oversight

Medicaid and Ticket to Work: States' Early Efforts to Cover Working Individuals with Disabilities

Published by the Government Accountability Office on 2003-06-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to Congressional Committees




June 2003
             MEDICAID AND
             TICKET TO WORK
             States’ Early Efforts to
             Cover Working
             Individuals with
             Disabilities




GAO-03-587
                                                June 2003


                                                MEDICAID AND TICKET TO WORK

                                                States’ Early Efforts to Cover Working
Highlights of GAO-03-587, a report to the       Individuals with Disabilities
Senate Committee on Finance and the
House Committee on Energy and
Commerce




Over 7 million individuals with                 As of December 2002, 12 states had implemented Medicaid Buy-In programs
disabilities rely on medical and                under the authority of the Ticket to Work legislation, which was effective
supportive services covered by                  October 1, 2000, enrolling over 24,000 working individuals with disabilities.
Medicaid. However, if working-age               These states used the flexibility allowed by the legislation to raise income
individuals with disabilities desire            eligibility and asset limits as well as cost-sharing fees.
to increase their self-sufficiency
through employment, they could
jeopardize their eligibility for                Across the 12 states, income eligibility levels ranged from 100 percent of the
Medicaid coverage, possibly                     federal poverty level (FPL) in Wyoming to no income limit in Minnesota,
leaving them without an alternative             with 11 states setting income eligibility limits at twice the FPL or higher. In
for health insurance.                           addition to increasing income and asset levels, these states required
                                                participants to buy in to the program by charging premiums, ranging from
In an effort to help extend                     $26 to $82 a month, and copayments, generally ranging from $0.50 to $3 for
Medicaid coverage to certain                    office visits and prescription drugs.
individuals with disabilities who
desire to work, the Congress                    In detailed analysis of four states—Connecticut, Illinois, Minnesota, and
passed the Ticket to Work and                   New Jersey—GAO found that most Buy-In participants had prior insurance
Work Incentives Improvement Act
of 1999. This legislation authorizes
                                                coverage by Medicaid and Medicare, few had prior coverage by private
states to raise their Medicaid                  health insurance, and many earned low wages—most making less than $800
income and asset eligibility limits             per month.
for individuals with disabilities who
work. States may require that                   In commenting on a draft of this report, the Centers for Medicare & Medicaid
working individuals with                        Services noted that it expects to report in 2004 on its current study of states’
disabilities “buy in” to the program            experiences in 2001 and 2002 with the Medicaid Buy-In programs.
by sharing in the costs of their
coverage—thus, these states’                    Enrollment and Income Eligibility Characteristics of 12 States with Ticket to Work Medicaid
programs are referred to as a                   Buy-In Programs
Medicaid Buy-In.
                                                    State                          Enrollment Buy-In
                                                                                                                                                       a
The act also required that GAO                                                                start date         Income limit as a percentage of FPL
report on states’ progress in                       Missouri                              8,461 July 2002                                      250%
designing and implementing the                      Minnesota                             6,178 July 2001                                    No limit
Medicaid Buy-In. GAO identified                     Indiana                               3,318 July 2002                                      350%
states that operated Buy-In                                                                                                                            b
                                                    Connecticut                           2,433 Oct. 2000                           $75,000 per year
programs as of December 2002 and
                                                    Pennsylvania                          1,325 Jan. 2002                                      250%
analyzed the income eligibility
limits and cost-sharing provisions                  New Hampshire                            968 Feb. 2002                                     450%
established by those states. GAO                    New Jersey                               551 Feb. 2001        250% (earned) and 100% (unearned)
also assessed the characteristics of                Kansas                                   489 July 2002                                     300%
the Buy-In participants in four                     Illinois                                 323 Jan. 2002                                     200%
states that were among the most                     Washington                               144 Jan. 2002                                     220%
experienced in implementing the                     Arkansas                                  65 Feb. 2001                                     250%
program.                                            Wyoming                                        3 July 2002                                 100%
                                                Source: State-reported data as of December 2002.
www.gao.gov/cgi-bin/getrpt?GAO-03-587.          a
                                                The FPL for an individual in 2002 was $8,860 annually.
To view the full product, including the scope   b
                                                Connecticut’s income eligibility limit is not determined by the FPL.
and methodology, click on the link above.
For more information, contact Kathryn G.
Allen at (202) 512-7118.
Contents


Letter                                                                                     1
              Results in Brief                                                             4
              Background                                                                   6
              Individuals with Disabilities Had Lower Employment, Education,
                and Income—and More Insurance Coverage—than the General
                Population                                                               14
              States’ Buy-In Programs Expanded Eligibility and Increased Cost
                Sharing for More Workers with Disabilities                               16
              Buy-In Participants in Four States Generally Had Prior Medicaid
                Coverage and Worked in Low-Wage Jobs                                     27
              Agency and State Comments                                                  32

Appendix I    Methodology for Developing Estimates and
              Characteristics of Working-Age Individuals with
              Disabilities                                                               34



Appendix II   Comments from the Centers for Medicare & Medicaid
              Services                                          36



Tables
              Table 1: Highlights of SSI and DI and Their Links to Medicare and
                       Medicaid                                                            9
              Table 2: Comparison of Criteria for the Ticket to Work Buy-In and
                       the BBA Option                                                    12
              Table 3: Enrollment and Eligibility Characteristics of 12 States With
                       Ticket to Work Medicaid Buy-In Programs                           17
              Table 4: Twelve States’ Premium Requirements for Ticket to Work
                       Medicaid Buy-In Programs                                          25
              Table 5: Number of Buy-In Participants Reporting Other Sources of
                       Health Care Coverage in Four States                               29
              Table 6: Average Monthly Income for Ticket to Work Buy-In
                       Participants in Four States                                       31
              Table 7: MEPS Sample and Estimated Population Sizes, 1997 and
                       1998                                                              35




              Page i                                  GAO-03-587 Medicaid and Ticket to Work
Figures
          Figure 1: Selected Characteristics of Working-Age Individuals with
                   Disabilities Compared with the Rest of the General
                   Working-Age Population                                                           15
          Figure 2: Twelve States’ Medicaid Buy-In, SSI Work Incentive, and
                   Spend-Down Income Eligibility Levels, as a Percentage of
                   the FPL                                                                          20




          Abbreviations

          ADL               activities of daily living
          AHRQ              Agency for Healthcare Research and Quality
          AWI               average wage index
          BBA               Balanced Budget Act of 1997
          CMS               Centers for Medicare & Medicaid Services
          DI                Social Security Disability Insurance
          EPE               extended period of eligibility
          FPL               federal poverty level
          IADL              instrumental activities of daily living
          MEPS              Medical Expenditure Panel Survey
          NHIS              National Health Interview Survey
          SGA               substantial gainful activity
          SSA               Social Security Administration
          SSI               Supplemental Security Income



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          Page ii                                         GAO-03-587 Medicaid and Ticket to Work
United States General Accounting Office
Washington, DC 20548




                                   June 13, 2003

                                   The Honorable Charles E. Grassley
                                   Chairman
                                   The Honorable Max Baucus
                                   Ranking Minority Member
                                   Committee on Finance
                                   United States Senate

                                   The Honorable W.J. “Billy” Tauzin
                                   Chairman
                                   The Honorable John D. Dingell
                                   Ranking Minority Member
                                   Committee on Energy and Commerce
                                   House of Representatives

                                   During fiscal year 2000, over 7 million individuals with disabilities were
                                   enrolled in Medicaid, a federal-state program that finances health care for
                                   certain low-income Americans. For these individuals, Medicaid gives
                                   states the option to cover a wide array of medical and supportive services,
                                   including assistance with basic daily activities such as bathing, dressing,
                                   and eating. Depending on state Medicaid rules, individuals with disabilities
                                   who qualify for cash assistance from the Supplemental Security Income
                                   (SSI) or Social Security Disability Insurance (DI) programs may qualify for
                                   Medicaid. Nearly all individuals who qualify for SSI, which primarily
                                   covers low-income individuals who are disabled and have little or no work
                                   experience,1 are assured eligibility for Medicaid coverage. Under DI, which
                                   assists people who worked but became disabled before their retirement
                                   age,2 individuals are eligible for Medicare, a federal health insurance
                                   program for elderly individuals and some individuals with disabilities.
                                   Depending on their income and assets, individuals eligible for DI also may




                                   1
                                    SSI beneficiaries also include individuals who are blind or aged. References to the SSI
                                   program throughout this report address individuals who are disabled, not blind or aged,
                                   except where noted.
                                   2
                                   DI beneficiaries also include certain other persons, including dependents and survivors of
                                   workers with disabilities. References to the DI program throughout this report address only
                                   workers with disabilities, not dependents or survivors.



