March 29, 2000  
Dear State Medicaid Director:  
On December 17, 1999, President Clinton signed the "Ticket to Work and Work Incentives 
Improvement Act of 1999" into law. In signing this legislation, President Clinton emphasized that it 
will enable the nation to better ensure that "No one will have to choose between taking a job and 
having health care." This legislation improves access to employment training and placement 
services for people with disabilities who want to work. It also offers States unprecedented 
opportunities to eliminate barriers to employment for people with disabilities by improving access 
to health care coverage available under Medicare and Medicaid. The Health Care Financing 
Administration (HCFA) will be providing information on an ongoing basis concerning 
implementation of this important legislation.  
The concern expressed most frequently by people with disabilities who want to work is the fear of 
losing coverage for health care should their employment cause them to lose eligibility for benefits 
such as Medicare and Medicaid. Often these individuals cannot get private health insurance. The 
loss of Medicare and Medicaid would leave them without a way to pay for medical expenses and 
for basic supports they require to live. Many, therefore, fear working as not in their best interests if 
it would result in the loss of their Medicare or Medicaid coverage. Others may be employed, but 
are careful to limit their employment to the very low levels that will not jeopardize such coverage.  
Title II of the new legislation entitled "Expanded Availability of Health Care Services" contains 
five provisions that specifically address the concerns many people with disabilities have about 
possible loss of health care if they return to work. Three of the provisions affect the Medicaid 
program, and are described more fully below. The remaining two provisions include: (1) an 
extension to 78 months (versus the previous 24 month limit) of premium-free Medicare Part A 
benefits for beneficiaries who lose Title II cash assistance because they return to work; and (2) a 
consumer protection provision which at the policyholder's request requires suspension of Medigap 
coverage and premiums for disabled policyholders who are entitled to Medicare Part A benefits if 
the individual is covered under certain group health plans. The law now requires that the policy be 
automatically reinstated if the policyholder provides timely notice that he or she lost the group 
health coverage.  
It will take some time to develop detailed guidance on the provisions affecting the Medicaid 
program. In the meantime, though, I want to provide each of you with a summary of the Medicaid 
provisions and information on who you can contact for further information and technical assistance. 
I hope you will  
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begin seriously considering the options available to States to make a real, positive contribution to 
efforts to assist people with disabilities to gain and sustain competitive employment.  
New Eligibility Groups (Section 201 of the legislation). Two new optional categorically 
needy Medicaid eligibility groups are created by the new statute.   Under the subsection (XV) eligibility group, States can cover individuals at least age 16 but less 
than 65 years of age who, except for earned income, would be eligible to receive Supplemental 
Security Income (SSI) benefits, regardless of whether they have received SSI cash benefits. This 
group is similar to the group created by section 4733 of the Balanced Budget Act (BBA), except 
that there is no 250 percent of the Federal poverty level family income limit, AND under this new 
group States are free to establish their own income and resource standards, or have no income or 
resource standards if they choose.  
Under what we are calling the "Medical Improvement and Employment Security" group, States 
can cover employed individuals with a medically improved disability who lose Medicaid 
eligibility under the subsection (XV) eligibility group described above because their medical 
conditions have improved to the point where they are no longer disabled under the SSI definition 
of disability. If a State wants to cover this group, it must cover the subsection (XV) group 
described above.  
As with the original BBA group, States may impose premiums or other cost-sharing charges on a 
sliding scale based on income for individuals eligible under both of the new eligibility groups. For 
individuals with annual adjusted gross income (as defined by the IRS) that exceeds $75,000, States 
are required to charge 100 percent of the premiums they may impose. However, States can 
subsidize the premium cost for these individuals, using State funds.  
Medicaid Infrastructure Grant Program (Section 203 of the legislation). This eleven year 
grant program makes $150 million available over the first five years to States to design, establish 
and operate State infrastructures that:  
  implement the Medicaid eligibility group(s) discussed above;  
  design and plan a Medicaid demonstration for employed individuals with potentially severe 
physical or mental impairments;  
  plan, design or evaluate improvements to the Medicaid State Plan for purposes of providing 
more effective employment support; and/or  
  create a State-to-State Medicaid Infrastructure Center to serve as a regional technical 
assistance provider for health care improvements supporting employment.  
 
Funds may also be used to conduct outreach campaigns to educate beneficiaries about the 
availability of such health care and related coverage for competitively employed individuals with 
disabilities. Subject to availability of the overall annual amount appropriated for this grant program, 
the minimum award to States is $500,000 per fiscal year.  
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To be eligible for grant funds, a State must make personal assistance services available under its 
State Medicaid plan to the extent necessary to assist individuals with disabilities to maintain 
employment. The grant program is designed to reward States for their efforts in encouraging 
individuals with disabilities to be employed, and to give proportionately more funding to States that 
have elected to cover the eligibility group for working individuals with disabilities.  
Medicaid Demonstration (Section 204 of the legislation). This program, which is funded at $250  million over six years, enables States to provide the full Medicaid benefits package to workers with 
potentially severe disabilities. These workers must be at least 16 but less than 65 years old, and 
have a specific physical or mental impairment that can reasonably be expected, but for the receipt 
of Medicaid services, to lead to blindness or disability as defined under the SSI program. Under the 
demonstration, a State defines the number of people with the physical or mental impairments it 
chooses to cover. The intention of the demonstration is to measure the effect of providing early 
intervention in the form of Medicaid benefits and services on the ability of participants to retain 
competitive employment. States are permitted to operate sub-State demonstrations.  
Funds under both the Medicaid Infrastructure Grant Program and the Medicaid Demonstration will 
be available beginning October 1, 2000. Two requests for proposals (RFPs) will be released this 
summer with complete details on how States can apply for funds under both the infrastructure grant 
program, and the demonstration program. We plan to issue State Medicaid Directors letters in 
advance to alert States to the pending release of the RFPs.  
HCFA also is preparing guidance materials for States on the options created by this legislation. 
Additional letters to State Medicaid Directors will provide more detailed information about the 
new eligibility groups. A draft State Medicaid plan pre-print for States to use in submitting plan 
amendments to cover these groups also will be made available.  
In addition, we will be providing ongoing technical assistance and education around the new health 
care programs as well as participating in several public information sessions on the entire Act 
sponsored by the Social Security Administration. If you have questions about the new eligibility 
groups created by the Ticket to Work and Work Incentives Improvement Act of 1999, please 
contact Roy Trudel at 410-7863417 (e-mail rtrudel@hcfa.gov). If you have questions about the 
Medicaid Infrastructure Grants or the Medicaid Demonstration, please contact Carey O'Connor at 
202-690-7865 (e-mail coconnor2@hcfa. gov).  
We are excited about the opportunities presented by the legislation, and look forward to working 
with you as you begin to consider the options available to your State to really make a difference 
in the lives of people with disabilities who want to work.  
Sincerely,  
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/s/  
Timothy M. Westmoreland Director  
cc: All HCFA Regional Administrators All HCFA Associate Regional Administrators for Medicaid 
and State Operations Lee Partridge - Director, Health Policy Unit American Public Human Services 
Association Joy Wilson - Director, Health Committee National Conference of State Legislatures 
Matt Salo - Director of Health Legislation National Governors' Association   <% 'Sitewide navigation info / do NOT edit %>  
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