Eligibility for benefits under SSI, DI, Medicare, and Medicaid programs for individuals with disabilities is determined in part on whether an individual has a disability as defined in the Social Security Act. For purposes of these programs, a person is disabled if he or she has a medically determined physical or mental impairment that (1) has lasted or is expected to last at least 1 year or result in death and (2) prevents the person from engaging in substantial gainful activity (SGA). As of January 2003, SGA is defined as countable earnings—generally gross earnings less the cost of items that, because of the impairment, a person needs to work—of more than $800 per month. The Social Security Administration’s (SSA) interpretation of disability specifies that for a person to be determined to be disabled, the impairment must be of such severity that the person not only is unable to do his or her previous work but, considering the person’s age, education, and work experience, is unable to do any other kind of substantial work that exists in the national economy. The Ticket to Work and Work Incentives Improvement Act of 1999 allowed states to expand the availability of Medicaid coverage for individuals with disabilities who work, even though they earn more than the SGA level. States that implement Ticket to Work Buy-In programs may consider as disabled those individuals who, except for the fact that they are earning more than the SGA $800 monthly amount, otherwise would meet the Social Security Act definition of disabled. Individuals with disabilities become eligible for Medicaid in a variety of ways but primarily through SSI or DI eligibility (see table 1). Individuals with disabilities, however, must also meet Medicaid income and asset requirements in order to obtain Medicaid coverage. Both the SSI and DI programs contain work incentive provisions designed to assist individuals with disabilities to achieve gainful employment while retaining some eligibility for health care coverage. Individuals receiving SSI also are assured eligibility for Medicaid in 39 states and the District of Columbia. The remaining 11 states (known as 209(b) states) may use different standards for disability, income, or assets; thus, SSI beneficiaries in these 11 states may not have assured eligibility for Medicaid. Work incentives under SSI allow individuals to (1) have their SSI cash benefits gradually reduced as earnings increase, rather than having cash benefits removed entirely once earnings exceed the SGA limit, and (2) maintain their Medicaid coverage up to an income limit that varies across the states (from $15,049 (170 percent of the FPL) in Arizona to $39,228 (443 percent of the FPL) in New Hampshire as of 2002). Individuals receiving DI also may become eligible for Medicaid under certain circumstances. By virtue of their DI disability determination, they meet one of the categorical eligibility requirements for Medicaid. However, they must also meet Medicaid’s income and asset requirements as defined by each state. DI beneficiaries can “spend down” their income on medical expenses in order to meet state-determined income limits for the medically needy eligibility category, if a state provides this optional coverage. While DI beneficiaries receive health care coverage through Medicare, eligibility for the medically needy category provides Medicaid- covered services that are not covered by Medicare, such as most outpatient prescription drugs. Work incentives under DI are structured such that if an individual’s work activity increases to a level where he or she is no longer deemed disabled, the individual loses DI eligibility, and in turn, Medicaid eligibility. The Ticket to Work Medicaid Buy-In builds on an earlier effort to expand Medicaid eligibility for individuals with disabilities who desire to work. Through the Balanced Budget Act of 1997 (BBA) (Pub. L. No. 105-33, 111 Stat. 251), the Congress gave states the option of implementing a coverage category for working individuals with disabilities. For these individuals, the BBA authorized states to extend Medicaid coverage to those who meet the SSI definition of disability and exceed the SSI income eligibility limit but whose income remains under 250 percent of the FPL. States electing the BBA option may require beneficiaries to pay premiums or may use other cost-sharing provisions as long as they are set on a sliding scale based on income. As of December 2002, 12 states had implemented a BBA option for working individuals with disabilities. The Ticket to Work Medicaid Buy-In legislation expands the availability of Medicaid coverage for individuals with disabilities who desire to work by allowing them to gain or maintain Medicaid eligibility as they enter the workforce or to increase their earnings if they are in the workforce. The Ticket to Work Buy-In builds on the BBA option by giving states unlimited flexibility to set higher income and asset levels for two new eligibility groups—Basic Coverage Group and Medical Improvement Group—for working individuals with disabilities. (For a comparison of the two programs, see table 2.) The Basic Coverage Group allows states to cover people aged 16 to 64 who, except for the amount of their earned income, would be eligible to receive SSI benefits. States may establish their own income and asset standards or elect to have no standards at all. As with the BBA