                                   Page 1                                           GAO-03-587 Medicaid and Ticket to Work
qualify for Medicaid and thus receive coverage for some services not
covered by Medicare, such as most outpatient prescription drugs.

Because eligibility for Medicaid is generally linked to individuals’ income
and assets, working-age individuals—aged 16 to 64—with disabilities who
live in the community and work may jeopardize their Medicaid coverage
due to earnings from work, possibly leaving them without an adequate
health insurance alternative. The loss of Medicaid may be of particular
concern for working-age individuals with disabilities because some
benefits—including personal assistance with daily activities and adaptive
equipment (such as household items modified for use by those with
disabilities)—may not be available through other sources of health
insurance. For example, private health insurance, such as that offered by
employers, often does not cover personal assistance with basic daily
activities or adaptive equipment. As a result, working-age individuals with
disabilities may forgo employment and associated earnings in order to
ensure their continued financial eligibility for Medicaid coverage of their
health care needs.

In an effort to help extend Medicaid coverage to certain individuals with
disabilities who desire to work, the Congress passed the Ticket to Work
and Work Incentives Improvement Act of 1999 (Pub. L. No. 106-170, 113
Stat. 1860). This legislation, effective October 1, 2000, authorizes states to
raise their Medicaid income and asset limits for individuals with
disabilities who work. States may require that working individuals with
disabilities “buy in” to the Medicaid program by sharing in the costs of
their coverage—therefore, such states’ programs are referred to as a
Medicaid Buy-In. A Medicaid Buy-In program is intended to assist
individuals by allowing them to work and thereby increase their
independence and self-sufficiency, while at the same time enabling them
to obtain or maintain health care coverage. The act directed that we report
to the Congress on characteristics of individuals with disabilities,
including their health care costs and health insurance coverage, as well as
states’ progress in designing and implementing the Medicaid Buy-In
program. Accordingly, as agreed with the committees of jurisdiction, we
examined




Page 2                                   GAO-03-587 Medicaid and Ticket to Work
1. characteristics of working-age individuals with disabilities compared
   with the rest of the working-age U.S. population with regard to
   employment, education, income, health insurance status, and health
   care expenditures,

2. how states that have chosen to establish a Ticket to Work Medicaid
   Buy-In program have designed their programs, including income
   eligibility limits and any cost-sharing provisions, and

3. characteristics of selected states’ Ticket to Work Medicaid Buy-In
   participants, including previous health insurance coverage and income
   from employment.

To compare characteristics of working-age individuals with disabilities to
individuals in the rest of the working-age population, we analyzed data
available from the Agency for Healthcare Research and Quality’s (AHRQ)
Medical Expenditure Panel Survey (MEPS)—the survey of individuals’
demographics, employment, health characteristics, and medical spending
(household component) for 1997 and 1998, the most recent years for
which relevant data were available. We analyzed data from MEPS because
such data provided both a way to identify working-age individuals with
disabilities and details on their health care expenditures. Our estimates
based on MEPS resulted in a relatively broad definition of disability for
individuals aged 16 to 64 because it included individuals who reported one
or both of the following conditions: (1) needing help or supervision in
performing activities of daily living (ADL) (such as bathing or dressing) or
instrumental activities of daily living (IADL) (such as taking medications
or preparing meals) because of an impairment or a physical or mental
health problem,3 or (2) being completely unable to work at a job, do
housework, or go to school. For individuals meeting this definition of
disability, we compared characteristics such as income level, insurance
status, and health care expenditures to those of the rest of the U.S.
population aged 16 to 64. AHRQ collected these data prior to



3
 MEPS identifies ADLs as basic physical activities such as bathing, dressing, or getting
around the house and identifies IADLS as cognitive or social functions such as using the
telephone, paying bills, taking medications, preparing light meals, doing laundry, or going
shopping. MEPS offers a relatively expansive definition of disability in that it does not
distinguish the number of ADLs or IADLs with which an individual may require assistance.
Other national surveys that provided details on the number of ADLs and IADLs with which
an individual required assistance—such as the National Health Interview Survey (NHIS)
Disability Supplement—were based on older data—1994 and 1995. As of March 2003, the
NHIS Disability Supplement had not been updated.




Page 3                                           GAO-03-587 Medicaid and Ticket to Work
                   implementation of Ticket to Work Medicaid Buy-In programs and thus the
                   data do not reflect any effects of states’ Buy-In programs. (App. I provides
                   detailed information on our methodology for developing estimates and
                   characteristics of working-age individuals with disabilities.) To examine
                   the designs of the Buy-In programs for states that had chosen to establish
                   a Buy-In program and whose programs were in effect as of December
                   2002, we reviewed state Medicaid plan amendments describing the Buy-
                   Ins, analyzed published state documents, and conducted telephone
                   interviews with state Medicaid officials. Additionally, we analyzed the Buy-
                   In implementation experience of four states—Connecticut, Illinois,
                   Minnesota, and New Jersey—that were among the most experienced in
                   implementing the program. At the federal level, we interviewed officials at
                   the Centers for Medicare & Medicaid Services (CMS), which oversees
                   states’ Medicaid programs, to gather information about states’ programs.
                   We reviewed documents, including federal laws and reports, related to the
                   state Buy-In programs. We conducted our work from May 2002 through
                   June 2003 in accordance with generally accepted government auditing
                   standards.


                   Compared with the rest of the working-age U.S. population, the estimated
Results in Brief   6.7 million working-age individuals with disabilities were more likely to be
                   not working, have less education, and have incomes below the federal
                   poverty level (FPL). However, they were less likely to be uninsured than
                   the rest of the working-age U.S. population—just 9 percent of those with
                   disabilities reported being uninsured, compared with 15 percent of 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 Medicare and Medicaid. Annual average health care
                   expenditures for working-age individuals with disabilities were about five
                   times the expenditures for other working-age individuals.

                   Of the 12 states that had opted to implement Medicaid Buy-In programs
                   under the Ticket to Work authority, all expanded eligibility to include
                   working individuals with higher incomes or more assets than generally
                   allowed under the states’ traditional Medicaid programs. As of December
                   2002, the 12 states had enrolled over 24,000 working individuals with
                   disabilities. Enrollment ranged from a low of 3 individuals in Wyoming to
                   8,461 in Missouri. Eleven of the 12 states set Buy-In eligibility limits for
                   income at twice the FPL or higher—$17,720 per year for an individual in
                   2002. Additionally, the states’ Buy-In programs generally allowed
                   participants to keep more assets, such as retirement accounts and medical
                   savings accounts, than allowed in states’ traditional Medicaid programs.


                   Page 4                                  GAO-03-587 Medicaid and Ticket to Work
The higher income eligibility and asset levels set by states for the Buy-In
programs provided additional opportunities—particularly for DI-eligible
individuals, who had prior working experience before becoming
disabled—to secure and maintain Medicaid coverage. In addition to
increasing income and asset levels, all states took advantage of the
statute’s flexibility by requiring participants to buy in to the program by
paying premiums or copayments. Generally, states assessed premiums for
individuals with incomes above the FPL and adjusted premiums upward as
income increased. Across the 10 states that charged premiums in 2002, the
average monthly premiums paid ranged from $26 in New Hampshire to $82
in Indiana. Additionally, the percentage of participants who were charged
premiums varied significantly across the states, from 12 percent of
participants in Connecticut to all or nearly all participants in Illinois,
Pennsylvania, Washington, and Wyoming.

