APS (2003), Clark et
> al. (2003), Vermont Division of Vocational Rehabilitation (2003b),
> Minnesota MIG (2004).

# V. Evidence of Effectiveness

In this section, we review available studies and information on the
existing Medicaid Buy-in programs in search of evidence of program
effectiveness. We focus on the following three areas, reflecting the
primary purposes of the legislation:

-   Evidence that Buy-in programs have effectively de-linked health
    insurance access from DI/SSI eligibility;

-   Evidence that Buy-in programs provide needed services and supports;
    and

-   Evidence that Buy-in programs affect the employment of people with
    disabilities.

## A. Evidence of De-Linking Health Insurance and SSI/DI Eligibility 

Breaking the link between public health insurance and eligibility for
SSI/DI is one of the primary goals of the health insurance-related
provisions in the Ticket Act, including the Buy-in. As discussed above,
that link is believed to greatly influence the employment decisions of
people with disabilities in ways that make work an unviable proposition
because health insurance eligibility is contingent on low levels of work
activity and earnings. A Buy-in can break or weaken the link between
health insurance and DI/SSI eligibility for people with disabilities,
however, the way in which the Buy-in program is designed will inherently
target and exclude some people with disabilities.

In this section, we focus on the design features related to income
eligibility criteria and premiums that states have adopted. In assessing
these features, we develop a better understanding of who the Buy-in
programs are targeting, and thus, for whom the link between health
insurance and SSI/DI eligibility is most likely to be broken. We also
discuss the issue of consumer awareness and trust of Buy-in programs,
and the potential effect on the de-linking of health insurance from
SSI/DI eligibility and employment decisions.

### 1. Income Eligibility Criteria

The Medicaid Buy-in has the potential of breaking the link between
eligibility for federal disability benefits and health insurance
coverage. How the Buy-in does this will differ depending on the program
participation status of the individual.

**Former SSI cash recipients maintaining Medicaid coverage through
section 1619(b).** It is commonly believed, and one empirical study has
demonstrated (Stapleton et al. 1998), that some 1619(b) participants
constrain their earnings to remain below the 1619(b) income threshold to
retain their Medicaid eligibility. If the income eligibility threshold
for the Buy-in is set much higher than the state's 1619(b) threshold,
then it will effectively break the link between SSI and Medicaid,
permitting former SSI cash recipients to earn more and retain Medicaid
coverage.

As noted in ***Section III*** and ***Appendix A***, a range of income
thresholds is used by states for determining eligibility for the Buy-in,
from 100% FPL up to no income limit at all. Most states use 250% FPL as
the cut-off. In 2004, 250% FPL for an individual is \$23,275. Given that
most of the Buy-in states have 1619(b) thresholds in the \$21,000 to
\$30,000 range, at first glance, it would appear that the Buy-ins would
do little to encourage higher earnings among former SSI recipients by
guaranteeing continued health insurance coverage because the income
limits are set low relative to 1619(b) income limits. But the gross FPL
limits are misleading because of the income counting and adjustment
procedures used by states. Taking into account the income counting
methodologies employed, ***Exhibit V.1*** shows the dollar cut-offs by
state for a single individual with no unearned income or
impairment-related work expenses. The exhibit also shows the 1619(b)
thresholds for each state.

In all but a few states, the Buy-in income eligibility threshold is
substantially higher than the 1619(b) threshold, suggesting that the
Buy-in successfully de-links health insurance from SSI eligibility for
some former SSI recipients, or potential SSI recipients, in those
states. That is, former SSI recipients working at or near 1619(b) levels
can work and earn at higher levels without losing health insurance
coverage by enrolling in the Buy-in. In only one state (Missouri) is the
Buy-in threshold *lower* than the 1619(b) threshold. While nearly all
Buy-in programs still impose an upper limit to income, with a few
exceptions, the additional amount that can be earned beyond the 1619(b)
threshold is about \$20,000 per year or more.

**DI beneficiaries seeking to retain or obtain Medicaid coverage.** DI
beneficiaries are covered by Medicare, and can keep that coverage for up
to about nine years after leaving the DI program due to earnings. But
because of significant gaps in Medicare coverage (discussed further in
the next section), many DI beneficiaries seek and obtain Medicaid
coverage via spend down, medically needy, or other poverty provisions in
the state Medicaid program. For these DI beneficiaries in all but a few
states,[^36] the Buy-in will allow them to work and earn more than would
otherwise be permissible to maintain Medicaid. As discussed previously,
however, the majority of Buy-in states use the SSI income counting
methodology when determining income for purposes of Buy-in program
eligibility. Its preferential treatment of earned income has
implications for DI beneficiaries whose DI benefits will be counted as
unearned income for purposes of Buy-in eligibility. The practical effect
of this is that DI beneficiaries will be subject to more restrictive
income eligibility thresholds under many Buy-in programs. For example,
an individual with \$600 per month in DI benefits will be subject to a
Buy-in income threshold that is \$14,400 less than an equivalent
individual without such benefits in states that use the SSI income
counting methodology.[^37] In general, the greater the DI benefit, the
more restrictive the Buy-in income limit because it reduces the maximum
Buy-in income eligibility limit by two times the level of the DI
benefit.[^38] Because of the treatment of DI benefits in calculating
Buy-in eligibility in most states, one could argue that, in these
states, health insurance is not de-linked from DI eligibility. In fact,
it is linked in just the opposite manner from the traditional linkage
that public policy has been attempting to eliminate. Instead of losing
health insurance when benefits are lost, DI-only recipients must give up
DI benefits before health insurance can be gained.

While the use of the SSI income counting methodology seems reasonable in
the context of the SSI program, it may not make sense in the context of
a Buy-in program with respect to DI beneficiaries because DI benefits
are not reduced with earnings.[^39] For those with very high DI
benefits, the Buy-in will provide little or no incentive to work -- too
much may have to be given up in order to obtain Medicaid coverage. It
will also not allow those who might have high earnings potential (i.e.,
those with high past earnings and high DI benefits) from accessing
services through the Buy-in that might improve their ability to work.
Given the DI program rules and realities of how DI benefits are adjusted
in response to earnings, even beneficiaries willing to work at earnings
levels high enough to give up DI benefits will find it difficult to
obtain Buy-in coverage unless the nine-month Trial Work Period is
completed and SSA has appropriately discontinued cash benefits.

The fact that the majority of Buy-in enrollees are DI beneficiaries and
the fact that the income counting methods in many states serve to more
severely restrict the gross level of earnings and income permitted for
Buy-in eligibility among DI beneficiaries relative to others, suggest
that many Buy-in programs will create weak incentives for DI
beneficiaries to work at substantial levels, and overall, lead to only
small impacts on employment.

**Exhibit V.1**

**Annual 1619(b) and Buy-in Income Eligibility Limits**

> ![](media/image5.wmf){width="4.260416666666667in" height="6.9875in"}
>
> Sources: <http://policy.ssa.gov/poms.nsf/lnx/0502302200> and authors'
> calculations based on information contained in ***Appendix A***.

**Others seeking to obtain health insurance coverage.** For those
without health insurance coverage and not enrolled in the federal
disability programs, the Buy-in will eliminate incentives to stop
working in order to qualify health insurance benefits via the disability
programs for some. In states where the gross income limit for the Buy-in
are set very low (e.g., Missouri, see ***Exhibit V.1***), individuals
may have to reduce earnings to qualify for coverage. Even in states
where the gross income limits are more generous, for those with
potentially high DI benefits, the trade-offs between work and going on
disability benefits may not be substantially affected by the Buy-in once
taxes and other factors (such as asset limits and the treatment of
spousal income) are taken into account. In general, the higher the gross
income limit, the more likely the Buy-in will delink health insurance
coverage from the decision to leave the labor force to apply for
disability benefits among those without health insurance.

### 2. Premiums

The treatment of unearned income and the potential effects on enrollment
and earnings is also an issue with respect to the calculation of
premiums. As discussed in ***Section III***, states use a variety of
criteria for determining the premiums individuals must pay for coverage.
In most cases, the premium is tied to income overall (either personal or
family income), and therefore, not linked in any direct way to SSI/DI
eligibility. In a few states, however, the premium formula includes a
component that treats unearned income separately from earned income. In
these cases, those with unearned income are charged higher premiums than
similar individuals without unearned income.

As DI benefits are considered unearned income, the Buy-in premiums in
these states are directly linked to DI eligibility, and are generally
much higher than for similar individuals without unearned income. For
example, in Oregon, Buy-in participants must forgo in the form of a
monthly premium payment any unearned income in excess of the state\'s
SSI standard (\$564 in 2004). In Washington, a component of the premium
calculation is a "monthly enrollment fee" equal to 50% of unearned above
the State of Washington\'s Medically Needy program\'s Protected Income
level (\$571). In Wisconsin, individuals pay 100% of unearned income
minus a living allowance (\$655 per month in 2003) and specified
deductions plus 3% of the individual\'s earned income. The large
variation in premiums paid by persons in similar circumstances except
for unearned income were noted previously in ***Exhibit III.6***. The
implication is that Buy-in coverage is again linked to DI but in a
manner that is different from the traditional idea of linking: those on
DI are required to pay more for coverage than those who are not.

### 3. Consumer Awareness

For Buy-in programs to de-link health insurance from SSI/DI eligibility
and eliminate the fear of losing health insurance if a beneficiary goes
to work, it is necessary for consumers to be aware of the program rules
and trust the system. A Buy-in program with a generous income limit will
have no effect on the employment of people with disabilities if
participants and members of the target population are unaware of the
fact that they are permitted to earn higher levels of income without
losing coverage, or if they are distrustful of the program. Lack of
consumer awareness and/or trust that health insurance will be maintained
under a Buy-in if earnings increase will significantly undermine any
potential effects of Buy-in programs on employment. Buy-in enrollees in
several states have expressed beliefs about the programs that are likely
to undermine the effectiveness of these programs in promoting
employment.

**Confused:** Numerous enrollees in several states expressed concern
that the eligibility criteria and enrollment process are too complex and
confusing. Adding to this confusion is the inaccurate and conflicting
information that enrollees report they get from eligibility workers. One
state found that its program actually got more confusing as time went
on. In an initial survey, 44% of respondents to an enrollee survey said
they did not fully understand their financial options, and in a
follow-up survey a year later, 57% didn't understand. (APS 2002)

*"Medicaid and Medicare and SSI all fall into the same bureaucratic bowl
of soup. The rules are impossible to understand. I think they give the
rules to lawyers to pass the bar exam."* \--Maine Buy-in enrollee
(Salley and Glantz 2002).

*"I'm a social worker and I'm a professional, so I have a better
understanding of SSI and DI and Medicaid than a lot of people do, but
even I was nervous, because there's so many, there's so many
complexities, there's so many ins and outs. I mean, you really have to
think very carefully about what the implications are for you."*\--
Connecticut Buy-in enrollee (Porter 2004).

**Unaware:** A number of Buy-in states have conducted surveys of
participants and asked questions to determine whether or not program
participants were aware that they were in a special Medicaid program
that permitted them to earn more money and remain eligible, and to
assess their beliefs about losing health insurance if they increased
their work effort. Findings related to consumer awareness include:

-   A survey of 266 Vermont Buy-in enrollees found that 20% of
    respondents were unaware that they were enrolled in the state's
    Buy-in program. Although a large percentage of respondents were
    aware of enrollment, only 62% somewhat or strongly agreed that they
    understood the basic rules of the Buy-in program (Vermont Division
    of Vocational Rehabilitation, 2003a; 2003b).

-   A survey of 733 Connecticut Buy-in enrollees found that 33% of
    respondents were unaware that they were enrolled in the state's
    Buy-in program. Among those surveyed, about 45% said that they
    wanted to work more in the previous 12 months, and of these 41%
    indicated that fear of losing health insurance was a reason why they
    did not work more. Across all respondents, 52% agreed or strongly
    agreed that, if they worked more, they might lose their health
    insurance (Porter 2004). Connecticut has a \$75,000 income limit for
    its Buy-in.

-   Among 660 working respondents to a survey of Buy-in enrollees in
    Massachusetts, 47% believed they would lose their Medicaid or
    Medicare benefits if they worked more (Center for Health Policy
    Research 2004). Massachusetts has no income limit for its Buy-in.

Although the majority of Buy-in respondents in Connecticut and Vermont
are aware that they are enrolled in the program, a rather large
percentage of enrollees in these and other states appear to be unaware
of program eligibility rules, either through their own admission or as
indicated by their fear of losing health insurance benefits if they
increase work. Somewhat surprising, and perhaps indicative of lack of
consumer awareness, is the large percentages of enrollees who report a
fear of losing health insurance due to work in states like Connecticut
and Massachusetts, that have relatively high or no limits on income for
purposes of Buy-in eligibility.