option, states electing the Basic Coverage Group may require participants to pay monthly premiums or may impose other cost-sharing mechanisms if they are set on an income-based sliding scale. However, for individuals with annual incomes less than 450 percent of the FPL, states may not impose premiums that exceed 7.5 percent of income. Additionally, if the individual’s adjusted gross income for federal income tax purposes exceeds $75,000, the state must require the individual to pay the highest amount of premiums that an individual would be required to pay under the state’s premium structure, although a state is allowed to subsidize this cost with its own funds. While the Basic Coverage Group Buy-In participants must have earnings, the Ticket to Work legislation does not specify a minimum level of employment for this group. Since states cannot adopt rules defining employment for this group that are more restrictive than those in federal law, states cannot establish requirements such as minimum earnings or hours worked. The Medical Improvement Group allows states to cover working individuals who lose Medicaid eligibility under the Basic Coverage Group because their conditions have improved to the point that they no longer meet the SSI definition of disability but still have “a severe, medically determinable impairment.” The same premium requirements apply as for the Basic Coverage Group. If a state elects to cover the Medical Improvement Group, it must also cover the Basic Coverage Group. While the Ticket to Work legislation does not set an employment standard for the Basic Coverage Group, it provides a definition and also allows a state to define employment for the Medical Improvement Group. According to the legislation, an individual qualifying for the Medical Improvement Group is considered employed if the individual is earning at least the minimum wage and working at least 40 hours per month. Alternatively, a state may use hours of work, wage levels, or other measures to define employment if the Secretary of Health and Human Services approves the definition. Compared with the rest of the working-age population, the estimated 6.7 million working-age individuals with disabilities nationwide were more likely to be not working, have less education, and have incomes below the FPL. Specifically, 82 percent of working-age individuals with disabilities, or about 5.5 million individuals, reported that they were not working. (See fig. 1.) Nearly three-fourths of working-age individuals with disabilities reported they had a high school education or less. Furthermore, these individuals were nearly three times more likely than individuals without disabilities to have incomes below the FPL. At the same time, individuals with disabilities were less likely to be uninsured compared with the rest of the working-age U.S. population, with just 9 percent of those with disabilities reporting being uninsured, compared with 15 percent for the rest of the working-age population. Nearly half of individuals with disabilities who reported having health insurance obtained coverage through public sources, such as Medicaid and Medicare. Working-age individuals with disabilities were far more likely to have public health coverage than working-age individuals in the general population. Specifically, working-age individuals with disabilities were about eight times more likely to have public health insurance coverage than other working-age individuals. Generally, the lower the income level, the more likely an individual with disabilities was to have public health insurance coverage. For example, 75 percent of individuals with disabilities who had incomes below the FPL had public health insurance, while fewer than 20 percent of those with incomes at or exceeding 400 percent of the FPL had public coverage. The extent of their health care costs underscores the need for individuals with disabilities to maintain some type of health insurance coverage to help cover the costs of their care. Health care expenditures for working- age individuals with disabilities were about five times the expenditures for other working-age individuals, annually averaging about $7,600 and $1,500, respectively. The 12 states that opted to implement the Ticket to Work Medicaid Buy-In program as of December 2002 set income and asset levels for eligibility that provided new opportunities for working individuals with disabilities to secure and maintain Medicaid coverage. DI-eligible individuals benefited particularly because states’ broader eligibility categories under the Buy-In allowed individuals to become eligible for Medicaid without spending down their incomes and to remain eligible when their incomes rose to higher levels. In addition to expanding income eligibility and asset limits, all states took advantage of the flexibility of the statute to charge premiums or copayments to ensure that Buy-In participants shared in the cost of their health care coverage. Across the 12 states that opted to implement Ticket to Work Medicaid Buy-In programs, all set eligibility requirements that expanded eligibility for working individuals with higher incomes or more assets than usually allowed under their Medicaid programs. As of December 2002, the number of Buy-In participants for the 12 states totaled 24,258, ranging from 3 participants in Wyoming to almost 8,500 participants in Missouri. (See table 3.)