Our more detailed analysis of four states that were among the most
experienced in implementing this program found that most Buy-In
participants had prior insurance coverage by Medicaid and Medicare, few
had prior coverage by private health insurance, and many earned low
wages while participating in the Buy-In. More than half of the Buy-In
participants in these four states had previous Medicaid coverage. Those
Buy-In participants who had switched from another Medicaid eligibility
category generally did so because they were able to increase their income
and assets and maintain their Medicaid eligibility. Many Buy-In
participants in these states were eligible for health care coverage through
the Medicare program. However, Medicaid eligibility gave these
individuals additional benefits that were not offered under Medicare, such
as outpatient prescription drugs and personal care services. Few
participants—less than 10 percent of participants in any of the four
states—reported having employer-sponsored coverage at the time of their
enrollment into the Medicaid Buy-In programs. Available employment data
showed that participants generally were working in low-wage jobs—most
making less than $800 per month—although they could earn more and still
retain Buy-In Medicaid benefits. These four states, however, had little
information regarding the extent to which the Buy-In programs fostered
employment among individuals with disabilities.

In its comments on a draft of this report, CMS noted it is conducting an
extensive study of states’ experiences with the Medicaid Buy-In programs
and expects to issue a report in 2004. CMS and 11 of the 12 states in our
sample also provided technical comments, which we incorporated as
appropriate.



Page 5                                  GAO-03-587 Medicaid and Ticket to Work
             Eligibility for benefits under SSI, DI, Medicare, and Medicaid programs for
Background   individuals with disabilities is determined in part on whether an individual
             has a disability as defined in the Social Security Act.4 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.5 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.6

             The Ticket to Work and Work Incentives Improvement Act of 1999 allowed
             states to expand the availability of Medicaid coverage for individuals with



             4
              The DI program and SSI program are authorized under titles II and XVI, respectively, of
             the Social Security Act. The definition of disability for the DI program is in section 223(d)
             of the Social Security Act. The definition of disability for the SSI program is in section
             1614(A)(3). In all material respects, the two definitions are similar and have been
             interpreted by the Social Security Administration (SSA) similarly.
             5
              Under the Social Security Act, the Commissioner of Social Security has the authority to set
             the SGA level for individuals who have disabilities other than blindness. SSA has increased
             the SGA level several times over the past decade, to $500 per month in 1990 and to $700 per
             month in July 1999. In December 2000, SSA finalized a rule calling for the annual indexing
             of the nonblind SGA income limit to the average wage index (AWI) and on this basis
             increased the SGA income limit to $780 in January 2002. The SGA income limit for
             individuals who are blind is set by statute and indexed to the AWI. For 2002, the SGA
             income limit for blind individuals was $1,300 of countable earnings. In January 2003, the
             SGA limit increased to $800 per month for nonblind individuals and to $1,330 per month for
             blind individuals. To calculate countable earnings for SGA, SSA deducts from gross
             earnings the cost of items that, because of the impairment, a person needs to work (for
             example, attendant care services performed in a work setting, wheelchairs, or Braille
             devices).
             6
              SSA uses a series of steps to evaluate the applicant’s level of disability. As part of the
             steps, SSA compares the applicant’s condition to a Listing of Impairments that describes
             medical conditions that are severe enough to prevent a person from engaging in SGA. If an
             applicant’s impairment is cited in the Listing of Impairments or the applicant’s impairment
             is as severe as or more severe than those impairments in the Listing of Impairments, then
             the applicant would be considered disabled and awarded benefits without any further
             evaluation to determine whether he or she has vocational limitations that, when combined
             with the medical impairment, prevents work.




             Page 6                                             GAO-03-587 Medicaid and Ticket to Work
                           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           Individuals with disabilities become eligible for Medicaid in a variety of
Disabilities Qualify for   ways but primarily through SSI or DI eligibility (see table 1). Individuals
Medicaid Primarily         with disabilities, however, must also meet Medicaid income and asset
                           requirements in order to obtain Medicaid coverage. Both the SSI and DI
through SSI or DI          programs contain work incentive provisions designed to assist individuals
Eligibility                with disabilities to achieve gainful employment while retaining some
                           eligibility for health care coverage.7

SSI                        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.8 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




                           7
                            These work incentive provisions can help individuals pay for services or items that they
                           need in order to work or enable individuals to maintain or increase their cash benefits until
                           they are stable in employment. Other work incentives allow individuals with disabilities to
                           recover impairment-related work expenses, such as attendant care services and
                           transportation costs.
                           8
                            Under Section 1902(f) of the Social Security Act, 42 U.S.C. 1396a(f), states may use their
                           1972 state assistance eligibility rules in determining Medicaid eligibility for individuals with
                           disabilities, rather than SSI eligibility rules, and 11 states do so. The 11 states are
                           Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, New Hampshire, North Dakota,
                           Ohio, Oklahoma, and Virginia. These states are often referred to as 209(b) states because
                           the origin of this authority is §209(b) of the Social Security Amendments of 1972. The
                           209(b) states’ definitions of disability or their income/resource standards for Medicaid
                           eligibility tend to be more restrictive than those for SSI but can be the same as or more
                           liberal. If a state’s 209(b) rules are more restrictive, it must also allow individuals to spend
                           down into Medicaid eligibility by deducting incurred medical care expenses from income.




                           Page 7                                             GAO-03-587 Medicaid and Ticket to Work
     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).9

DI   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.10
     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.11 While DI beneficiaries receive health care coverage through
     Medicare,12 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.




     9
      In contrast to other Medicaid income eligibility thresholds, which are usually set by the
     state within federal guidelines, SSA sets the income threshold for SSI-related Medicaid
     eligibility annually. The income threshold for a particular state is based on the current SSI
     cash benefit in each state and a state’s per capita Medicaid expenditures. If an SSI
     beneficiary has gross earnings higher than the threshold amount for his or her state, SSA
     can calculate an individual threshold amount if he or she has medical or impairment-
     related work expenses above the state amount.
     10
       States receive federal Medicaid matching funds for health care provided to certain
     individuals meeting broad federal requirements for eligibility, including categorical,
     income, resource, immigration status, and residency requirements. The categorical
     requirement includes individuals who fall into specified categories, which can be classified
     into five broad coverage groups: individuals with disabilities, children, pregnant women,
     individuals in families with dependent children, and the elderly.
     11
      The medically needy category refers to individuals who meet certain categorical
     requirements for Medicaid eligibility—for example, children, individuals with dependent
     children, and individuals who are aged, disabled, or pregnant—and have incurred medical
     expenses to the point where their income, less the medical expenses incurred, makes them
     eligible for Medicaid. As of November 2002, 35 states and the District of Columbia opted to
     cover Medicaid beneficiaries under the medically needy eligibility category.
     12
       After they have received DI cash benefits for 24 months, DI beneficiaries are entitled to
     Medicare part A coverage and are eligible to enroll in part B. Medicare part A helps cover
     inpatient care in hospitals, critical access hospitals, and skilled nursing facilities. It also
     covers hospice care and some home health care. Medicare part B helps cover physician
     services and outpatient hospital care.




     Page 8                                              GAO-03-587 Medicaid and Ticket to Work
Table 1: Highlights of SSI and DI and Their Links to Medicare and Medicaid

 Program            SSI                                                    DI
 General            • Means-tested income assistance program for           • Income assistance program for individuals who have
 description          disabled, blind, or aged individuals with or without    lost their ability to work as a result of a severe, long-
                      prior participation in the labor force.                 term disability and have worked long enough in Social
                    • Federal income limit of $545 in countable income        Security-covered employment and during a specified
                      per month for an individual ($817 for a couple) and     time period to meet program requirements.b
                      $2,000 in assets for a single adult ($3,000 for a    • No federal income or asset limit for participation in the
                      couple) as of 2002.a                                    DI program, other than meeting the SGA earnings limit
                    • SSI cash benefits are based on a beneficiary’s          to be determined disabled ($800 per month in 2003).
                      countable income, living arrangements, and state     • The DI cash benefits are based on a beneficiary’s
                      of residence. Most states pay some beneficiaries        lifetime average earnings that were covered by Social
                      an additional amount referred to as a “state            Security. The payment amount is adjusted each year
                      supplement.” The amounts and qualifications for         to account for changes in the cost of living.
                      these state supplements vary by state.
 Number of          • In 2001, 3.8 million individuals aged 18-64 received • In 2001, 5.3 million individuals through age 64
 working-age          SSI benefits.                                           received DI benefits because of a disability they
 individuals                                                                  incurred.
 covered
 Link to Medicaid   •   In 39 states and the District of Columbia, SSI         •  Individuals eligible for DI meet the Medicaid categorical
 and Medicare           eligibility assures an individual’s eligibility for       designation for disability, but they also must meet the
                        Medicaid benefits.                                        Medicaid income and asset requirements as defined
                    •   Eleven states use more restrictive disability,            by the state. DI individuals may spend down their
                        income, or asset requirements than SSI for                income and assets and thus become eligible for
                        Medicaid eligibility.c                                    Medicaid under the medically needy eligibility category,
                    •   No direct link to Medicare.                               if a state uses this optional coverage category.
                                                                               • Entitled to part A Medicare coverage after they have
                                                                                  received DI cash benefits for 24 months.d
 Program work       Under section 1619 (a),(b) of the Social Security Act,     DI beneficiaries who work may retain eligibility for
 incentives and     42 U.S.C. 1382h(a),(b), disabled SSI beneficiaries         Medicaid as long as their medical disability continues and
 effect on health   who work may be eligible for continued Medicaid            they continue to meet a state’s Medicaid income and
 coverage           coverage through two work incentive programs:              asset requirements.