**Fearful:** There is a lot at stake for consumers when they go to work,
and many are fully aware that they are still tied to DI eligibility
rules. Some feel overwhelmed with the complexity of the whole system and
are fearful of working and losing their cash benefits and health
insurance. Fear of working and losing health insurance among Buy-in
enrollees has been frequently cited among survey respondents in a number
of states (Salley and Glantz 2002; APS Healthcare 2003; Hanes 2002).
This fear may be due to lack of awareness of program rules, but might
also be based on consumer experiences and due to a number of real
factors. Examples of real factors leading to the loss of Buy-in coverage
include: earnings exceeding eligibility limits; eligibility
determination errors by the Medicaid agency; and consumer errors in
submitting required paperwork. Among survey respondents enrolled in the
Maine Buy-in program, 16% indicated that they had lost their Medicaid
coverage at least once during the previous 12 months, and of these, the
primary reasons were errors or paperwork problems (27%) and earnings
being too high (27%) (Salley and Glantz 2002).

*"The fear of getting arrested- I mean I was like, even coming to you
today was like ok, is there something wrong? Did I do something wrong
with my paperwork, or you know, even when I send my paperwork in every
year when I do my evaluation its that fear until you get that paper
back, am I over limit, or are they going to deny me for something and
how am I going to survive without medical benefits?"\--* Connecticut
Buy-In enrollee (Porter 2004).

*"I would like to do more, but I'm afraid to do more, too, because of
this income. I mean the boss is willing to have me come in there and do
a little extra, but she knows I have those guidelines there. And you're
even afraid to get a raise, you know. I just got a raise, and she said
"Is that going to put you over the limit?", and I said no. It was only
22 cents. If it does, it does. I mean, what could I do?"* --Connecticut
Buy-in enrollee (Porter 2004).

*"If I lose the benefits, I lose the medications. If I lose the
medications, I lose my life*"---Maine Buy-in enrollee (Salley and Glantz
2002).

Compounding the problem is that in most states, if individuals
participate in the Buy-in, accumulate assets and then need to return to
regular Medicaid either because they lose their jobs or turn age 65,
they may not be eligible because their assets are too high.

*"I can have more assets, but, you know, at what price to me on down the
road when I may not be earning what I'm earning, if I should become more
disabled? Then, what do I do? I've really, can I say, screwed myself?
Because I won't be eligible for any subsidies or supports, and the
savings that I will have put away will be quickly eaten up by my
personal assistance needs. So, I won't have income to live on, and . . .
that could potentially put me in the need for being back on benefits
again, and being a cost to the system rather than paying into
it."---*Connecticut Buy-in enrollee (Porter 2004).

## B. Evidence of Providing Needed Supports

One goal of the Buy-in is to provide access to the medical supports
needed to maintain employment. These supports include stable and
consistent access to health care and pharmaceuticals, as well as
"supports that enable \[people with disabilities\] to live independently
and enter or rejoin the workforce... such as attendant services,
assistance with transportation to and from work, reader services, job
coaches, and related assistance." (Ticket Act, sec 2(a)4).

In the absence of the Buy-in, people with disabilities are often left
without comprehensive medical coverage or are forced into poverty to
obtain it, either by limiting their work efforts or spending-down to
qualify for Medicaid. Under these circumstances, individuals often have
sporadic access to needed services compounded by limited funds for
anything except basic survival. This situation makes it difficult to
even consider employment and self-sufficiency.

The Buy-in offers access to the full range of Medicaid-covered services
in each state. This is relatively comprehensive coverage and for the
many Buy-in participants who are Medicare-eligible DI beneficiaries,
Medicaid covers many of the services that Medicare excludes. In this
section, we discuss the types of supports that the Buy-in offers
(standard Medicaid services, personal assistance services, and waiver
services) as well as the limitations of these supports. In addition, we
discuss the types of supports being developed by the Medicaid
Infrastructure Grantees.

As noted in ***Section III***, in some states prescription drugs make up
a large portion of the cost of the Buy-in program. This is not
surprising given the large percentage of participants who have most of
their inpatient and outpatient care covered by Medicare. In 2006,
Medicare will begin full implementation of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (PL 108-173). We
conclude this section with a discussion of the implications of the
prescription drug benefit for the Buy-in programs.

### 1. Filling Medicare's Gaps and Other Medicaid-Covered Services

As noted previously, a large percentage of Buy-in participants are
covered by Medicare. Thus, it appears that a large role of the Buy-in at
this point is to fill Medicare's coverage gaps. Medicare lacks coverage
for some services that might be necessary for work, including:

-   pharmaceuticals;

-   home health for people who are not confined to the home;

-   durable medical equipment for out-of-home use;

-   assistive devices that compensate for sensory or neurological
    deficits (e.g., hearing aides);

-   rehabilitation services intended to maintain or slow the
    deterioration of functioning; and

-   full coverage for outpatient mental health treatment.[^40]

In addition to filling the above gaps in Medicare coverage, Medicaid in
some states provides some types of employment supports. For example,
states offer some or all the following:

-   personal assistance services both in and out of the home;

-   targeted case management to assist individuals in gaining access to
    needed medical, social, educational and other services;

-   supported employment services for people with mental illness;[^41]

-   supported employment and supported housing for people with mental
    retardation as waiver services;[^42] and

-   additional types of assistive technology and durable medical
    equipment.

For a substantial percentage of Buy-in participants, the value of
Medicaid services is so significant that, prior to the Buy-in, they were
willing to spend down to qualify for Medicaid. The benefit of the Buy-in
compared to a spend down category of eligibility is echoed throughout
enrollee surveys, focus groups and interviews. In Illinois, 73% of
Buy-in participants previously enrolled in a spend down category are
paying a premium that is less than 25% of what their spend-down would
have been (Illinois Department of Public Aid 2003). In Kansas,
participants attributed to the Buy-in an ability to pay off outstanding
pharmacy bills or make purchases that increased their ability to work,
such as fixing a car or Buy-in a used one (Hall 2003).

Four Buy-in states do not have spend-down provisions so the Buy-in
offers the only access to Medicaid for people with incomes that exceed
Medicaid eligibility limits.[^43]

Despite its breadth of coverage, Medicaid is not a panacea. The
drawbacks of Medicaid have been expressed by Buy-in enrollees and are
well articulated in the literature.

**Coordination of benefits is difficult.** Medicaid programs have
extensive experience coordinating with Medicare for people who are
eligible for both programs.[^44] Medicaid is the payer of last resort so
each state has a third-party liability system that tracks information on
Medicare payments and uses Medicaid funds to pay only for services, or
portions of services, not covered by Medicare. This is a complex
process, but from the perspective of state staff implementing and
operating the Buy-in, the third-party liability system is well
established and does not require modifications to accommodate Buy-in
participants.[^45]

Consumers, on the other hand, have a very different perspective.
Medicare and Medicaid have different coverage rules and often limit
where beneficiaries can receive care. The burden usually falls on
beneficiaries to understand their coverage and advocate for appropriate
coordination (Ryan and Super 2003). Coordination with private insurance
can be difficult as well. One interviewee gave the following example: If
a private insurance company denies a claim for durable medical equipment
because it is "not medically necessary," it requires advocacy to make
Medicaid rethink the decision.

Coordinating benefits with private insurers is much more difficult for
Medicaid agencies than is coordination with Medicare. Some Medicaid
programs have Health Insurance Premium Payment (HIPP) options where the
state will pay the private insurance premiums and co-payments for
Medicaid enrollees who have access to other insurance if it is "cost
effective." Some states offer this HIPP option to Buy-in enrollees,
while others, such as Massachusetts and Vermont, offer a lower Buy-in
premium to enrollees with private insurance. The ability to coordinate
with other insurers varies by state and the Buy-in programs are
generally tied to whatever processes the state's Medicaid program has
already established.

**Insurance coverage doesn't mean access**. Medicaid reimbursements are
very low and as a result, many providers, particularly specialists, do
not participate in the program. This can make finding a provider
difficult (Santerre 2002). In addition, there are often significant
administrative hassles.

"*Medicare and Medicaid do not pay doctors enough. The doctor didn't
treat me and passed me off to the other doctors. It took me 15 months to
be properly diagnosed and treated*"---Vermont Buy-in enrollee (Vermont
Division of Vocational Rehabilitation 2003a).

*"They're getting very fussy. My medications need prior authorization,
it makes it very awkward for a re-fill. Faxing back and forth between
different parties*."---Maine Buy-in enrollee (Salley and Glantz 2002).

**Medicaid has a "welfare stigma."** Some Medicaid recipients are
embarrassed or feel that they are treated with less respect because they
must rely on the program.

*"And when I go to the doctor, or to any provider, I have to tell you I
feel a little embarrassed about using that card. And I always have this,
I always feel compelled to say 'I just want you to know I pay for this.
I pay \$430 a month for this' because it seems like I'm, like I'm on the
state. And, you know, I don't have anything against people who are, but
I feel a stigma that shouldn't be there, but I feel it."* \--
Connecticut Buy-in enrollee (Porter 2004).

"*\[It was a\] degrading experience to get Medicaid. DHS makes you feel
like you are lying to get the benefits"*---Maine Buy-in enrollee (Salley
and Glantz 2002).

**There are significant gaps in services**. The services covered by
Medicaid vary by state: All states offer pharmaceutical coverage but
some have limits on the number of prescriptions an individual can fill
per month, and others have restrictive formularies. Few Medicaid
programs provide vision and dental care and coverage of durable medical
equipment is inconsistent across states. []{.mark}

*"Medicaid just sent people a letter that they're not doing eyeglasses
anymore. Eye exams, I can't afford this."\--*Vermont Buy-in enrollee
(Vermont Division of Vocational Rehabilitation 2003a).

### 2. Personal Assistance Services (PAS)

The Ticket Act provides states an incentive to implement or expand
personal assistance services (PAS) provided both in and outside of the
home (including the workplace) and make those services available to
Buy-in participants. States providing adequate PAS are eligible for MIG
funding. As noted in ***Section II***, the Act specifies that PAS be
available under the Medicaid state plan (i.e., the services are
available statewide and across eligibility groups) in order for states
to be eligible for the MIG funding. Faced with fiscal constraints, many
states were unable to add or expand services under their state plans,
but were able to implement more limited PAS programs under waivers. CMS
has established a process to deem states "conditionally eligible" if
their waivers meet a minimum standard (PAS must be statewide, available
to people with physical disabilities and MR/DD who are working at least
40 hours per month, and allow services outside the home). Conditionally
eligible states can receive MIG funding for a limited number of years.

Generally, enrollee eligibility for PAS is based on the physical
inability to perform activities of daily living. Several states, most
notably Utah and Oregon, have expanded PAS to include people with
psychiatric disabilities and mental retardation that need assistance
with cognition and behavior.

Given the emphasis placed on PAS in the Ticket Act, it is important to
note that relatively few Buy-in participants use PAS. For example, in
Minnesota and Maine 5%-7% of Buy-in participants use Medicaid-provided
PAS (private communication; Salley and Glantz 2002). This seemingly low
usage is not surprising given that state criteria for PAS eligibility is
generally geared towards people with severe physical disabilities, and
these individuals make up a relatively small portion of Buy-in
participants. Nevertheless, for those individuals, PAS is a critical
support for work.

### 3. Medicaid Infrastructure Grants

While the focus of the discussion in this section is the effectiveness
of the Buy-in programs in providing needed supports, in the words of one
MIG director, "It's hard to separate success of the Buy-in from success
of the MIG." The Medicaid Infrastructure Grants have undertaken a
variety of efforts to address employment barriers that go beyond the
issue of access to medical supports. Many people we interviewed reminded
us that "the Buy-in is a necessary, but not sufficient condition" for
employment. The MIG funds have allowed states to undertake a variety of
complementary activities intended to promote the employment of people
with disabilities. Examples include:

-   Increasing access to benefits information by developing web-based
    benefits planning tools and providing training for benefit
    specialists;

-   Developing statewide interagency advisory groups and formed
    coalitions with transportation and housing authorities, mental
    health agencies and groups working with youth-in-transition in order
    to create an integrated system of services.

-   Assisting One-Stop centers in making their facilities and programs
    more accessible to people with disabilities;

-   Providing outreach and education about the types of assistive
    technology (AT) devices that are available to assist consumers with
    disabilities; and

-   Surveying consumers to identify unmet needs.

### 4. Medicare Drug Benefit

The Medicare Modernization Act of 2003 created a Medicare drug benefit
that will go into effect in January 2006. The Act requires that any
Medicare beneficiary (including those who are also eligible for
Medicaid) receive their prescription drugs through the new Medicare
program. As a result, the role of the Buy-in programs in providing
needed pharmacy benefits will change.

The Medicare drug benefit is voluntary and, for a monthly premium,
beneficiaries will be able to purchase a drug plan with the following
features (O'Sullivan et al. 2003):

-   a \$250 deductible;

-   25% coinsurance for costs between \$251 and \$2,250;

-   no coverage for drug costs between \$2,250 and \$5,100;

-   full coverage for catastrophic costs (those exceeding \$5,100
    annually);[^46] and

-   the coverage will be provided through prescription drug plans that
    meet minimum requirements set by Medicare.

The Act specifies that Medicare is the primary payer and Medicaid
coverage is NOT available for drugs or cost sharing. It provides three
levels of premium and cost-sharing subsidies for individuals with
incomes below 150% of FPL or who are dually eligible for Medicare and
Medicaid.

1.  Individuals dually eligible for Medicare and Medicaid with incomes
    up to 100% of FPL will pay no premium, no deductible, and will pay
    up to \$1 for generic drugs and \$3 for others.