                    •   Section 1619(a): Allows disabled beneficiaries to      Medicare coverage for DI beneficiaries who work may be
                        continue to receive SSI cash payments even when        retained under the following circumstances:
                        earnings exceed the SGA ($800 per month in
                        2003). However, as earnings increase, the SSI          •   Trial work period: Allows DI beneficiaries to have a trial
                        cash payment decreases until earnings completely           work period of 9 months (not necessarily consecutive)
                        replace cash benefits. There is no effect on               within a 60-month rolling period during which they can
                        Medicaid coverage as long as an individual                 earn any amount without affecting their DI benefits.
                        receives SSI cash benefits.                                Medicare part A coverage continues for the 9-month
                                                                  e
                                                                                   period.
                    •   Section 1619(b)—SSI work incentive: Allows
                        disabled beneficiaries to continue to receive          •   Extended period of eligibility (EPE): Immediately after
                        Medicaid coverage even when they no longer                 the trial work period, DI beneficiaries enter a 36-month
                        qualify for SSI cash benefits. Medicaid coverage           EPE as long as medical disability continues. Cash
                        continues until earnings reach a threshold amount          benefits continue for the first 3 months of this period
                        that varies by state. In contrast to other Medicaid        regardless of the earnings level. For the remaining 33
                        income eligibility thresholds, which are usually set       months, DI cash benefits are paid only in months in
                        by the state within broad federal parameters, SSA          which countable earnings were less than SGA ($800
                        sets the income threshold for SSI-related Medicaid         per month in 2003). For those who earn at or above
                        eligibility, which varies from state to state on the       SGA level after the 36-month EPE, part A Medicare
                        basis of each state’s current SSI cash benefit (the        coverage continues for at least 7 years and 9 months
                        f d lb         fi   d                 l      ) d



                                                Page 9                                           GAO-03-587 Medicaid and Ticket to Work
 Program       SSI                                                            DI
                 federal benefit and any state supplement) and a                   (including the 36 months of the EPE), unless the
                 state’s per capita Medicaid expenditures.f Across                 person is determined to be not disabled for a reason
                 the 50 states and the District of Columbia,                       other than earning the SGA level.
                 Medicaid eligibility for SSI-related individuals in
                 2002 ranged from 170 percent of the FPL in                   With the trial work period and the EPE, DI beneficiaries
                 Arizona to 443 percent of the FPL in New                     who work, and continue to have a medical disability, are
                 Hampshire.                                                   entitled to at least 8-1/2 years of Medicare part A
                                                                              coverage following the start of a trial work period.g

Source: SSA.

                                       Note: GAO analysis of SSA documents, as of December 2002.
                                       a
                                        Not all income or assets are counted in order to calculate “countable” income or assets. Income
                                       exclusions include $20 per month of most income, $65 per month of wages and one-half of wages
                                       over $65, food stamps, and home energy and housing assistance. Assets excluded are the home a
                                       person lives in; a car, depending on its use or value; certain burial spaces and burial funds up to
                                       $1,500; and life insurance with a face value of up to $1,500.
                                       b
                                        To be eligible for DI benefits, workers (except those who are blind) also must meet a test of
                                       substantial recent covered work, which means that workers aged 31 and older must have been in
                                       Social Security covered employment for at least 20 quarters of the 40 calendar quarters ending with
                                       the quarter in which the disability began. Workers disabled before age 31 may qualify for benefits
                                       under a special insured status requirement.
                                       c
                                        In identifying eligible individuals with disabilities, states generally are required to use the SSI eligibility
                                       requirements; however, they also have the option to use their January 1972 state assistance eligibility
                                       rules under section 1902(f) of the Social Security Act, which tend to be more restrictive than SSI
                                       rules. If a state’s 209(b) rules are more restrictive, it must also allow individuals to spend down into
                                       Medicaid eligibility by deducting incurred medical care expenses from income. As of 2002, 11 states
                                       had elected this option: Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, New Hampshire,
                                       North Dakota, Ohio, Oklahoma, and Virginia.
                                       d
                                        Medicare part A helps cover inpatient care in hospitals, critical access hospitals, and skilled nursing
                                       facilities. It also covers hospice care and some home health care. Medicare part B helps cover
                                       physician services and outpatient hospital care. DI beneficiaries are eligible to enroll in part B
                                       Medicare coverage after they have received DI cash benefits for 24 months.
                                       e
                                        Throughout this report, we refer to individuals who qualify for Medicaid under 1619(b) as participants
                                       in the SSI work incentive program.
                                       f
                                       If an SSI beneficiary has gross earnings higher than the threshold amount for his or her state, SSA
                                       can calculate an individual threshold amount if he or she has medical or impairment-related work
                                       expenses above the state amount.
                                       g
                                        Under section 1818A of the Social Security Act, a disabled individual who has lost entitlement to
                                       premium-free Medicare part A solely because of SGA may be able to enroll in part A as long as the
                                       disability continues. The individual is responsible for paying the premiums.




                                       Page 10                                                    GAO-03-587 Medicaid and Ticket to Work
Medicaid Buy-In Program   The Ticket to Work Medicaid Buy-In builds on an earlier effort to expand
Designed to Expand        Medicaid eligibility for individuals with disabilities who desire to work.
Coverage for Working      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
Individuals with          category for working individuals with disabilities. For these individuals,
Disabilities              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.13

                          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.)




                          13
                           States with the BBA option as of December 2002 included Alaska, California, Iowa, Maine,
                          Mississippi, Nebraska, New Mexico, Oregon, South Carolina, Utah, Vermont, and
                          Wisconsin.




                          Page 11                                        GAO-03-587 Medicaid and Ticket to Work
Table 2: Comparison of Criteria for the Ticket to Work Buy-In and the BBA Option

 Criteria              Ticket to Work Buy-In                                                  BBA Option
 Who can be covered    Basic Coverage Group: Working disabled individuals, aged               Working disabled individuals of any age
                       16–64 (SSI disability definition).a                                    (SSI disability definition).
                                                                                                                          a


                       Medical Improvement Group: Employed Individuals losing
                       Basic Coverage because they no longer meet the SSI disability
                       definition, but still have severe impairment.
 Income standard       For both the Basic Coverage and Medical Improvement                    Up to 250 percent of the FPL, and
                       groups, the state establishes its own standard or chooses not          unearned income must meet SSI income
                                                                                                    b
                       to have an income standard.                                            test.
 Asset standard        For both the Basic Coverage and Medical Improvement                    SSI asset standard ($2,000/person,
                                                                                                              b
                       groups, the state establishes its own standard or chooses not          $3,000/couple).
                       to have one.
 Premiums and cost     For both the Basic Coverage and Medical Improvement                    State may require premiums and other
 sharing               groups, the state may require premiums and other cost-sharing          cost-sharing mechanisms on an income-
                       mechanisms on an income-based sliding scale.                           based sliding scale.
                       For annual incomes less than 450 percent of the FPL, state
                       may charge premiums and use other cost-sharing mechanisms
                       of up to 7.5 percent of income.
                       States must charge the highest amount of premium under the
                       states’ premium structure for those with adjusted gross annual
                       incomes exceeding $75,000.
 States using this     Basic Coverage Group: Arkansas, Connecticut, Illinois,                 Alaska, California, Iowa, Maine,
 option as of          Indiana, Kansas, Minnesota, Missouri, New Hampshire, New               Mississippi, Nebraska, New Mexico,
                  c
 December 2002         Jersey, Pennsylvania, Washington, Wyoming                              Oregon, South Carolina, Utah, Vermont,
                       Medical Improvement Group: Connecticut, Indiana, Missouri,             Wisconsin
                       Pennsylvania, Washington

Source: CMS.