2.  Other individuals with incomes below 135% of FPL and other
    "full-benefit" dual eligibles with income over 100% of FPL will pay
    no premium, no deductible, and will pay no more than \$2 for generic
    drugs and \$5 for others.

3.  Other individuals with incomes between 135% and 150% of FPL will
    have a \$50 deductible, 15% cost sharing for costs up to the
    out-of-pocket limit and cost-sharing for costs above the
    out-of-pocket threshold of \$2 for a generic drug and \$5 for
    others.

It appears that Buy-in participants will qualify for the second type of
subsidy as a "full-benefit dual eligible." Nevertheless, According to a
CMS official who spoke at a recent conference on Medicaid Buy-in
programs,[^47] it is unlikely that the soon-to-be released regulations
will directly address the special situation of Buy-in participants
unless it is raised during the comment period for the regulations.

Regardless of how the Medicare prescription drug benefit is ultimately
implemented, it will reduce the value of the Medicaid Buy-in for
Medicare beneficiaries, especially for those who enroll in the Buy-in
predominantly to obtain prescription drugs. For participants with
incomes below 150% of FPL, they will be eligible for a subsidy
regardless of whether they enroll in the Buy-in. For people with incomes
over 150% of FPL, participation in the Buy-in will likely qualify them
for a subsidy, but this subsidy is less valuable than current Medicaid
pharmacy benefit because it requires a copayment and the breadth of
available drugs may be more restrictive than under the current system
(Crowley 2004). As a result, we would expect a reduction in the number
of Buy-in enrollees, especially in states with high premiums.

## C. Evidence of Increasing Employment

To date, there is only weak evidence that Buy-in programs promote the
employment of some people with disabilities. Four general types of
analyses of Buy-in participant earnings have been conducted, but none
provide definitive evidence that Buy-in programs promote employment. The
four types of analyses include: comparisons of earnings among
participants across states, primarily for descriptive purposes, and to
qualitatively assess correlations between earnings levels and program
design features; survey findings regarding respondent opinions about the
effect of the Buy-in on employment; empirical studies of Buy-in enrollee
earnings before and after Buy-in participation; and empirical studies of
enrollee earnings that use a comparison group. We briefly describe these
studies and their findings below.

### 1. Descriptive Studies of Earnings Levels across State Buy-in Programs

Two recent studies provide descriptive comparisons of the earnings of
Buy-in participants across states. Neither attempts to estimate the
effect of Buy-in programs on employment, rather, the intent is to
provide descriptive information about earnings, to provoke further
consideration of the issues surrounding Buy-in programs, and, in one
case, to provide a qualitative assessment of the likely effect of
particular program design features on enrollee earnings.

Ireys et al. (2003) provides descriptive information about Buy-in
enrollee earnings in 19 states as reported to CMS by states on their
2002 State Annual Buy-In Report Form. These data, described previously
in ***Section III***, provide a useful overview of the earnings
experiences of enrollees in different states and raise questions for
further research about the observed variation across states in earnings,
as well as other enrollee characteristics.

Hanes and Folkman (2003) examine the implementation experiences of
Buy-in programs in seven states to make inferences about the
relationships between program design and enrollment. One of the issues
considered is the earnings levels of Buy-in participants, and how
observed differences across states might be tied to program design.
Focusing on the percentage of enrollees who work and earn more than
\$780 (the level of substantial gainful activity (SGA) as defined by SSA
in 2002, the time period for the data presented) the authors find wide
variation in the percentage of enrollees working above SGA -- from below
10% of enrollees in Iowa to more than 60% in Massachusetts. In
attempting to attribute the observed variation to program design
features, the authors conclude that there appears to be no definitive
trend or consistent interpretation that would lead one to believe that
there is one program model that serves as a "true" work incentive
relative to others. Programs that attempt to target enrollment to those
most likely to work at high levels (e.g., Oregon) perform as well or
even less well, in terms of the percentage of enrollees working above
SGA, as programs with no income limits, and thus no targeting (e.g.,
Massachusetts). The authors conclude that, while program design will
influence enrollment patterns, and thus, the observed earnings of
enrollees, a host of other factors, both internal and external to state
Medicaid programs, will influence the extent to which Buy-in enrollees
work at substantial levels.

### 2. Survey and Focus Group Findings

Findings from a few recent surveys conducted with Buy-in enrollees in
different states provide anecdotal evidence that Buy-in programs promote
and enable employment among some Buy-in participants:

-   Among the 31% of survey respondents who were working and enrolled in
    the Vermont Buy-in, 80% indicated that the Buy-in program was very
    important in helping them keep working (Vermont Division of
    Vocational Rehabilitation 2003a);

-   In a survey of Buy-in enrollees in Utah, most respondents
    (percentage not reported) indicated that the Buy-in program had
    helped them become employed or increase their hours of work (Julnes
    et al. 2003);

-   Among working Buy-in enrollees surveyed in Connecticut, about 60%
    indicated that the Buy-in program made work or increased earnings
    possible (Porter 2004).

The survey findings imply that a large proportion of Buy-in participants
in some states believe that the Buy-in is key to helping them go to
work. Focus group and interview findings from several states, while less
representative of the Buy-in populations in those states in general,
provide additional evidence that the Buy-in promotes employment among
some enrollees. For some, access to health insurance via the Buy-in is
the main reason for going to work; for others, the Buy-in is necessary
to enable employment:

*"The primary reason I went to work was to get the medical benefits. I'd
go down the tubes if it weren't for MWD."* \--Vermont Buy-in enrollee
(Vermont Division of Vocational Rehabilitation 2003a).

*"I keep the job to get the benefit (MWD). It is a priority --
physically it sometimes is a struggle (to work), but keeping this
benefit is a priority."* \--Vermont Buy-in enrollee (Vermont Division of
Vocational Rehabilitation 2003a).

*"I think its \[the Buy-in program\] wonderful. I'm really happy its
there. I really probably would have a lot more difficulty working,
especially once I lose my private insurance, if I didn't have it...I'm
not usually the mushy type, but I'm, grateful for it, I guess you could
say. Even with all the administrative crap, I am. I would gladly jump
through even more hoops."* \--Connecticut Buy-in enrollee (Porter 2004).

### 3. Comparisons of Earnings Pre and Post Buy-in Enrollment

Pre-post analyses of enrollee earnings have been conducted for Buy-in
participants in a number of states (Porter 2004; Julnes 2004; Clark et
al. 2003; Hanes et al. 2002). These analyses track average earnings of
Buy-in participants, comparing earnings before and after Buy-in
enrollment. A common finding of these analyses is that, on average,
earnings tend to increase significantly just prior to and during the
quarter of enrollment, then stabilize or fall somewhat after enrollment,
but remain at levels somewhat higher than during the pre-enrollment
periods.

The increase in average earnings post-enrollment does not, alone,
constitute evidence that the Buy-in is promoting employment. All Buy-in
programs have a work requirement for enrollment. Thus, one would expect
average earnings to be higher post-enrollment due to selection. The
increase in earnings among participants might also be due to a host of
factors that are unrelated to the Buy-in (e.g., the economy and changes
in other programs that affect who enrolls in the Buy-in). Enrollment in
the Buy-in for many might simply be an incidental outcome of an increase
in earnings that was driven by some other factor.

The pre-post enrollment earnings trends are of interest, however,
because they provide a first look at the earnings experiences of
enrollees and raise questions for further consideration. In one such
study, Porter (2004) uses quarterly earnings data obtained from the
state Unemployment Insurance program to examine pre- and post-enrollment
earnings for a cohort of Connecticut Buy-in enrollees, focusing on the
four quarters prior to the quarter of enrollment, the quarter of
enrollment, and the four quarters following the quarter of enrollment.
These data indicate a marked and statistically significant increase in
earnings from pre-enrollment to the quarter of enrollment, with a slight
(statistically insignificant) decline in earnings thereafter (***Exhibit
IV.2***).

A question raised by this pattern (a pattern common to other programs
that have conducted similar analyses, though perhaps not as dramatic) is
to what extent is this pattern due to the Buy-in *inducing* individuals
to go to work in order to obtain coverage, versus other factors inducing
individuals to go to work, as they might have done without the Buy-in,
but incidentally enroll in the Buy-in. Pre-post changes in means are
likely to reflect both types of changes. It is also possible, however,
that increases in earnings prior to Buy-in enrollment partially reflect
employment increases induced by the Buy-in prior to formal Buy-in
enrollment. Without a suitable comparison group, however, it is not
possible to determine whether pre-post earnings changes overstate or
understate the effects of the Buy-in on earnings.

Exhibit IV.2

Connecticut Buy-in Enrollee Earnings, Pre- and Post-Enrollment

  -----------------------------------------------------------------------
  ![](media/image6.wmf){width="4.791666666666667in"
  height="2.832638888888889in"}

  -----------------------------------------------------------------------

Source: Porter (2004).

In other analyses, Julnes et al. (2004) divides Utah Buy-in enrollees
into groups based on: 1) the *level* of pre-enrollment earnings; and 2)
the magnitude of the *changes* between pre- and post-enrollment
earnings. This analysis of subgroups demonstrates the heterogeneity of
Buy-in enrollees, and how that heterogeneity is masked if one focuses
only on overall average earnings.

***Exhibit IV.3*** shows the pre-post earnings patterns by level of
pre-enrollment earnings.[^48] The exhibit illustrates how pre-post
earnings patterns can be very different for enrollees depending on their
pre-enrollment earnings. While the earnings of most Utah enrollees
remained fairly constant, or increased slightly after enrollment, for
the 20% of enrollees with the highest pre-enrollment earnings, average
post-enrollment earnings decline markedly.

The variation in these patterns might reflect the varying reasons why
people with disabilities enroll in the Buy-in. For many, the Buy-in
might induce employment at minimal levels in order to qualify for
coverage. For others already working enough to meet eligibility
criteria, the Buy-in may have no effect on earnings. For some, the
Buy-in may reduce work disincentives associated with a previous Medicaid
category, and thus, induce at least small increases in employment and
earnings. Finally, the Buy-in might represent for some, access to needed
coverage as health worsens and/or as other sources of coverage are lost,
perhaps following disability onset. These scenarios represent pure
speculation based on the earnings patterns observed. Further
investigation of the characteristics of members of these subgroups, and
the reasons behind the interesting differences in earnings patterns
might substantiate or discredit this speculation. It is possible that
the results simply reflect the well-known statistical phenomenon of
"regression toward the mean." Among those with initially high earnings,
very few will achieve significant earnings growth, but many are
susceptible to earnings decline for reasons unrelated to the Buy-in.
Symmetrically, none of those with the lowest initial earnings can
experience a significant decline, but some might experience significant
gains, again for reasons unrelated to the Buy-in.

Exhibit IV.3

Pre-Post Earnings Patterns by Level of Pre-enrollment Earnings, Utah
Buy-in Participants

![](media/image7.wmf){width="7.0in" height="4.040972222222222in"}Source:
Julnes et al. (2004).

In another disaggregation of Utah Buy-in enrollees by earnings
characteristics, enrollees are grouped by the magnitude of the *changes*
in earnings that occur from before to after enrollment in the
Buy-in.[^49] The researchers find that: for about 70% of Buy-in
enrollees, earnings remain relatively unchanged; for about 10% of
enrollees, earnings increase substantially after enrollment; and for the
remaining 20%, earnings decline markedly (Julnes et al. 2004).

Another study of pre- and post-enrollment earnings of Buy-in
participants in New Hampshire (Clark et al. 2003) takes the findings of
the estimated increases in earnings, and compares them to the estimated
additional costs to the state of covering these individuals via the
Buy-in. The authors find that the post-enrollment earnings of Buy-in
participants increased relative to earnings in the prior year by \$3.28
per every additional state dollar spent on the program. This study
suffers the same limitation as other pre-post analyses noted above, that
is, in the absence of evidence from a comparison group, one cannot
definitively attribute all of the increase in earnings among enrollees
to the Buy-in program. There is reason to believe, however, that much of
the increase in earnings could indeed be due to the Buy-in program. The
vast majority of the New Hampshire Buy-in participants (88%) had been
enrolled in Medicaid (via medically needy, spend down, and other
categories) immediately prior to enrolling in the Buy-in. For these
individuals, the Buy-in eliminated rather significant restrictions on
income imposed by the eligibility criteria of their previous Medicaid
category. If other factors affecting employment did not change
significantly over the relatively short study period, it is reasonable
to believe that much of the increase in earnings observed was due to the
Buy-in eliminating the income restrictions imposed by the Medicaid
categories previously used by Buy-in enrollees.

The attempt to quantify the costs and benefits of the Buy-in undertaken
by Clark et al. highlights an important tradeoff that states face in
designing their programs. On the one hand, if the state is going to be
covering many of these individuals in their Medicaid programs anyway,
the state might as well allow them to earn more by offering a Buy-in
program. On the other hand, the Buy-in will lead to additional state
costs incurring both from the costs that would have previously been paid
by individuals via spend down, and from the costs of new people to the
Medicaid program.

### 4. Evaluating Earnings Changes Over Time Using Comparison Groups

A few studies have examined the pre-post earnings changes of Buy-in
participants, and compared them to the changes in earnings of a
non-participant comparison group in an effort to assess the effect of
Buy-ins on employment.

Hanes et al. (2002) analyze the pre- and post-enrollment earnings of
Buy-in participants in Oregon, Vermont, and Wisconsin. The authors also
track the earnings over the same time period for two comparison groups
of people with disabilities: non-participants in Oregon and people with
disabilities in Washington state. The study notes the large difference
in the earnings of Oregon enrollees relative to others, and hypothesizes
that this is due to Oregon's efforts to target the Buy-in to those most
ready to work , but who are unable to increase earnings for lack of
health insurance coverage.[^50] The study is limited in terms of
evaluating whether a Buy-in has an effect on employment, however,
because it focuses on differences in the *levels* of earnings, rather
than differences in *changes* in earnings, across study and comparison
groups. Both study and comparison groups appear to exhibit similar
increases in earnings over time. Though no statistical
(difference-in-difference) tests of significance are reported, from the
earnings patterns presented, it appears that the Buy-in programs have
little or no effect on earnings.

A study by Salahuddin (2003) examines the impact of the California
Buy-in on the employment of people with disabilities using a comparison
group of people with disabilities in the state of Washington. The focus
of the analysis is on the earnings of DI beneficiaries. The author uses
Social Security administrative data on individual characteristics,
including earnings. DI beneficiaries in Washington state are selected
for a comparison group because of similarities to California in terms of
the pre-Buy-in earnings and other characteristics of DI beneficiaries,
and other factors related to state programs and economies. The SSA data
are matched to California Buy-in data to identify Buy-in enrollees among
California DI beneficiaries. Multivariate techniques are used to control
for observed differences in characteristics between the treatment and
comparison group members and to estimate the impact of participation in
the California Buy-in on earnings.

Salahuddin (2003) finds no significant effect of the Buy-in on earnings
in several different specifications estimating the determinants of
changes in earnings. The lack of a measured effect may be due to a
number of factors. The program was new at the time of the study. Many
participants had been enrolled in the Buy-in for only a short period of
time (21% of the sample had been enrolled for two months or less), so
few may have had opportunities to increase earnings. It might also be
that a large number of enrollees were just switching Medicaid categories
with a goal of obtaining lower cost coverage, rather than a goal of
increasing earnings (77% of Buy-in participants had been receiving
Medicaid through another program in the month prior to Buy-in
enrollment).

# VI. Suggestions for Increasing the Effectiveness of Buy-in Programs

In our collection and review of information on Medicaid Buy-in programs,
a number of factors affecting Buy-in effectiveness were raised by
interviewees and in the literature. In the sections below, we discuss
some ideas for improving the effectiveness of Medicaid Buy-in programs.
Some of these are ideas obtained from state staff involved in
implementing these programs, while others arise out of the qualitative
assessment of Buy-in programs conducted for this report. We organize the
discussion around issues that might be addressed by states, CMS, other
federal agencies, and Congress.

## A. States

**Assess the Buy-in program to determine if program features are
inhibiting the state's ability to meet the goals of its Buy-in, and the
goals of the broader state system of supports for people with
disabilities.** As discussed throughout this paper, a number of program
features will determine who is eligible for the Buy-in, and among these
individuals, for whom the program represents an increase in work
incentives. How states design their programs should depend on their
specific goals. Representatives from several states indicated that some
of the features of their Buy-in programs were determined based simply on
what other states were doing, rather than on thoughtful consideration
and analysis of the likely impact of the programs on the employment of
people with disabilities.

One specific example of a program feature that appears to affect Buy-in
participation and potential effectiveness is the treatment of unearned
income. As discussed previously, the differential treatment of unearned
income causes those with high DI benefits (and thus, those with
substantial work histories) to be ineligible for the Buy-in program in
several states, or severely limits the amount of income that can be
earned and still retain eligibility for the Buy-in. The use of the SSI
income counting methodology and treatment of unearned income in this
manner was required under the BBA, but states need not use the SSI
methodology under the Ticket Act. States may be adhering to this
methodology to maintain consistency with income accounting methods used
for other Medicaid categories, or just because it's what they have
always done, without considering the potential consequences for DI
beneficiaries who may need certain services provided by Medicaid
programs in order to work. Alternatively, states may be using the
criteria to purposefully limit their programs. When asked if the Buy-in
program would be more successful without the unearned income limit, one
MIG director responded "It depends on who you ask. The advocates would
like to have no limit on unearned income, but from Medicaid's
perspective the program is working perfectly as is."

Low asset limits have also been cited as a program feature potentially
inhibiting Buy-in effectiveness. Strict limits prevent working people
with disabilities from saving and working towards self-sufficiency.
Implementing asset criteria utilized for other programs without
consideration of the goals of the Buy-in program and the potential
effect on work incentives for Buy-in participants could limit the
success of these programs.

Even if states thoughtfully evaluate their program features in the
context of broader goals for the system, it can be difficult to make
program changes. As several interviewees explained, once the program is
in place it is politically very difficult to change because there are
always winners and losers.

**Identify and address administrative and consumer awareness issues that
might be inhibiting Buy-in effectiveness.** Fear of losing health
insurance appears to remain an issue among Buy-in participants. This may
be partly due to a lack of awareness of program rules, and partly due to
administrative features of programs that make them complex and difficult
to navigate, and/or that increase the likelihood that coverage will be
interrupted. Examples include short grace periods for continued
eligibility when employment is interrupted, paperwork errors, and
eligibility workers not informing beneficiaries of their enrollment in
the Buy-in and its special rules. Outreach and education campaigns also
appear to be important and necessary components of implementing Buy-in
programs, especially in light of the complexity of these programs, their
potential interaction with other programs, and the fact that most
programs are new and unfamiliar to consumers and Medicaid eligibility
staff. Staff from a few states indicated that they purposefully have not
embarked on large-scale marketing of the programs in order to "keep a
low profile" and not draw any attention (e.g., due to high enrollment
growth) that might get the program cut from next year's budget.

## B. CMS 

**Provide guidance on the disability determination process or guarantee
states that they will not be penalized by CMS for incorrect decisions.**
The ability of people with disabilities who are working and not
currently attached to the disability system to enroll in the Buy-in may
be hampered in some states. While some states have developed processes
to determine disability for this population, in others the determination
is haphazard. Many states are nervous that the determinations will not
hold up under CMS audit, and that claims will be denied. This insecurity
about the determination process may lead states to err on the side of
not enrolling individuals who might be eligible for the program. It may
be particularly important to include this group in the Buy-in, as it is
a population that, with adequate access to health care, may be able to
maintain their attachment to the workforce.

**Provide guidance to states on grace periods, and define grace periods
in the State Plan Amendment template.** Currently many states defined in
their administrative rules grace periods for continued eligibility in
circumstances where employment is terminated, but these rules are not
reviewed or approved by CMS. Some states offer no grace periods at all
when employment is lost, making the program unduly harsh on people with
intermittent work experiences. Recognizing that employment may be
intermittent for many people with severe disabilities, and that
extremely short or no grace periods for temporary unemployment may not
be conducive to the goals of a Buy-in program, CMS should provide some
guidance to states on this issue, allow states wide latitude in defining
the grace period for unemployment so that any state can develop a
process that would minimize the ability to game the program, and make
whatever rules developed be subject to approval via the state plan
amendment process. Advocates of short or no grace periods argue that
other Medicaid eligibility categories do not have eligibility grace
periods for income, assets, or any other eligibility criteria. The
employment requirement of Buy-in programs, and their underlying goal of
promoting and supporting the employment of people with disabilities
through the provision of health insurance, may, however, provide a
compelling reason for grace periods.

**Maintain flexibility in the use of MIG funding.** The effectiveness of
the Buy-in is closely tied to the effectiveness of the variety of
activities conducted by states under their MIGs. MIGs have been key to
both promoting Buy-in programs to consumers and state agency staff, and
developing other employment supports. To date, CMS has allowed a great
deal of flexibility on how MIG funds can be spent and states generally
believe that this flexibility is a great strength of the program. Among
the many useful activities that states are able to conduct under their
MIGs is evaluation and assessment of their program's performance. It is
unlikely that much of the information on the Buy-in programs presented
in this report would even be available were it not for the MIG
resources. Through the MIGs, CMS has encouraged and given states the
resources to engage in program evaluation and policy analysis
activities.

**Continue to support and offer TA and information sharing
opportunities.** The two TA centers have sponsored a number of
conferences and forums for information sharing across states on the
issue of Buy-in programs and employment supports for people with
disabilities. CMS has also sponsored its own forums, most recently, one
devoted to issues related to using state data for purposes of policy
research and evaluation. It is important for CMS to continue to support
these activities. Though states are required to obtain TA from some
source, states are free to specify the nature of the TA and the source,
and are not confined to using one or both of the two TA centers. While
there are numerous advantages to this flexibility and decentralization,
it could be the case in the future that the TA centers receive
insufficient funding to be able to sponsor the conferences and forums
that they have been able to convene in the past. If this is the case,
then CMS will need to take the lead in sponsoring such activities. MIG
staff find these forums extremely useful for: developing an
understanding of the federal rules and regulations governing Buy-ins;
developing and refining program and administrative procedures;
understanding factors affecting the success of their programs; and
developing ideas about how to improve the employment support systems in
their states, in general.

**Continue to engage in national-level evaluation efforts.** CMS,
through its contractor, Mathematica Policy Research, has been tracking
the experiences of Buy-in programs. The first report from this effort
(Ireys et al. 2003) is a useful resource on information about the range
of Buy-in programs across the country. CMS should continue to support
these, and more in-depth analyses, of state Buy-in programs. CMS is in a
position to conduct a national level evaluation of these programs that
would potentially be much more rigorous than any evaluation that could
be conducted by an individual state. CMS staff indicate that they are in
the process of developing a data-sharing arrangement with SSA. The SSA
data are critical to conducting any rigorous evaluation of the Buy-ins.
These data will provide large sample sizes and allow the construction of
comparison groups (e.g., in a manner similar to that employed in
Salahuddin 2003) that will permit the empirical estimation of impacts of
the Buy-in on employment and provide more definitive evidence on the
effectiveness of Buy-in programs in promoting employment. There is
clearly a large degree of variation in how the Buy-in programs have been
implemented. A rigorous, national evaluation of these programs would
provide useful information to states about the factors that appear to
increase or decrease effectiveness that could be used to refine their
programs, and might provide evidence on the benefits of Buy-in programs
that would attract greater support for these programs, and for
employment initiatives targeted to people with disabilities in general.

## C. Other Federal Agencies

**Provide leadership for interagency coordination at the federal
level.** States are attempting to break down the service and funding
"silos" within their states. Many report difficulty "getting people to
the table" and would like to see more leadership at the federal level to
encourage staff at the state level to cooperate with other agencies. In
addition, the federal government could develop integrated and flexible
funding streams.[^51] In the absence of this leadership, state agencies
are left wondering whose job it is to provide such things as supported
employment, supportive housing, assistive technology, and other
supports.

**Allow data sharing between programs.** Evaluation of the Buy-in
programs is severely hampered by the inability of CMS and states to gain
access to SSA data. As noted above, CMS staff have indicated that they
are in the process of working with Social Security to gain access to
these data for research purposes, but to date that access has not been
granted.

**Increase funding for benefits counseling.** The effectiveness of
Buy-in programs is contingent on the ability of people with disabilities
to make informed choices. The Ticket Act recognized the complexity of
the system and directed SSA to fund the Benefits Planning, Assistance
and Outreach (BPAO) projects. The BPAO grants fund only about 500
specialists nationwide, and many states report that this is wholly
inadequate to meet their needs. In addition, BPAO-funded benefit
specialists are only permitted to serve Social Security beneficiaries.
Some states have funded additional specialists through their MIGs or
other sources, but others have been unable to identify another funding
stream. The Buy-in has added another dimension of complexity to the
already complex employment decisions of people with disabilities. Unless
the employment support system for people with disabilities is markedly
simplified in the future, the need for benefit specialists will continue
to increase, along with the federal and state initiatives attempting to
promote the employment of people with disabilities.

## D. Congress

**Allow states to define work.** Although some states would like the
legislation amended to define work, most want the ability to define work
themselves within certain parameters. It is likely that the lack of this
ability has had important impacts on Buy-in programs. In an effort to
contain costs, states have made decisions in designing their programs
that they may have made differently if they had been able to target
enrollment by defining employment.

**Remove the age limit for Buy-in programs in the Ticket Act.** The
Ticket Act limits Buy-in eligibility to those ages 16 to 64. In theory,
the age limit creates a disincentive for older people to enter the
program because they know it will end when they turn age 65. In
addition, it may dissuade people from saving because they know they will
deplete their resources when they turn 65 in order to qualify for
Medicaid in another eligibility category.