                                          Note: GAO analysis of CMS documents, as of December 2002.
                                          a
                                          For those individuals who have not been determined disabled by SSA, the state must do a disability
                                          determination to ensure that the individual would meet the definition of disability under the SSI
                                          program. The disability test must be identical to the SSI or DI disability test except that employment
                                          activity, earnings, and SGA cannot be considered in determining whether the individual meets the
                                          definition of disability.
                                          b
                                           Under usual eligibility rules, states are required to use the processes used by SSI and the former Aid
                                          to Families with Dependent Children program in determining eligibility for Medicaid. However, section
                                          1902(r)(2) of the Social Security Act, 42 U.S.C. 1396a(r)(2), allows states to disregard (not include)
                                          additional kinds and amounts of income and assets beyond what is allowed under these programs.
                                          For example, a state could disregard a select amount of earned or unearned income or income used
                                          for home maintenance or repair.
                                          c
                                           Florida received approval for a Ticket to Work Medicaid Buy-In program in June 2002; however, the
                                          state had not implemented the program as of December 31, 2002. Arizona received approval for a
                                          Ticket to Work Medicaid Buy-In program in December 2002. The program was implemented in
                                          January 2003, which was after the cut-off date of December 2002 for inclusion in this study.




                                          Page 12                                                GAO-03-587 Medicaid and Ticket to Work
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.14 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




14
  If states establish income and asset standards, SSI income and asset methodologies are
used to determine eligibility, including the SSI earned income disregard of $65, plus one-
half of remaining earnings. Other income disregards include $20 of unearned income, and
certain impairment-related work expenses, such as certain attendant care services,
transportation costs, and medical devices. The SSI asset methodology allows for exclusion
of such things as the home a person lives in, a car depending on its use or value, and life
insurance valued up to $1,500.




Page 13                                          GAO-03-587 Medicaid and Ticket to Work
                      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
Individuals with      million working-age individuals with disabilities nationwide were more
Disabilities Had      likely to be not working, have less education, and have incomes below the
                      FPL. Specifically, 82 percent of working-age individuals with disabilities,
Lower Employment,     or about 5.5 million individuals, reported that they were not working. (See
Education, and        fig. 1.) Nearly three-fourths of working-age individuals with disabilities
                      reported they had a high school education or less. Furthermore, these
Income—and More       individuals were nearly three times more likely than individuals without
Insurance Coverage—   disabilities to have incomes below the FPL. At the same time, individuals
than the General      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
Population            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.




                      Page 14                                 GAO-03-587 Medicaid and Ticket to Work
Figure 1: Selected Characteristics of Working-Age Individuals with Disabilities
Compared with the Rest of the General Working-Age Population


    Not working
                                                                                                       82


                                               22



High school
education or less                                                                            73


                                                                             50



Income below
FPL
    a                                                 29


                                 10


             b
Uninsured
                                 9


                                       15



Covered by public
                c                                                           49
health insurance


                             6


                       0                  20                     40               60              80        100
                       Percentage

                                 Individuals with disabilities

                                 General population

Source: AHRQ.

Note: GAO analysis of AHRQ’s MEPS household component, 1997 and 1998.
a
 Individuals reported income levels from either 1997 or 1998. The FPL in 1997 was $7,890 for an
individual; the FPL in 1998 was $8,050 for an individual.
b
    Individuals reported being uninsured during the entire year for 1 of the 2 years.
c
    Public health insurance coverage primarily includes Medicaid and Medicare.




Page 15                                                               GAO-03-587 Medicaid and Ticket to Work
                              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.15


                              The 12 states that opted to implement the Ticket to Work Medicaid Buy-In
States’ Buy-In                program as of December 2002 set income and asset levels for eligibility
Programs Expanded             that provided new opportunities for working individuals with disabilities
                              to secure and maintain Medicaid coverage. DI-eligible individuals
Eligibility and               benefited particularly because states’ broader eligibility categories under
Increased Cost                the Buy-In allowed individuals to become eligible for Medicaid without
                              spending down their incomes and to remain eligible when their incomes
Sharing for More              rose to higher levels. In addition to expanding income eligibility and asset
Workers with                  limits, all states took advantage of the flexibility of the statute to charge
Disabilities                  premiums or copayments to ensure that Buy-In participants shared in the
                              cost of their health care coverage.


Twelve States Expanded        Across the 12 states that opted to implement Ticket to Work Medicaid
Medicaid Eligibility Levels   Buy-In programs, all set eligibility requirements that expanded eligibility
for Working Individuals       for working individuals with higher incomes or more assets than usually
                              allowed under their Medicaid programs. As of December 2002, the number
with Disabilities             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



                              15
                               In our MEPS analysis of health care expenditures of individuals with disabilities, we did
                              not find a difference in average expenditures between those in and out of the workforce.




                              Page 16                                          GAO-03-587 Medicaid and Ticket to Work
                                             table 3.) Eleven of the 12 states set Buy-In eligibility limits for income at
                                             twice the FPL or higher—or $17,720 per year for an individual in 2002—
                                             thereby expanding opportunities for individuals to secure and maintain
                                             Medicaid coverage. Buy-In programs also allowed participants to retain
                                             more assets than usually allowed in states’ Medicaid programs. Of the 12
                                             states, 7 states set asset limits that ranged from $10,000 to $30,000 for
                                             individuals, couples, or both. Three states— Missouri, Indiana, and
                                             Arkansas—opted for asset requirements of $4,000 or less for an
                                             individual,16 while the remaining two states—Washington and Wyoming—
                                             imposed no asset limits.

Table 3: Enrollment and Eligibility Characteristics of 12 States With Ticket to Work Medicaid Buy-In Programs
                                         a                                                                          b                             c
 State                         Enrollment         Buy-In start date     Income limit as a percentage of FPL                        Asset limits
 Missouri                            8,461                July 2002                                    250%                  $999.99 individuald
                                                                   e
 Minnesota                           6,178               July 2001                                   No limit                 $20,000 individual
 Indiana                             3,318                July 2002                                    350%                   $2,000 individual;
                                                                                                                                  $3,000 couple
 Connecticut                         2,433                Oct. 2000               $6,250 monthly gross income,               $10,000 individual;
                                                                                                              f
                                                                                  or $3,082 monthly net income                  $15,000 couple
 Pennsylvania                        1,325               Jan. 2002                                        250%                  $10,000 couple
 New Hampshire                         968               Feb. 2002                                        450%               $20,000 individual;
                                                                                                                                $30,000 couple
 New Jersey                           551                Feb. 2001                             250% (earned) and             $20,000 individual;
                                                                                                 100% (unearned)                $30,000 couple
 Kansas                               489                July 2002                                         300%                 $15,000 couple
 Illinois                             323                Jan. 2002                                         200%              $10,000 individual;
                                                                                                                                $10,000 couple
 Washington                           144                Jan. 2002                                            220%                      No limit
 Arkansas                              65                Feb. 2001                                            250%            $4,000 individual;
                                                                                                                                 $6,000 coupleg
 Wyoming                                3                 July 2002                                           100%                      No limit

Source: State-reported data.

                                             Note: GAO analysis of state-reported data, as of December 2002.
                                             a
                                              States’ enrollment data represent either the number of participants enrolled on a specific day in
                                             December 2002 or the total number who were ever enrolled during that month. Also, some states
                                             included individuals who were retroactively enrolled for that month.




                                             16
                                              Indiana set asset requirements for a couple at $3,000, while Missouri allowed the spouse
                                             of a Buy-In participant to retain assets up to $100,000 and excluded one-half of the
                                             participant’s marital assets.