As the workforce ages and as the Social Security full retirement age
increases,[^52] there is a conceptual justification for extending the
program to people over age 65. Further, there is no reason to expect
Buy-in participants to exit employment at age 65. Several states
interviewed indicated that this restriction should be lifted. From CMS'
perspective, lifting the age restriction could create a whole new set of
eligibility issues because SSA does not define disability for
individuals age 65 and over. It is important to note however, that
several BBA states have enrolled people over age 65 in the Buy-in (most
of whom had disability determinations before they turned 65). In
addition, the 1619(b) provision in SSI applies to people over 65 and,
according to SSA's Program Operations Manual, the disability
determination can be made after the individual turns 65.[^53]

**Give CMS more control over MIG eligibility requirements.** The Ticket
Act is clear that the standard for MIG eligibility is the provision of
adequate PAS as included in the state Medicaid plan. To accommodate
states that do not meet the PAS criteria, CMS has established a
"conditionally eligible" category that allows states time to develop the
option. CMS has also established a process to determine if PAS
established under state waivers meets the intent of the Ticket Act.
Nevertheless, a number of states are at risk of losing MIG funding
because they cannot (either fiscally or politically) expand PAS to the
required minimum level. Given that a relatively small proportion of
Buy-in participants use PAS, some MIG directors question whether PAS
availability should be the sole criterion for granting states resources
to develop Buy-in programs and other broad-based employment supports. A
few MIG directors have expressed frustration that states with strong
systems are able to get funding to make those systems stronger, while
states with weak systems are penalized. Eliminating the PAS requirement
and allowing CMS greater flexibility in developing criteria for awarding
MIG funding to states would address this.

**Implement a benefit offset program for DI similar to SSI and change
the definition of disability.** These suggestions have broad
implications that go well beyond the Buy-in. Nevertheless, we mention
them here because so many interviewees believe that these two aspects of
the disability system are having major impacts on the success of the
Buy-in in promoting employment. The DI cash cliff is perceived to be a
significant work disincentive, one that a Buy-in alone cannot address.
In addition, many state interviewees believe that defining disability in
terms of work for purposes of federal program eligibility is in direct
conflict with initiatives that attempt to increase the employment of
those that participate in such programs.

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## Appendix A

## Buy-in Program Design Features by State

This Appendix briefly summarizes the characteristics of the Buy-In
program in each state. The information is derived from a variety of
sources including: The Center for the Study and Advancement of
Disability Policy at George Washington University
([http://www.medicaidbuyin.org](http://www.medicaidbuyin.org/)), State
Medicaid Agency Websites, and Medicaid Infrastructure Grant Websites.

### Alaska

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  BBA

  **Implementation date:**      July 1999

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    Individual unearned income less than
  Limit:**                      Alaska Public Assistance (APA) standard
                                of need.

  **Resource Limit:**           \$2,000/\$3,000

  **Excluded Assets:**          None

  **Work Requirement:**         Must have earned income.

  **Grace Period:**             None

  **Premium Threshold:**        100% of FPL

  **Individual or family        Net family income
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

If family income is more than 100% of the FPL, the individual is
assessed an income-based premium of up to 10% of net income beginning in
the third month of eligibility. The formula for calculating the payment
is Y=(X-100)/15-0.75(N-1) where Y is the percentage payment required, X
is the percentage of poverty represented by the person\'s family income,
and N is the number of persons in the household.

### Arizona

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage/Medical
                                Improvement

  **Implementation date:**      January 2003

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual

  **Income Disregard:**         Disregard unearned income/ Standard SSI
                                disregards

  **Separate Unearned Income    No (unearned income is disregarded)
  Limit:**                      

  **Resource Limit:**           No resource limit

  **Excluded Assets:**          Retirement Accounts, Other approved
                                accounts

  **Work Requirement:**         Paid for working and paying FICA taxes

  **Grace Period:**             Guaranteed six months of eligibility the
                                first time approved for program unless in
                                institutional living arrangement.

  **Premium Threshold:**        n/a

  **Individual or family        n/a
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:** No premiums are charged. Co-payments are
required.

### Arkansas

  ---------------------------- ------------------------------------------
  **Authorizing Legislation:** Ticket Act Basic Coverage

  **Implementation date:**     February 2001

  **Countable Income           250% of FPL
  Eligibility:**               

  **Whose Income is Counted?** Individual

  **Income Disregard:**        Standard SSI disregards

  **Separate Unearned Income   Unearned income must be less than SSI
  Limit:**                     standard plus \$20

  **Resource Limit:**          \$4,000/\$6,000

  **Excluded Assets:**         Up to \$10,000 in approved account

  **Work Requirement:**        Employed in any ongoing work activity for
                               which income is reported to the IRS.
                               Employment must be verifiable with
                               paycheck stubs, tax returns, 1099 forms or
                               proof of Quarterly Estimated tax.

  **Grace Period:**            Up to six months if enrollee intends to
                               return to work

  **Premium Threshold:**       n/a

  **Individual or family       n/a
  income:**                    
  ---------------------------- ------------------------------------------

**Premium Structure:**

No premiums are charged, however cost sharing/co-payments apply.

### California

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  BBA

  **Implementation date:**      April 2000

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           \$2,000/\$3,000

  **Excluded Assets:**          Retirement Accounts

  **Work Requirement:**         Provide proof of employment (e.g., pay
                                stubs or written verification from the
                                employer.

  **Grace Period:**             None

  **Premium Threshold:**        All pay premium

  **Individual or family        Individual (unless spouse is also
  income:**                     eligible)
  ----------------------------- -----------------------------------------

**Premium Structure:**

Income is calculated by disregarding DI income for the individual, and
then applying standard SSI methodology for the earned income plus any
remaining unearned income if it is not DI.  Premiums range from
\$20-\$250 for an individual and are based on the following sliding
scale:

+----------------------------+----------------------+------------------+
| # Countable Income Range   | # Premium Individual | # Premium Couple |
+----------------------------+----------------------+------------------+
| \$0-\$600                  | \$20                 | \$30             |
+----------------------------+----------------------+------------------+
| \$601-\$700                | \$25                 | \$40             |
+----------------------------+----------------------+------------------+
| \$701-\$900                | \$50                 | \$75             |
+----------------------------+----------------------+------------------+
| \$901-\$1,100              | \$75                 | \$100            |
+----------------------------+----------------------+------------------+
| \$1,101-\$1,300            | \$100                | \$150            |
+----------------------------+----------------------+------------------+
| \$1,301-\$1,500            | \$125                | \$200            |
+----------------------------+----------------------+------------------+
| \$1,501-\$1,700            | \$150                | \$225            |
+----------------------------+----------------------+------------------+
| \$1,701-\$1,900            | \$175                | \$275            |
+----------------------------+----------------------+------------------+
| \$1,901-\$2,100            | \$200                | \$300            |
+----------------------------+----------------------+------------------+
| \$2,101-250%FPL            | \$250                | \$375            |
+----------------------------+----------------------+------------------+

### Connecticut

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage/Medical
                                Improvement

  **Implementation date:**      October 2000

  **Countable Income            \$75,000
  Eligibility:**                

  **Whose Income is Counted?**  Individual

  **Income Disregard:**         IRS deductions. (Income is counted as
                                Adjusted Gross Income according to IRS
                                rules)

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           \$10,000/\$15,000

  **Excluded Assets:**          Retirement Accounts, Other approved
                                accounts

  **Work Requirement:**         Must make FICA contributions

  **Grace Period:**             Can continue for one year after losing
                                employment

  **Premium Threshold:**        200% of FPL

  **Individual or family        Family
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Premium is 10% of net *family* income in excess of 200% of FPL. Net
family income includes income of spouse but not of dependent children
and excludes standard SSI deductions, impairment-related work expenses
and self-employment expenses. For individuals with net family incomes in
excess of 250% of the FPL but not greater than 450% of the FPL, the
amount of the monthly premium cannot exceed 7.5% of net family income.
Fees paid for private insurance are deducted from the individual\'s
Medicaid Buy-In premium liability.

### Illinois

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage

  **Implementation date:**      January 2002

  **Countable Income            200% of FPL (net after taxes)
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           \$15,000

  **Excluded Assets:**          

  **Work Requirement:**         Employment must be verifiable by pay
                                stubs and employer documents that income
                                is subject to income tax and FICA.

  **Grace Period**              No

  **Premium Threshold:**        \$250

  **Individual or family        Individual
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Premiums assess according to the following chart based on the
applicant's monthly income:

  ---------------- ----------- ------------- ------------- -------------- ---------
  **Countable      **Gross                                                
  Earned Income**  Unearned                                               
                   Income**                                               

                   \$0-\$250   \$251-\$500   \$501-\$750   \$750-\$1000   \$1001+

  \$0-\$250        \$0         \$19          \$38          \$56           \$75

  \$251-\$500      \$6         \$25          \$44          \$63           \$81

  \$501-\$750      \$13        \$31          \$50          \$69           \$88

  \$750-\$1000     \$19        \$38          \$56          \$75           \$94

  \$1001+          \$25        \$44          \$63          \$81           \$100
  ---------------- ----------- ------------- ------------- -------------- ---------

### Indiana

  ------------------------------ ----------------------------------------
  **Authorizing Legislation:**   Ticket Act Basic Coverage/Medical
                                 Improvement

  **Implementation date:**       July 2002

  **Countable Income             350% of FPL
  Eligibility:**                 

  **Whose Income is Counted?**   Individual

  **Income Disregard:**          Standard Medicaid Disregards

  **Separate Unearned Income     No
  Limit:**                       

  **Resource Limit:**            \$2,000/\$3,000

  **Excluded Assets:**           Retirement Accounts, Up to \$20,000 in
                                 approved accounts

  **Work Requirement:**          Employment must be verifiable by pay
                                 stubs and employer documents that income
                                 is subject to income tax and FICA.

  **Grace Period:**              Can continue for one year after losing
                                 employment

  **Premium Threshold:**         150% of FPL

  **Individual or family         Individual
  income:**                      
  ------------------------------ ----------------------------------------

**Premium Structure:**

Premiums range from \$0 to \$254 per month according to the following:

  ------------------------ -------------------- -------------------------
  **Income as a Pct of     **Individual**       **Couple**
  FPL**                                         

  Less than 150%           None                 None

  150%-175%                \$48                 \$65

  175%-200%                \$69                 \$93

  200%-250%                \$107                \$145

  250%-300%                \$134                \$182

  300%-350%                \$161                \$218

  More than 350%           \$187                \$254
  ------------------------ -------------------- -------------------------

### Iowa

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  BBA

  **Implementation date:**      March 2000

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           \$12,000/\$13,000

  **Excluded Assets:**          Retirement Accounts, Assistive Technology
                                Accounts

  **Work Requirement:**         Must have earned income.

  **Grace Period:**             May continue for six months after work
                                stoppage.

  **Premium Threshold:**        150% of FPL

  **Individual or family        Individual
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Premiums are assessed if an *individual\'s* gross income is at or above
150% of the FPL. There are eleven different premium brackets depending
on income level. At 150% of the FPL (\$1,074/month), the monthly premium
is \$20. Individuals with incomes at or above 390% of the FPL pay the
maximum premium of \$201 per month.

### Kansas

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage

  **Implementation date:**      July 2002

  **Countable Income            300% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards and IRWEs

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           \$15,000

  **Excluded Assets:**          Retirement Accounts, Independence
                                Accounts

  **Work Requirement:**         Employment must be verifiable by pay
                                stubs and employer documents that income
                                is subject to income tax and FICA.

  **Grace Period:**             May continue for six months after work
                                stoppage.

  **Premium Threshold:**        \$750

  **Individual or family        Family
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Premiums are based on net income (unearned -\$20 + half of earned
income - IRWE) according to the following:

  -------------------- --------------- ---------------------- ---------------
  **SINGLE**                           **TWO/THREE PERSON**   

  Monthly Net Income   Monthly Premium Monthly Net Income     Monthly Premium

  \$0.00-\$749         \$0             \$0.00-\$1,010         \$0

  \$749.01-\$936       \$55            \$1,010.01-\$1,263     \$74

  \$936.01-\$1,123     \$69            \$1,263.01-\$1,515     \$93

  \$1,123.01-\$1,310   \$83            \$1,515.01-\$1,768     \$112

  \$1,310.01-\$1,497   \$97            \$1,768.01-\$2,020     \$130

  \$1,497.01-\$1,684   \$110           \$2,020.01-\$2,273     \$149

  \$1,684.01-\$1,871   \$124           \$2,273.01-\$2,525     \$168

  \$1,871.01-\$2,060   \$138           \$2,525.01-\$2,778     \$186

  \$2,060.01-\$2,245   \$152           \$2,778.01-\$3,030     \$205

  greater than \$2,245 Not eligible    2 person greater than  Not eligible
                                       \$3,030                

                                       \$3,030.01-\$3,815 (3  \$205
                                       person)                

                                       3 person greater than  Not eligible
                                       \$3,815                
  -------------------- --------------- ---------------------- ---------------

### Louisiana

  ------------------------------- ---------------------------------------
  **Authorizing Legislation:**    Ticket Act Basic Coverage

  **Implementation date:**        2004

  **Countable Income              250% of FPL
  Eligibility:**                  

  **Whose Income is Counted?**    Individual

  **Income Disregard:**           Standard SSI disregards and IRWEs

  **Separate Unearned Income      No
  Limit:**                        

  **Resource Limit:**             \$25,000

  **Excluded Assets:**            

  **Work Requirement:**           Employed

  **Grace Period:**               None

  **Premium Threshold:**          150% of FPL

  **Individual or family          Individual
  income:**                       
  ------------------------------- ---------------------------------------

**Premium Structure:**

Premiums are assessed according to the following:

  ------------------------------------------------- ---------------------
  **Countable income**                              **Premium**

  Less than \$1,123                                 \$0

  \$1,124-\$1,497                                   \$80

  \$1,148-\$1,871                                   \$110
  ------------------------------------------------- ---------------------

### Maine

  ------------------------------- ---------------------------------------
  **Authorizing Legislation:**    BBA

  **Implementation date:**        August 1999

  **Countable Income              250% of FPL
  Eligibility:**                  

  **Whose Income is Counted?**    Individual and spouse

  **Income Disregard:**           Standard SSI disregards plus \$55

  **Separate Unearned Income      100% of FPL plus \$75
  Limit:**                        

  **Resource Limit:**             \$8,000/\$10,000

  **Excluded Assets:**            

  **Work Requirement:**           Must have earned income

  **Grace Period:**               None

  **Premium Threshold:**          150% of FPL

  **Individual or family          Individual and spouse
  income:**                       
  ------------------------------- ---------------------------------------

**Premium Structure:**

\$10 if monthly countable income is between 150% and 200% of the FPL and
\$20 if monthly countable income is over 200% of the FPL. There is no
premium for individuals with monthly countable income under 150% of the
FPL or paying a Medicare Part B premium.

### Massachusetts

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  1115 Waiver

  **Implementation date:**      1988

  **Countable Income            No limit
  Eligibility:**                

  **Whose Income is Counted?**  n/a

  **Income Disregard:**         n/a

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           None

  **Excluded Assets:**          n/a

  **Work Requirement:**         40 hours per month for common
                                health-working. No work requirement for
                                common health non working but premiums
                                are much higher

  **Grace Period:**             None

  **Premium Threshold:**        150% of FPL

  **Individual or family        Family income
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Premiums are assessed on a sliding scale according to the following:

  ----------------------- ----------------------- -----------------------
  **Income**              **Premium without other **Premium with other
                          insurance**             insurance**

  0%-150% of FPL          \$0                     \$0

  150%-200% of FPL        \$15 plus \$5 for each  60% of full premium
                          additional 10% of FPL   
                          between 150% and 200%   

  200%-400% of FPL        \$40 plus \$8 for each  65% of full premium
                          additional 10% of FPL   
                          between 200% to 400%    

  400%-600% of FPL        \$202 plus \$10 for     70% of full premium
                          each 10% of FPL between 
                          400 and 600%            

  600%-800% of FPL        \$404 plus \$12 for     75% of full premium
                          each 10% of FPL between 
                          600 and 800%            

  800% - 1000% of FPL     \$646 plus \$14 for     80% of full premium
                          each 10% of FPL between 
                          800 and 1000%           

  Above 1000% of FPL      \$928 plus \$16 for     85% of full premium
                          each 10% of FPL above   
                          1000%                   
  ----------------------- ----------------------- -----------------------

### Minnesota

  ---------------------------- ------------------------------------------
  **Authorizing Legislation:** Ticket Act Basic Coverage (initially
                               approved under BBA)

  **Implementation date:**     July 1999

  **Countable Income           no upper income limit
  Eligibility:**               

  **Whose Income is Counted?** Individual

  **Income Disregard:**        Effective 7/1/04, the first \$65 of
                               earnings are disregarded, therefore,
                               individuals must have average monthly
                               earnings of more than \$65/month to
                               qualify.

  **Separate Unearned Income   No (see premium structure)
  Limit:**                     

  **Resource Limit:**          \$20,000 individual assets

  **Excluded Assets:**         Retirement Accounts and medical expense
                               accounts set up through an employer (in
                               addition to standard Medicaid exclusions)

  **Work Requirement:**        Effective Jan. 1, 2004, must document
                               earned income tax withholding and FICA tax
                               withheld

  **Grace Period:**            Effective Jan. 1, 2004, if loss of
                               employment not attributable to enrollee,
                               may continue for 4 months

  **Premium Threshold:**       All pay a premium

  **Individual or family       Individual, except for 16 & 17 year olds
  income:**                    who reside with parents (parental income
                               is deemed to the child in those cases)
  ---------------------------- ------------------------------------------

**Premium Structure:**

Premiums are based on a sliding fee scale or a minimum of \$35,
whichever is greater. Income and household size are used to calculate
the premium. Enrollees pay 7.5% of income at 300% of FPG. In addition,
enrollees must pay an \"unearned income obligation\" in addition to the
monthly premium. The unearned income obligation is equal to 1/2 % of
enrollee\'s gross unearned income.

### Mississippi

  ------------------------------- ---------------------------------------
  **Authorizing Legislation:**    BBA

  **Implementation date:**        July 1999

  **Countable Income              \$3,945/individual or \$5,271/couple
  Eligibility:**                  

  **Whose Income is Counted?**    Individual and spouse

  **Income Disregard:**           None (Gross income is measured)

  **Separate Unearned Income      \$1,098 individual/\$1,456 couple (135%
  Limit:**                        of FPL)

  **Resource Limit:**             \$24,000/\$26,000

  **Excluded Assets:**            Retirement Accounts

  **Work Requirement:**           40 hours per month (according to
                                  website)

  **Grace Period:**               No

  **Premium Threshold:**          150% of FPL

  **Individual or family          Individual and Spouse
  income:**                       
  ------------------------------- ---------------------------------------

**Premium Structure:**

\$51-\$85 per month if income is above 150% of FPL

### Missouri

  ---------------------------- ------------------------------------------
  **Authorizing Legislation:** Ticket Act Basic Coverage/Medical
                               Improvement Group

  **Implementation date:**     July 2002

  **Countable Income           250% of FPL
  Eligibility:**               

  **Whose Income is Counted?** Individual (spouse\'s income counted only
                               if it is over \$100,000)

  **Income Disregard:**        None (Gross income is measured)

  **Separate Unearned Income   no
  Limit:**                     

  **Resource Limit:**          \$1,000

  **Excluded Assets:**         Retirement Accounts, Independent Living
                               Accounts from earnings while participating
                               in Buy-In

  **Work Requirement:**        Employed

  **Grace Period:**            None

  **Premium Threshold:**       150% of FPL

  **Individual or family       Individual
  income:**                    
  ---------------------------- ------------------------------------------

**Premium Structure**:

Premiums are calculated according to the following:

  ------------------------------------- ---------------------------------
  **Income as a percent of FPL**        **Premium**

  150%-175%                             4% of income at 163%

  175%-200%                             5% of income at 183%

  201%-225%                             6% of income at 213%

  226%-250%                             7% of income at 238%
  ------------------------------------- ---------------------------------

### Nebraska

+----------------------------+-----------------------------------------+
| **Authorizing              | BBA                                     |
| Legislation:**             |                                         |
+----------------------------+-----------------------------------------+
| **Implementation date:**   | July 1999                               |
+----------------------------+-----------------------------------------+
| **Countable Income         | 1\. Countable income less than 250% of  |
| Eligibility:**             | FPL and                                 |
|                            |                                         |
|                            | 2\. Sum of all unearned and spouse\'s   |
|                            | earned income less than SSI benefit     |
|                            | level for family size                   |
+----------------------------+-----------------------------------------+
| **Whose Income is          | Individual and Spouse                   |
| Counted?**                 |                                         |
+----------------------------+-----------------------------------------+
| **Income Disregard:**      | Standard SSI disregards                 |
+----------------------------+-----------------------------------------+
| **Separate Unearned Income | Yes. Unless an individual is in a Trial |
| Limit:**                   | Work Period or Extended Period of       |
|                            | Eligibility, DI income (minus           |
|                            | disregards must be less than SSI income |
|                            | standard.                               |
+----------------------------+-----------------------------------------+
| **Resource Limit:**        | \$4,000                                 |
+----------------------------+-----------------------------------------+
| **Excluded Assets:**       |                                         |
+----------------------------+-----------------------------------------+
| **Work Requirement:**      | Must have earned income                 |
+----------------------------+-----------------------------------------+
| **Grace Period:**          | No                                      |
+----------------------------+-----------------------------------------+
| **Premium Threshold:**     | 200% of FPL                             |
+----------------------------+-----------------------------------------+
| **Individual or family     | Family                                  |
| income:**                  |                                         |
+----------------------------+-----------------------------------------+

**Premium Structure:**

Persons with family incomes of between 200% and 249% of the FPL are
assessed monthly fees ranging from 2% to 10% of income.

### New Hampshire

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage

  **Implementation date:**      February 2002

  **Countable Income            450% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           \$20,889/31,334 (indexed annually)

  **Excluded Assets:**          Independence Accounts

  **Work Requirement:**         Be working (proven with a pay stub or
                                1099 Estimated Tax statement if the
                                individual is self-employed)

  **Grace Period:**             If an enrollee loses his/her job, there
                                is a 12-month period during which time
                                he/she can continue as long as the
                                person: intends to go back to work in the
                                next 12 months, and job loss was due to a
                                good reason.

  **Premium Threshold:**        150% of FPL

  **Individual or family        Family
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Premiums are assessed according to the following table based on family
net income:

  ---------------------------------------- ------------------------------
  **Monthly net income range**             **Monthly premium**

  \< \$1,108                               \$0

  \>\$1,108 and \<\$1,477                  \$80

  \>\$1,477 and \<\$1,846                  \$110

  \>\$1,846 and \<\$2,215                  \$135

  \>\$2,215 and \<\$2,585                  \$165

  \>\$2,585 and \<\$2,954                  \$190

  \>\$2,954 and \<\$3,323                  \$220
  ---------------------------------------- ------------------------------

### New Jersey

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage

  **Implementation date:**      February 2001

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    Unearned income other than DI or SSI
  Limit:**                      (pension, private disability etc) has
                                limit of 100% of FPL

  **Resource Limit:**           \$20,000/\$30,000

  **Excluded Assets:**          Retirement Accounts

  **Work Requirement:**         Be employed

  **Grace Period:**             No

  **Premium Threshold:**        150% of FPL

  **Individual or family        Individuals
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Individuals with income (after disregards) in excess of 150% of the
federal poverty level are required to pay a monthly premium of \$25
(\$50 for a married couple). Currently, New Jersey is not collecting
premiums because the cost of collecting them exceeded their value.

### New Mexico

+----------------------------+-----------------------------------------+
| **Authorizing              | BBA                                     |
| Legislation:**             |                                         |
+----------------------------+-----------------------------------------+
| **Implementation date:**   | January 2001                            |
+----------------------------+-----------------------------------------+
| **Countable Income         | Earned income less than 250% of FPL     |
| Eligibility:**             |                                         |
+----------------------------+-----------------------------------------+
| **Whose Income is          | Individual                              |
| Counted?**                 |                                         |
+----------------------------+-----------------------------------------+
| **Income Disregard:**      | Standard SSI disregards (including IRWE |
|                            | and cost of health insurance)           |
+----------------------------+-----------------------------------------+
| **Separate Unearned Income | Unearned income less than \$1,090/month |
| Limit:**                   |                                         |
+----------------------------+-----------------------------------------+
| **Resource Limit:**        | \$10,000                                |
+----------------------------+-----------------------------------------+
| **Excluded Assets:**       | Retirement Accounts                     |
+----------------------------+-----------------------------------------+
| **Work Requirement:**      | \(1\) have enough gross earnings in a   |
|                            | quarter to meet Social Security         |
|                            | Administration's definition of a        |
|                            | qualifying quarter, or                  |
|                            |                                         |
|                            | \(2\) lost SSI and Medicaid due to the  |
|                            | initial receipt of DI benefits, until   |
|                            | Medicare entitlement.                   |
+----------------------------+-----------------------------------------+
| **Grace Period:**          | None                                    |
+----------------------------+-----------------------------------------+
| **Premium Threshold:**     | n/a                                     |
+----------------------------+-----------------------------------------+
| **Individual or family     | n/a                                     |
| income:**                  |                                         |
+----------------------------+-----------------------------------------+

**Premium Structure:**

No premium, co-payments apply:

-   \$5 per outpatient visit, other practitioner visit, clinic visit,
    urgent care visit, outpatient therapy session, or behavioral health
    sessions

-   \$5 per dental visit

-   \$15 per emergency visit

-   \$25 per inpatient hospital admission

-   \$2 per prescription, applies to prescription and non-prescription
    drug items

### New York

  ------------------------------- ---------------------------------------
  **Authorizing Legislation:**    Ticket Act Basic Coverage

  **Implementation date:**        April 2003

  **Countable Income              250% of FPL
  Eligibility:**                  

  **Whose Income is Counted?**    Individual

  **Income Disregard:**           Standard SSI disregards

  **Separate Unearned Income      No
  Limit:**                        

  **Resource Limit:**             \$10,000

  **Excluded Assets:**            

  **Work Requirement:**           Be employed

  **Grace Period:**               May Buy-in continuously if employed for
                                  at least 6 months in a 12 month period

  **Premium Threshold:**          150% of FPL

  **Individual or family          Individual
  income:**                       
  ------------------------------- ---------------------------------------

**Premium Structure:**

Individuals with incomes between 150% and 250% of FPL pay 3% of net
earned income plus 7.5% of net unearned income.