                                             Page 17                                               GAO-03-587 Medicaid and Ticket to Work
b
 In 2002, the FPL for an individual was $8,860 annually; for a family of three, the FPL was $15,020.
Not all income is counted in order to calculate “countable” income. Income exclusions include $20 per
month of most income, $65 per month of wages and one-half of wages over $65, food stamps, and
home energy and housing assistance.
c
Not all assets are counted in order to calculate “countable” assets. Assets excluded are the home a
person lives in; a car, depending on its use or value; certain burial spaces and burial funds up to
$1,500; and life insurance with a face value of up to $1,500.
d
 Missouri allowed the spouse of an individual with disabilities to retain assets up to $100,000 and
excluded one-half of the participant’s marital assets.
e
 Minnesota originally opted to cover workers with disabilities through the BBA option, implemented in
July 1999, and amended its program to follow Ticket to Work Buy-In requirements.
f
 Connecticut uses a two-step method that is not based on the FPL to determine income eligibility.
First, an applicant’s individual gross income must be $6,250 a month or less ($75,000 maximum per
year). If the applicant’s income is higher than $6,250, the state applies a second test whereby the SSI
income disregards and impairment-related work expenses are excluded; if an individual’s adjusted
income (after applying these exclusions) is less than or equal to $3,082 per month, the individual is
income-eligible for the Medicaid Buy-In.
g
    Arkansas increases the asset limit by $200 for each additional family member.


States generally allowed Ticket to Work participants to exclude certain
assets from the asset limits. In addition to excluding the value of certain
assets that applied to most individuals with disabilities in the Medicaid
program when determining eligibility,17 10 of the 12 states allowed Buy-In
participants to save money in retirement accounts such as Individual
Retirement Accounts, Keoghs, and 401(k)s; medical savings accounts; or
special accounts that allow individuals to save for expenses such as
modifications for job or home and education costs. These accounts are not
considered when determining asset limits for participants. Two states—
Arkansas and Indiana—set $10,000 and $20,000 limits, respectively, on the
amount of savings participants can accumulate in these accounts. State
officials in a few states said allowing participants to exclude these
retirement accounts and other assets helped support states’ goals of
affording working individuals with disabilities greater independence and
self-sufficiency. For example, under these rules, participants can save to
buy cars or homes and can set aside money for retirement.




17
 For example, a home, personal property, one vehicle under certain conditions, a burial
space, and life insurance valued at up to $1,500 are disregarded for individuals applying for
Medicaid.




Page 18                                                  GAO-03-587 Medicaid and Ticket to Work
Buy-In Programs May         In most of the 12 states, the Buy-In programs were especially beneficial for
Offer Greatest Benefit to   DI-eligible individuals who, in contrast to most SSI individuals, were not
DI Participants             always eligible for Medicaid coverage. Prior to the Ticket to Work
                            legislation, DI individuals in 11 of the 12 states could qualify for Medicaid
                            by spending down their incomes to specified levels (Wyoming did not offer
                            a spend-down option).18 In these 11 states, the spend-down income
                            eligibility levels ranged from 15 percent to 100 percent of the FPL. Under
                            the new Buy-In programs, the income eligibility levels significantly
                            exceeded those established under the spend-down categories (see fig. 2),
                            thus allowing individuals to qualify for the Medicaid Buy-In directly—
                            rather than spending down their incomes to qualify for Medicaid coverage.
                            For example, an individual receiving DI in Arkansas could obtain Medicaid
                            coverage through the Buy-In program with an income up to 250 percent of
                            the FPL; prior to the Buy-In, the individual would have had to incur
                            medical expenses that reduced his or her income to approximately 15
                            percent of the FPL in order to qualify for the spend-down category of
                            Medicaid. This allows an individual with disabilities in Arkansas to
                            maintain an income of up to $22,150 per year under the Buy-In, whereas
                            that person would have had to spend down to an income of $1,300 a year
                            to qualify for Medicaid.




                            18
                              States may offer spend-down coverage through an optional medically needy eligibility
                            category. However, 209(b) states that do not offer a medically needy eligibility category
                            must allow individuals who are aged, blind, or disabled (including SSI and DI individuals)
                            to spend down their incomes, using their incurred medical expenses, to meet the 209(b)
                            category income eligibility requirements.




                            Page 19                                          GAO-03-587 Medicaid and Ticket to Work
Figure 2: Twelve States’ Medicaid Buy-In, SSI Work Incentive, and Spend-Down Income Eligibility Levels, as a Percentage of
the FPL



500 Percentage of FPL               (Note a)                                                                                                (No limit)


450                                             438

400


350                                                                                               350                                                    350

                                                                                                           311
300                                                                                                                       300
                                                                            286
                                                                                                                                 277

250     250
                   231

200                                                                 200


150


100                                                                                  100
                                                         71                                                         76                 71                      70
 50

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Source: State-reported data, SSA data on SSI work incentive, and Kaiser Family Foundation data on spend down.




                                                              Page 20                                                    GAO-03-587 Medicaid and Ticket to Work
                      450
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                                           Note: GAO analysis of states’, SSA’s, and the Kaiser Family Foundation’s data, as of
                                           December 2002.
                                           a
                                            Connecticut uses a two-step method that is not based on the FPL to determine Medicaid Buy-In
                                           income eligibility. First, an applicant’s individual gross income must be $6,250 a month or less
                                           ($75,000 maximum per year). If the applicant’s income is higher than $6,250, the state applies a
                                           second test whereby SSI income disregards and impairment-related work expenses are excluded; if
                                           an individual’s adjusted income (after applying these exclusions) is less than or equal to $3,082 per
                                           month, the individual is income-eligible for the Medicaid Buy-In.
                                           b
                                            SSI’s work incentive program, known as Section 1619(b), 42 U.S.C. 1382h(b), provides for continued
                                           Medicaid eligibility for individuals whose incomes are too high to qualify for an SSI cash payment but
                                           are not high enough to offset the loss of Medicaid or publicly funded attendant care.




                                           Page 21                                                 GAO-03-587 Medicaid and Ticket to Work
c
 Spend-down refers to two approaches to Medicaid eligibility. First, most states offer spend-down
coverage through their medically needy category of eligibility, where individuals deduct incurred
medical expenses from their income to spend down into Medicaid coverage. Second, 209(b) states
that use their 1972 state assistance eligibility rules in determining Medicaid eligibility for individuals
with disabilities must allow individuals who are aged, blind, or disabled (including SSI and DI
individuals) to spend down their incomes by incurred medical expenses, regardless of whether they
offer a medically needy eligibility category in Medicaid. Of the six 209(b) states with Ticket to Work
Medicaid Buy-In programs, two states—Indiana and Missouri—do not offer medically needy
coverage, but these states must allow individuals with disabilities to spend down into Medicaid.
d
    Wyoming does not provide a spend-down option.


Buy-In programs afforded DI beneficiaries more immediate—and
sometimes expanded—Medicaid coverage. In addition to relieving
individuals of the requirement to spend down their income to qualify for
Medicaid, DI individuals, who are not entitled to receive Medicare
coverage until they have been receiving DI cash benefits for 24 months,
also received more immediate health insurance coverage through the
Medicaid Buy-In. Buy-In participants may also have access to a more
expanded benefit package than individuals who receive Medicaid through
a state’s medically needy program.19

However, when considering participation in the Buy-In program, DI
beneficiaries must weigh the benefits of the higher earnings allowed under
the program against the possible loss of DI cash benefits and Medicare
coverage if their earnings increase beyond a certain threshold.
Specifically, after a 9-month trial work period and a 36-month extended
period of eligibility, if a DI beneficiary’s earnings increase over the SGA
limit in any month, the individual loses DI eligibility entirely. Additionally,
DI beneficiaries who earn more than the SGA level after the initial 9-month
trial period could lose Medicare coverage after 8-1/2 years. The loss of
entitlement for Medicare may be of concern for those individuals with
disabilities who would not reach age 65 by the end of the 8-1/2-year time




19
  States may offer different sets of benefits depending on whether an individual’s eligibility
for Medicaid is considered mandatory or optional by federal statute; optional benefits may
vary by state. Most adults with disabilities who receive SSI payments have mandatory
coverage under Medicaid, while individuals who are medically needy (and spend down to
receive Medicaid benefits) are considered to be in the optional category. Thus, adults with
disabilities who move from medically needy coverage to the Medicaid Buy-In may receive
additional benefits, depending on states’ coverage policies.




Page 22                                                   GAO-03-587 Medicaid and Ticket to Work
                         period.20 To the extent that a state reduced its Medicaid Buy-In eligibility
                         level, or discontinued its Buy-In program, these former DI-eligible Buy-In
                         participants could potentially be without health care coverage until they
                         reached age 65.

                         In contrast, SSI beneficiaries have different considerations than those
                         weighed by DI beneficiaries in deciding whether to enroll in the Medicaid
                         Buy-In program. Most SSI beneficiaries were assured eligibility for
                         Medicaid and thus did not need the Buy-In program or to spend down their
                         incomes in order to qualify for Medicaid. SSI beneficiaries in Medicaid
                         would receive the same benefit package as those in a Buy-In program.
                         Even SSI beneficiaries who worked could remain eligible for Medicaid as
                         participants in a work incentive program, which allowed individuals to
                         increase their incomes while maintaining their Medicaid coverage. In 5 of
                         the 12 states, Buy-In income eligibility levels were lower than the Medicaid
                         eligibility levels for individuals in the SSI work incentive program, and
                         Buy-In eligibility levels only slightly exceeded those for the SSI work
                         incentive beneficiaries in another 5 states. Additionally, beneficiaries in
                         SSI’s work incentive program are not subject to premium payments in
                         Medicaid, while Buy-In programs generally have imposed premium
                         requirements for participants.


All States’ Buy-In       States may require Buy-In participants to share in the cost of their health
Programs Required Cost   care coverage. All 12 states adopted cost-sharing mechanisms, primarily
Sharing                  premiums or copayments, for Buy-In participants. States calculated
                         premiums for Buy-In participants using various methods. For example,
                         Pennsylvania and Washington set premiums as a percentage of allowable
                         income, while Indiana and Kansas established varying premium levels for
                         different incomes. (See table 4.) Generally, states assessed premiums
                         when income was at 100 percent of the FPL or higher. Among states that
                         charged premiums in 2002, the percentage of participants whose incomes
                         were high enough to be charged premiums varied significantly across the


                         20
                           Under section 1818A of the Social Security Act, a disabled individual who has lost
                         entitlement to premium-free Medicare part A solely because of SGA may be able to enroll
                         in part A as long as the disability continues. The individual is responsible for paying the
                         premiums. Furthermore, an individual who has lost his or her benefits under DI due to
                         earning more than SGA and who then fails to earn at least SGA due to being disabled, could
                         be eligible for reinstatement of his or her DI benefits and Medicare coverage. Section 112 of
                         the Ticket to Work legislation allows certain previously entitled individuals to request
                         expedited reinstatement of disability benefits under title II and title XVI when their
                         disabling impairment no longer permits them to perform SGA.




                         Page 23                                          GAO-03-587 Medicaid and Ticket to Work
states, from 12 percent of participants in Connecticut to all or nearly all
participants in Illinois, Pennsylvania, Washington, and Wyoming. Average
monthly premiums ranged from $26 to $82, with nearly half of the states
setting premiums from $40 to $60. Two states—Arkansas and New
Jersey—did not charge premiums as of December 2002. Stating that
premiums were difficult to administer and collect, Arkansas chose not to
impose a premium requirement. New Jersey has a premium requirement
for participants with incomes greater than 150 percent of FPL; however,
the state did not assess premiums because only about 5 percent of
beneficiaries owed a payment.




Page 24                                 GAO-03-587 Medicaid and Ticket to Work
Table 4: Twelve States’ Premium Requirements for Ticket to Work Medicaid Buy-In Programs

                                Percentage of                                                                      Participant’s       Percentage of
                                 FPL at which                                                                           average          participants
                               state assesses Monthly premium                                                           monthly              charged
 State                              premiums                                                                           premium             premiums
 Arkansasa                                N/A N/A                                                                           N/A                   N/A
 Connecticut                            200% 10% of family’s income that exceeds 200% of the FPL                            $50c                 12%
                                              for the appropriate family size; not to exceed 7.5% of
                                              net family income for families with incomes less than
                                              450% of the FPL. Family includes the participant and
                                              his or her spouse.b
 Illinois                               100% 24 premium levels based on the participant’s earned                              $48                99.7%
                                              and unearned income, ranging from $6 to $100.
                                              Premiums increase as income increases.
 Indiana                                150% Six premium levels based on the participant’s income,                            $82c                    22%
                                              ranging from $48 to $187, and six premium levels
                                              based on participant’s and spouse’s income, ranging
                                              from $65 to $254. Premiums increase as income
                                              increases.
 Kansas                                 100% Eight premium, levels based on the participant’s                                 $68                     57%
                                              income, ranging from $55 to $152, and eight premium
                                              levels, based on participant’s and spouse’s income,
                                              ranging from $74 to $205. Premiums increase as
                                              income increases.
 Minnesota                              100% Premium begins at 1% of income and the percentage of                             $57                     77%
                                              the premium increases as income increases, up to a
                                              premium of 7.5% of participant’s income.
                                                                                                                                  d
 Missouri                               150% Four premium levels, ranging from approximately $48                                                      16%
                                              to $123. Premiums increase as income increases.
 New Hampshire                          150% Six premium levels, ranging from $80 to $220.                                    $26e                    15%
                                              Premiums increase as income increases.
                                             f   f                                                                                f                     f
 New Jersey
 Pennsylvania                             N/A 5% of countable income (premiums under $10 are not                              $43                     95%
                                              collected).
 Washington                               N/A The lesser of                                                                   $70                100%
                                              50% of unearned income above $571, plus 5% of total
                                              unearned income, plus 2.5% of earned income minus
                                              $65, or
                                              (2) 7.5% of total income.
 Wyoming                                  N/A 7.5% of earned income plus 7.5% of unearned income                              $44                100%
                                              over $600 per year.

Source: State-reported data.

                                                     Legend: N/A = not applicable

                                                     Note: GAO analysis of state data, as of December 2002.
                                                     a
                                                     Arkansas’ Medicaid Buy-In program did not impose premiums.
                                                     b
                                                      The FPL calculation is dependent upon family size. For example, 100 percent of the FPL for an
                                                     individual in 2002 was $8,860 annually, while 100 percent of the FPL for a family of three was
                                                     $15,020.




                                                     Page 25                                              GAO-03-587 Medicaid and Ticket to Work
c
 State reduces a participant’s premium liability by any amount the participant pays for employer-
sponsored coverage.
d
    Missouri does not collect data on average monthly premiums.
e
 Although premiums in New Hampshire begin at $80 per month, nearly half of the participants have
premiums reduced because the state allows deductions for the costs of premiums that participants
pay for Medicare and employee-sponsored health insurance for family members.
f
New Jersey has a premium requirement for participants with incomes greater than 150 percent of
FPL; however, as of December 31, 2002, the state was not assessing premiums because only about
5 percent of beneficiaries owed a payment.


Three states—Connecticut, Indiana, and New Hampshire—reported
discounting the Buy-In premium if participants also paid premiums for
Medicare part B, for employer-sponsored insurance coverage, or for
individual insurance coverage. For example, New Hampshire deducted the
Medicare part B premium from a participant’s total Buy-In premium. If a
Buy-In participant were paying a Medicare part B premium of $54 a month,
his or her Medicaid Buy-In premium would be discounted by that amount.
Thus, if a participant’s Buy-In premium were $80 a month, the monthly
premium for the Buy-In program would be discounted to $26 a month. In
Connecticut, any amount that participants pay for Medicare part B
premiums, employer-sponsored coverage, or other out-of-pocket medical
insurance is deducted from their premium liability. For example, if a
participant owes a Buy-In premium of $100 a month and also is paying an
employer $80 a month for private coverage, the individual’s Buy-In
premium liability would be reduced to $20.