### Oregon

  ------------------------------- ---------------------------------------
  **Authorizing Legislation:**    BBA

  **Implementation date:**        February 1999

  **Countable Income              250% of FPL
  Eligibility:**                  

  **Whose Income is Counted?**    Individual

  **Income Disregard:**           All unearned income/Standard SSI
                                  disregards/Employment and Independence
                                  Expenses

  **Separate Unearned Income      no (see premium)
  Limit:**                        

  **Resource Limit:**             \$12,000

  **Excluded Assets:**            Retirement Accounts, Other approved
                                  accounts

  **Work Requirement:**           Must have taxable income.

  **Grace Period:**               No

  **Premium Threshold:**          200% of FPL

  **Individual or family          Individual
  income:**                       
  ------------------------------- ---------------------------------------

**Premium Structure:**

Two parts

-   Any unearned income in excess of the state\'s SSI standard.
    \"Special need\" SSI state supplements can increase the applicable
    SSI standard for certain purposes, reducing their payment liability.

-   If adjusted individual income (unearned income not contributed as
    part of the cost share and all earned income minus state and federal
    taxes and Employment and Independence Expenses) exceeds 200% of the
    FPL. The premium is a percentage of adjusted income, ranging from
    2%-10%.

### Pennsylvania

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Basic Coverage and Medical
                                Improvement

  **Implementation date:**      January 2002

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    no
  Limit:**                      

  **Resource Limit:**           \$10,000

  **Excluded Assets:**          

  **Work Requirement:**         Employed and receiving compensation

  **Grace Period:**             2 months

  **Premium Threshold:**        All pay premiums

  **Individual or family        Individual
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Monthly premium is 5% of *individual* countable monthly income

### South Carolina

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  BBA

  **Implementation date:**      October 1998

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    Individual unearned income less than
  Limit:**                      \$552/month

  **Resource Limit:**           2,000

  **Excluded Assets:**          

  **Work Requirement:**         Website says one needs to be earning more
                                than \$780/month

  **Grace Period:**             No

  **Premium Threshold:**        n/a

  **Individual or family        n/a
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

No premiums

### Utah

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  BBA

  **Implementation date:**      July 2001

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           \$15,000

  **Excluded Assets:**          Retirement accounts

  **Work Requirement:**         Pay stubs or a business plan is needed to
                                verify employment

  **Grace Period:**             May continue to Buy-in for 12 months
                                after job loss

  **Premium Threshold:**        100% of FPL

  **Individual or family        Family
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

20% of the family's net countable income that above 100% of FPL.

### Vermont

+----------------------------+-----------------------------------------+
| **Authorizing              | BBA                                     |
| Legislation:**             |                                         |
+----------------------------+-----------------------------------------+
| **Implementation date:**   | January 2000                            |
+----------------------------+-----------------------------------------+
| **Countable Income         | 1\) Family net income less than 250% of |
| Eligibility:**             | FPL                                     |
|                            |                                         |
|                            | 2\) Family net income less earnings and |
|                            | \$500 of DI at or below medically needy |
|                            | protected income level                  |
+----------------------------+-----------------------------------------+
| **Whose Income is          | Individual and Spouse                   |
| Counted?**                 |                                         |
+----------------------------+-----------------------------------------+
| **Income Disregard:**      | Standard SSI disregards. Disregard all  |
|                            | earnings and \$500 of DI for part 2 of  |
|                            | eligibility test.                       |
+----------------------------+-----------------------------------------+
| **Separate Unearned Income | Yes. Unearned income limit is the       |
| Limit:**                   | Medically Needy program\'s Protected    |
|                            | Income Level plus \$500.                |
+----------------------------+-----------------------------------------+
| **Resource Limit:**        | \$20,000                                |
+----------------------------+-----------------------------------------+
| **Excluded Assets:**       | Accounts with earnings after 1/1/00     |
+----------------------------+-----------------------------------------+
| **Work Requirement:**      | Must have earned income.                |
+----------------------------+-----------------------------------------+
| **Grace Period:**          | No                                      |
+----------------------------+-----------------------------------------+
| **Premium Threshold:**     | 185% of FPL                             |
+----------------------------+-----------------------------------------+
| **Individual or family     | Family                                  |
| income:**                  |                                         |
+----------------------------+-----------------------------------------+

**Premium Structure:**

No premium is charged if family income is at or below 185% of the FPL.

185%-225% of FPL \-- \$10/month

225%-250% of FPL \-- \$25 (reduced to \$12 if enrollee has private
insurance)

### Washington

  ---------------------------- ------------------------------------------
  **Authorizing Legislation:** Ticket Act Basic Coverage/Medical
                               Improvement

  **Implementation date:**     January 2002

  **Countable Income           450% of FPL based on gross income for
  Eligibility:**               single individual or 450% of FPL for
                               couple if married and spouse had income
                               greater than ½ of Federal SSI standard.

  **Whose Income is Counted?** Individual and spouse (But only individual
                               income if spouse's income is less than ½
                               of the SSI standard)

  **Income Disregard:**        Standard SSI disregards and IRWEs

  **Separate Unearned Income   No
  Limit:**                     

  **Resource Limit:**          No resource test

  **Excluded Assets:**         n/a

  **Work Requirement:**        Must have payroll taxes taken out of
                               wages, unless self employed. If
                               self-employed, must provide tax forms or
                               legitimate business records

  **Grace Period:**            Unspecified, but must be intending to
                               return to work

  **Premium Threshold:**       All pay premiums

  **Individual or family       Family
  income:**                    
  ---------------------------- ------------------------------------------

**Premium Structure:**

The assessed premium is the lesser of

(1) 7.5% of your total income; or

(2) The sum of 50% of any unearned income in excess of the medically
    needy income level (MNIL) - the current MNIL is \$571; plus 5% of
    your total unearned income; plus 2.5% of your earned income after
    deducting \$65.

### West Virginia

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage

  **Implementation date:**      Pending

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    Unearned income cannot exceed federal
  Limit:**                      benefit standard plus \$20

  **Resource Limit:**           \$5,000/\$10,000

  **Excluded Assets:**          Retirement Accounts, Independence
                                Accounts from Participants earnings

  **Work Requirement:**         Must be working

  **Grace Period:**             No

  **Premium Threshold:**        All pay premium

  **Individual or family        Individual
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

All participants pay a \$50 enrollment fee and upon payment the first
month's premium payment is waived. There is a sliding scale of premiums
based on the annual gross income of the individual with a minimum
monthly premium of \$15 and a maximum of 3.5% of individual's gross
monthly income.

### Wisconsin

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  BBA

  **Implementation date:**      January 2000

  **Countable Income            250% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards

  **Separate Unearned Income    no (see premium)
  Limit:**                      

  **Resource Limit:**           \$15,000 (only count individual assets

  **Excluded Assets:**          Retirement Accounts initiated after
                                Buy-in, Independence Accounts

  **Work Requirement:**         Must be working or enrolled in an
                                employment counseling program. Can remain
                                in employment counseling for up to one
                                year.

  **Grace Period:**             Can enroll in Health Employment
                                Counseling for up to a year. Additional
                                grace period 6 months for a health
                                setback.

  **Premium Threshold:**        150% of FPL

  **Individual or family        Individual
  income:**                     
  ----------------------------- -----------------------------------------

**Premium Structure:**

Premiums are assessed when an individual\'s income is at or above 150%
of the FPL for his family size.

-   100% of unearned income minus a living allowance (\$655/month
    in 2003) and specified deductions (IRWE and medical deduction) plus

-   3% of the individual\'s earned income. If unearned income deductions
    exceed actual unearned income, the difference is subtracted from
    earned income before assessing the 3% premium.

## Wyoming

  ----------------------------- -----------------------------------------
  **Authorizing Legislation:**  Ticket Act Basic Coverage

  **Implementation date:**      Pending

  **Countable Income            100% of FPL
  Eligibility:**                

  **Whose Income is Counted?**  Individual and Spouse

  **Income Disregard:**         Standard SSI disregards. Additionally,
                                first \$600 per year of unearned income
                                (\$50 per month) is disregarded from
                                income calculation.

  **Separate Unearned Income    No
  Limit:**                      

  **Resource Limit:**           None

  **Excluded Assets:**          n/a

  **Work Requirement:**         Must be employed

  **Grace Period:**             No

  **Premium Threshold:**        All pay premium

  **Individual or family        Individual
  income:**                     
  ----------------------------- -----------------------------------------

**Premium**

-   The individual pays a premium of 7.5% of total gross monthly
    earnings from work; and

-   The individual also pays a premium of 7.5% of her/his annual
    unearned income in excess of \$600, provided

-   The total paid in premiums, and the total premium amount liable does
    not exceed 7.5% of total family income.

**Appendix B**

**Demographic Characteristics of Buy-In Enrollees**

**in Selected States**

Several States have developed reports that provide demographic
information on Buy-In participants. In this Appendix, we present this
data and compare it to the demographics of the DI program nationally.

**Exhibit B1: Age**

+-------------------------+---------------+-------------+-------------+
| **State**               | **Ages**      | **Ages**    | **65 or     |
|                         |               |             | over\*\***  |
|                         | **20-44**     | **45-64**   |             |
+-------------------------+---------------+-------------+-------------+
| DI National             | 25.0%         | 75.0%       |             |
+-------------------------+---------------+-------------+-------------+
| > California            | 34.0%         | 55.5%       | 11%         |
+-------------------------+---------------+-------------+-------------+
| > Wisconsin             | 38.4%         | 61.6%       | 0%          |
+-------------------------+---------------+-------------+-------------+
| > Vermont               | 39.1%         | 59.3%       | 1.6%        |
+-------------------------+---------------+-------------+-------------+
| > Maine                 | 45.0%         | 49.0%       | 6.0%        |
+-------------------------+---------------+-------------+-------------+
| > Kansas\*              | 47.0%         | 53.0%       |             |
+-------------------------+---------------+-------------+-------------+
| > Connecticut           | 51.8%         | 48.4%       |             |
+-------------------------+---------------+-------------+-------------+
| > Illinois\*            | 55.0%         | 45.0%       |             |
+-------------------------+---------------+-------------+-------------+

> \* Estimated based on state data reported in different categories
>
> \*\*Applicable for BBA states only

**Exhibit B2: Education**

+------------+-------------+------------+----------------+------------+
| **State**  | **Less than | **High     | **Some college | **College  |
|            | High School | school     | (includes      | graduate   |
|            | Graduate**  | Graduate** | 2-year         | or more**  |
|            |             |            | degrees)**     |            |
+------------+-------------+------------+----------------+------------+
| National   | 31.0%       | 35.0%      | 23.0%          | 11.0%      |
| DI         |             |            |                |            |
+------------+-------------+------------+----------------+------------+
| > Kansas   | 10.2%       | 39.8%      | 39.1%          | 10.9%      |
+------------+-------------+------------+----------------+------------+
| > M        | 12.7%       | 63.2%      | 15.8%          | 8.3%       |
| innesota\* |             |            |                |            |
+------------+-------------+------------+----------------+------------+
| > Vermont  | 20.3%       | 47.3%      | 11.8%          | 17.3%      |
+------------+-------------+------------+----------------+------------+
| > C        | 23.7%       | 42.6%      | 22.7%          | 10.9%      |
| onnecticut |             |            |                |            |
+------------+-------------+------------+----------------+------------+

Exhibit B3: Marital Status

+------------------------------+-------------------+-------------------+
|                              | **Married**       | **Single\***      |
+------------------------------+-------------------+-------------------+
| DI National                  | 50%               | 50%               |
+------------------------------+-------------------+-------------------+
| > Connecticut                | 7.0%              | 92.9%             |
+------------------------------+-------------------+-------------------+
| > Minnesota                  | 14.5%             | 85.5%             |
+------------------------------+-------------------+-------------------+
| > Wisconsin                  | 22.0%             | 78.0%             |
+------------------------------+-------------------+-------------------+
| > Vermont                    | 24.1%             | 74.9%             |
+------------------------------+-------------------+-------------------+
| > Maine                      | 25.0%             | 75.0%             |
+------------------------------+-------------------+-------------------+

Sources of Information:

> DI National, Social Security Supplement 2003, Table 5d6
>
> California: Jee and Menges 2003
>
> Connecticut: Porter 2004
>
> Kansas: Hall 2003
>
> Maine: Salley and Glantz 2002
>
> Minnesota: Minnesota MIG 2004
>
> Vermont: Vermont Department of Rehabilitation Services 2003a
>
> Wisconsin: APS 2003

[^1]: These states include: Alaska, California, Connecticut, Illinois,
    Indiana, Iowa, Kansas, Maine, Minnesota, Nebraska, New Hampshire,
    Utah, Washington, and Wisconsin.

[^2]: The 1619(b) threshold varies by state and is equal to: the
    annualized gross earned income amount which would reduce SSI cash
    benefits to zero for an individual with no other income (taking into
    account the state\'s supplementary payment level, if any) plus the
    state\'s average annual per capita Medicaid expenditures. When an
    individual who is otherwise eligible for 1619(b) has gross earnings
    which exceed the state threshold amount, the individual may be
    determined eligible under an individualized threshold calculation,
    which uses the individual's actual Medicaid expenditures if higher
    than the state Medicaid average.

[^3]: For example, assume the state's medically needy income level is
    \$450 per month. An individual with a \$650 monthly income would
    have a monthly "spend-down" of (\$650-\$450) or \$200. Assuming the
    state has opted to use six months as the "budget period" for the
    program, the \$200 is multiplied by the state's budget period of 6
    months for a total spend-down requirement of \$1,200. Once the
    individual has incurred medical bills totaling more than \$1200, he
    or she is covered by the Medicaid program for the remainder of the
    budget period.

[^4]: The person must meet the same definition of disability used for
    SSI and DI eligibility determination, except for work requirements.
    States may also cover people who are no longer eligible for SSI or
    DI because of medical improvement.

[^5]: DI beneficiaries who work can continue to receive at least 93
    consecutive months of Medicare coverage, even though cash benefits
    have ceased due to work.

[^6]: Some former DI beneficiaries that leave the rolls due to work and
    complete the Extended Period of Eligibility for Medicare are
    eligible to purchase Medicare coverage by paying a monthly premium.
    The premium in 2004 is \$343 per month for Part A coverage and
    \$66.60 per month for Part B coverage.

[^7]: CMS contends that the demonstration waiver process is designed to
    explore the outcome of an innovative program. Because there is a
    state plan option for a Buy-in, there is ample experience and
    opportunity for CMS to assess its value and therefore, a waiver for
    such programs is unnecessary. CMS views the waiver approach to
    implementing a Buy-in as merely a means for states to limit their
    fiscal liability, rather than as a means for testing an innovative
    approach.

[^8]: North Dakota implemented its Buy-in program in June 2004, during
    the final drafting of this paper.

[^9]: Actions include modifying formularies, subjecting more drugs to
    prior authorization, imposing limits on the number of prescription
    per month, and other policies to control utilization (Smith et al.
    2004)

[^10]: One extreme example is Utah's Buy-in program, where state funding
    for the program was reduced from \$600,000 to \$200,000 for FY 2003.
    Program staff were forced to choose between further restricting
    eligibility (i.e., lower the income limit or impose an unearned
    income limit) or increasing premiums. In consultation with
    consumers, the program chose to increase premiums. Premiums were
    raised to almost 55% of countable income, creating significant
    hardships on enrollees. Funding for the program was reinstated the
    following year and premiums were subsequently reduced.

[^11]: Ten states exclude all or part of this group by imposing an
    unearned income limit. Three states allow DI beneficiaries to
    participate in the Buy-in, but require them to essentially "spend
    down" their unearned income via premiums and co-pays. In contrast,
    one state (Missouri) appears to be purposely shifting a large part
    of its spend down participants into the Buy-in.

[^12]: Prior to the enactment of the BBA and the Ticket Act,
    Massachusetts developed a Medicaid Buy-in using 1115 demonstration
    waiver authority granted by what was then the Health Care Financing
    Administration (HCFA). Under the 1115 demonstration waiver, the
    state was able to define the eligibility group and develop a premium
    structure subject only to HCFA's approval.

[^13]: Under the general Medicaid rules for determining eligibility for
    Medicaid, states are required to follow the same rules and processes
    used by the most closely related cash assistance program to
    determine eligibility. For aged, blind or disabled individuals,
    those are the rules of the SSI program. Section 1902(r)(2) allows
    states to use less restrictive income and resource methodologies in
    determining eligibility for most Medicaid eligibility groups than
    are used by the associated cash assistance programs.

[^14]: In one state (Oregon) any unearned income in excess SSI standard
    will be given to the state as a client contribution.

[^15]: The average monthly DI benefit was \$834 in December 2002 (SSA
    2004).

[^16]: The SSI asset test excludes the recipient's home, car, household
    goods, burial plots, term life insurance, and income considered part
    of a Plan for Achieving Self Support (PASS).

[^17]: Two states (Arizona and New Mexico) have opted to have enrollees
    pay a co-payment to the provider for each service they receive
    instead of collecting premiums.

[^18]: http://www12.inetba.com/barrierbreakers/index2.ivnu.

[^19]: Authors' calculation based on CMS Buy-in enrollment data and
    Medicaid Purchase Plan Annual Report 2002.

[^20]: California, Connecticut, Maine, Vermont and Utah surveyed program
    participants and included questions about their sources of
    information about the Buy-in (Jee and Menges 2003, Porter 2003,
    Salley and Glantz 2002, Vermont Division of Vocational
    Rehabilitation 2003a, and Julnes et al. 2003).

[^21]: Authors' calculation using 2003 Medicaid enrollment data.
    <http://www.cms.hhs.gov/medicaid/managedcare/mcsten03.pdf>. Buy-in
    participants as a percent of total Medicaid enrollees ranges from
    2.4% in Iowa to less than 0.10% in 11 states.

[^22]: Although we cannot determine how many people in each state are
    eligible for the Buy-in, or would be if they were working, we assume
    that the number is roughly proportional to the number of DI
    beneficiaries who would not be eligible for Medicaid via another
    disability-related Medicaid category. We estimate this number to be
    the number of DI beneficiaries in the state with DI benefits that
    are greater than the highest Medicaid income eligibility standard.
    This figure is shown in column (E) of Exhibit III.8.

[^23]: The correlation coefficient between columns F and G is .58,
    meaning that 33% (.58^2^) of the variation in enrollment can be
    explained by the proxy for other work supports in the state. The
    correlation is statistically significant (p=.001). In interpreting
    this correlation, it is important to keep in mind that SSI
    recipients are not Buy-in enrollees.

[^24]: Employment rate: The percentage of working-age men and women with
    a work limitation who are employed, based on the Current Population
    Survey. Accessed 6/14/04
    [http://www.disabilitystatistics.com](http://www.disabilitystatistics.com/).

[^25]: Gross income thresholds for continued Medicaid coverage under
    section 1619(b) are rather high, ranging from \$21,145 to \$42,390
    in the Buy-in states. According to national data on 1619(b)
    participants, only 28,705 (39%) have incomes exceeding \$14,400 per
    year (SSA 2003).

[^26]: Initially, some were concerned that the Buy-in would "crowd-out"
    private insurance. That is, that people would reject
    employer-sponsored insurance in favor of a less expensive, more
    comprehensive Medicaid program. This does not appear to be a
    significant issue given the small number of enrollees in most
    programs, and the large proportion of participants that come from
    other Medicaid categories (noted in the next section). One MIG
    director interviewed regards the issue of crowd-out differently,
    suggesting that Buy-in programs should "embrace crowd-out" and
    market beneficiaries to employers as "already insured" workers.

[^27]: This should equal the number of Buy-in participants who were
    neither DI nor other Medicaid at the time of enrollment. The Ireys
    et al. (2003) report seems to indicate irregularities in the
    reporting of the DI status of enrollees. Several states report a
    much larger number of Buy-in participants with Medicare coverage
    than the number of DI beneficiaries. CMS and state staff have
    suggested that this must be in error.

[^28]: Ireys et al. found that 39% in Medically Needy (spend down), 21%
    of enrollees with previous Medicaid coverage were in cash assistance
    categories, 27% in poverty-related categories, and 14% in other
    categories. It is difficult to interpret these findings because of
    apparent variation across states in how prior Medicaid eligibility
    categories are reported.

[^29]: Several states are, however, currently working together to
    develop a methodology that would allow states to determine and
    report disability type using diagnostic codes available on the
    Medicaid data system.

[^30]: Wisconsin data is from a sample of participants based on their
    most recent disability determination (APS 2003). Minnesota reports
    disability type based on categories of claims and services
    (Minnesota MIG 2004). The numbers reported by Vermont, Connecticut
    and Kansas are self-reports from participant surveys. (Vermont
    Division of Vocational Rehabilitation 2003a, Porter 2004, Hall 2003)

[^31]: Vermont, 30.1%; Connecticut, 36.7%; Minnesota 47.7%, Wisconsin
    50.3%, Kansas 53.2% (Vermont Division of Vocational Rehabilitation
    2003a, Porter 2003, Minnesota MIG 2004, APS 2003, Hall 2003).

[^32]: Kansas, 7.3%; Wisconsin 12.7%, Minnesota 15.7% (Hall 2003, APS
    2003, Minnesota MIG 2004).

[^33]: Wisconsin 37%, Minnesota 40%, Kansas 40%, Vermont 62%. (APS 2003,
    Minnesota MIG 2004, Hall 2003, Vermont Division of Vocational
    Rehabilitation 2003a).

[^34]: Although this number is important because it gives a sense of who
    is in the Buy-in, it is likely to be an understatement of the actual
    percent of people who have earnings because of the data source. Most
    states use their Unemployment Insurance data system to track
    earnings. Although Unemployment Insurance data capture 99.7% of
    wages and salaries from civilian employment, they do not reflect,
    among other small classes of workers, two categories that may be
    significant for Buy-in enrollees\--self employment and casual
    employment. It is interesting to note that only two states,
    Pennsylvania and Indiana, use eligibility system data to report
    earnings. Indiana has the highest percentage of people with earnings
    and Pennsylvania has the highest percent of enrollees with earnings
    over \$1,600.

[^35]: It is unlikely that a substantial number people with disabilities
    living in institutions would participate in the Buy-in. Medicaid
    expenditures associated with institutionalization are therefore
    excluded for purposes of the comparison.

[^36]: In states that set the unearned income limit for the Buy-in at
    the same level as the limit for their other disability-related
    poverty categories under Medicaid, DI beneficiaries in these
    Medicaid categories will generally not be eligible for the Buy-in.
    These states include Alaska, Arkansas, Nebraska (except if in a
    trial work period), South Carolina, and West Virginia. Note that
    these states have very low enrollment in general, and as measured as
    a percentage of the potentially eligible DI population, as shown in
    Exhibit III.8. Enrollment in West Virginia is not shown because the
    state had not begun enrollment at the time that the data in Exhibit
    III.8 were reported.

[^37]: All but nine states use a variant of the SSI income counting
    methodology in determining Buy-in eligibility.

[^38]: See Exhibit III.5 for specific examples.

[^39]: It is important to note that the SSI counting methodology is used
    in Buy-in and other programs that define income limits in terms of
    FPL percentages, rather than in terms of gross income. The
    methodology's preferential treatment of earnings allows participants
    to earn higher incomes and retain eligibility than would be
    permitted if the gross FPL percentage alone were used to determine
    the income limit. Buy-in programs implemented under the BBA were
    required to define income limits in terms of FPL percentages and to
    use the SSI income counting methodology. Although Buy-in programs
    implemented under the Ticket Act are not required to use this
    methodology, most have chosen to do so.

[^40]: Medicare requires a 50% co-payment for outpatient mental health
    services.

[^41]: Some states include employment-related supports in the Mental
    Health Rehabilitation Option.

[^42]: Supported employment is often included as a service in Mental
    Retardation /Developmental Disabilities waiver programs.

[^43]: Four states (Mississippi, New Mexico, South Carolina and Wyoming)
    do not have a Medically Needy eligibility group and are not 209(b)
    states which are required to allow people with disabilities to spend
    down to the SSI level.

[^44]: Including for example, SSI/DI dual enrollees, spend down
    participants, certain Qualified low income Medicare Beneficiaries
    (QMB), and Specified Low income Medicare Beneficiaries (SLMB).

[^45]: This process is more complex when the beneficiary is enrolled in
    either a Medicaid managed care plan or a Medicare+Choice plan. In
    these cases it can be more difficult to determine the services or
    portion of services that should be covered by Medicare versus
    Medicaid.

[^46]: The \$5,100 in total costs would represent \$3,662 in
    out-of-pocket costs after Medicare deductibles and co-payments are
    applied to the expenditures below \$2,250.

[^47]: National Council of State and Local Human Service Administrators
    conference sponsored by American Public Human Services Association
    and the Center for Workers with Disabilities convened in Washington,
    DC on July 19, 2004.

[^48]: Pre-enrollment earnings are measured as the average of earnings
    during the four quarters prior to the quarter of enrollment, based
    on state Unemployment Insurance wage data.

[^49]: Earnings changes are measured as the difference between the first
    quarter after enrollment and the average of the following: the
    fourth quarter before enrollment, the third quarter before
    enrollment, and the second quarter before enrollment, based on state
    Unemployment Insurance wage data.

[^50]: Oregon requires participants to give up any unearned income in
    excess of the state\'s SSI standard in order to participate in the
    Buy-in and thus, will likely attract only those who can work at
    levels high enough to justify the loss of unearned income (SSI and
    DI benefits).

[^51]: In addition to the MIG, CMS provides several Real Systems Change
    Grants to address the integration of services at the state level.

[^52]: The full retirement age for Social Security is increasing 2 years
    (from 65 to 67) over a 22 year period beginning with people born in
    1938. The age increases 2 months per year with an 11-year hiatus
    when the retirement age will be 66 (for people born 1943-1954)
    (<http://www.ssa.gov/pubs/retirechart.htm>).

[^53]: The relevant section of the Program Operation Manual is at
    <http://policy.ssa.gov/poms.nsf/lnx/0502302030> (accessed
    6/20/2004).