Participants in 8 of the 12 states also were required to pay copayments for
health care services, such as $0.50 to $3 for an office visit or prescription
drugs. Copayments for inpatient hospital care generally varied from $3 per
day in Illinois to $48 per hospital stay in Kansas. In 7 of these states,
copayments were the standard cost-sharing requirements for Medicaid.
The remaining state—Arkansas—imposed a two-level copayment system
for participants. Arkansas Buy-In participants with incomes below 100
percent of the FPL had the same copayment requirements and were
charged the same amounts for pharmacy and inpatient hospital services as
usually prescribed under the state’s Medicaid program. Participants with
incomes of 100 percent of the FPL or greater were charged additional
copayments for services and equipment such as physician services ($10
per visit), outpatient mental and behavioral health services ($10 per visit),
and prosthetic devices (10 percent of the maximum Medicaid payment).




Page 26                                                GAO-03-587 Medicaid and Ticket to Work
                            In the four states in which we conducted more detailed work—
Buy-In Participants in      Connecticut, Illinois, Minnesota, and New Jersey—Buy-In programs
Four States Generally       enrolled many individuals who previously were enrolled in Medicaid, often
                            in eligibility categories with more restrictive income limits, such as the
Had Prior Medicaid          medically needy category. Buy-In participants in the four states generally
Coverage and Worked         also had Medicare coverage. Across the four states, few Buy-In
                            participants had coverage from private insurance at the time of their
in Low-Wage Jobs            enrollment in the Medicaid Buy-In programs. Based on the limited
                            participation in private insurance, officials in several states did not believe
                            that “crowd-out”—the substitution of newly available public coverage for
                            private health insurance—was a concern for the Medicaid Buy-In
                            programs. The limited employment information available for participants
                            from two of the four states—Connecticut and Minnesota—showed that
                            Buy-In participants generally were employed in low-wage jobs—many
                            making less than the SGA threshold, which at the time was $780 per
                            month. These four states, however, had little information regarding the
                            extent to which the Buy-In programs fostered employment among
                            individuals with disabilities.


Buy-In Participants Often   Across these four states, the share of Buy-In participants with previous
Had Previous Coverage       Medicaid coverage was 53 percent in Connecticut, 81 percent in Illinois, 61
under Medicaid and          percent in Minnesota, and 58 percent in New Jersey. Whereas previous
                            Medicaid coverage was largely due to eligibility through spend-down
Medicare                    provisions, Buy-In participation allowed them to retain more of their
                            income or assets and still qualify for Medicaid. Of those who switched
                            from existing Medicaid coverage to the Buy-In program, Illinois and
                            Minnesota estimated that 79 percent and 51 percent of participants,
                            respectively, were beneficiaries who originally had spent down their
                            income to qualify for Medicaid. While not offering a specific estimate, a
                            New Jersey official indicated that most of the Buy-In participants who
                            were enrolled in Medicaid before switching to the Buy-In category also
                            had spent down their income to qualify for Medicaid. Buy-In eligibility was
                            particularly beneficial for individuals in New Jersey because the state’s
                            Medicaid coverage for medically needy beneficiaries did not include
                            prescription drugs or community-based long-term care services, both of
                            which were covered under the Buy-In.




                            Page 27                                   GAO-03-587 Medicaid and Ticket to Work
In three of the four states—Connecticut, Minnesota, and New Jersey—
more than 80 percent of Buy-In participants also received health care
coverage through Medicare.21 (See table 5.) State officials reported that
those with Medicare relied on the Medicaid Buy-In for purposes of
obtaining outpatient prescription drug coverage since Medicare generally
does not cover this benefit. Few participants—less than 10 percent of
participants in any of the four states—reported having employer-
sponsored coverage at the time of their enrollment into the Medicaid Buy-
In programs. For example, Connecticut, which requires Buy-In applicants
who have access to employer-sponsored insurance coverage to apply for
this coverage, found that less than 6 percent of Buy-In applicants had
health care coverage through their workplace. For Buy-In participants
with private health insurance coverage, which often has more limited
benefits than those covered by Medicaid, the Buy-In can serve as a “wrap
around” to private coverage by providing such services as home health and
personal care, and items such as durable medical equipment.22




21
 Illinois was unable to identify Buy-In participants who had Medicare.
22
  Medicaid-eligible individuals enrolled in employer-sponsored health plans are entitled to
receive full Medicaid benefits. The health plans become the primary payers for the services
they cover. States must provide coverage for those Medicaid services not included in the
employer plans.




Page 28                                         GAO-03-587 Medicaid and Ticket to Work
Table 5: Number of Buy-In Participants Reporting Other Sources of Health Care
Coverage in Four States
                                                                                          a
                                         Participants with other sources of coverage
                                                (percentage of total enrollment)
                                                               Employer-
                                                              sponsored
                                                                                            b
    State                                    Medicare           coverage               Other
    Connecticut                           1,870 (82%)          128 (5.6%)          34 (1.5%)
                                                     c
    Illinois                                                      4 (1.6%)           3 (1.2%)
                                                     d                   e                   e
    Minnesota                            5,394 (90%)            459 (7%)           367 (6%)
    New Jersey                              408 (82%)           38 (7.3%)            8 (1.5%)

Source: State-reported data.

Note: GAO analysis of state data, as of December 2002.
a
 These categories are not mutually exclusive, as individuals may have more than one source of
coverage.
b
 “Other” may include coverage held through a spouse or other family member, or Medicare
supplemental coverage. Most Medicare beneficiaries purchase Medicare supplemental coverage
(known as Medigap) to protect themselves against large out-of-pocket costs and help fill Medicare’s
coverage gaps.
c
    Illinois was unable to identify Buy-In participants who had Medicare.
d
    Minnesota’s Medicare data are as of September 2002.
e
    Minnesota’s employer-sponsored and other coverage data are as of December 2001.


According to officials in several states, crowd-out was not a concern for
Buy-In programs because most participants did not report having private
health insurance coverage at the time of their enrollment into the Medicaid
Buy-In programs. For example, Minnesota and New Jersey state officials
said they did not view crowd-out as a significant issue for this population
because many of the participants worked part-time and were rarely
offered private insurance coverage. Additionally, both Minnesota and
Connecticut required individuals to either enroll or remain enrolled in
employer-sponsored coverage if it was offered. As of December 2002,
these states had not formally analyzed whether Buy-In participants
withdrew from private health insurance coverage prior to obtaining
Medicaid coverage. New Jersey officials plan to monitor whether
employees are deciding to or are being urged to pursue the Buy-In
program rather than their employer-sponsored coverage.




Page 29                                                   GAO-03-587 Medicaid and Ticket to Work
Available Employment     In the three states with data available, working individuals with disabilities
Information Shows        who qualified for the Medicaid Buy-In program generally worked in low-
Participants Worked in   wage jobs. (See table 6.) While one purpose of the Ticket to Work
                         legislation was to enable individuals with disabilities to reduce their
Low-Wage Jobs and        dependency on federal cash benefit programs through earnings from
Experienced Minimal      work, available data from Connecticut, Illinois, Minnesota showed that
Increases in Earnings    few participants earned more than the SGA limit, which was $780 in
                         December 2002. Sixty-four percent of participants in Connecticut, 61
                         percent of participants in Illinois, and 77 percent of participants in
                         Minnesota had earned income well below the SGA limit. None of these
                         states had asked participants to identify their occupation or the industry in
                         which they were employed on their Medicaid Buy-In applications;
                         however, some states may conduct broader analyses of participants’
                         employment as part of required evaluations under a related Ticket to Work
                         grant program.23




                         23
                           Section 203 of the Ticket to Work and Work Incentives Improvement Act of 1999
                         authorized the Medicaid Infrastructure Grant Program, which is an 11-year grant program
                         beginning in fiscal year 2001 ($150 million for the first 5 years) that allows states to design,
                         establish, and operate state “infrastructures” to facilitate the competitive employment of
                         individuals with disabilities. Grant activities include (1) implementing Medicaid Buy-In
                         programs, (2) developing demonstration programs that offer the ability to purchase
                         Medicaid coverage for people with a severe impairment who do not yet meet the SSI
                         disability test, (3) making significant improvements to Medicaid services that support
                         people with disabilities in their competitive employment efforts, and (4) creating regional
                         technical assistance centers for health care improvements supporting employment—
                         known as State-to-State Medicaid Infrastructure Partnerships. As of December 2002, thirty-
                         eight states received Infrastructure Grants, including 10 of the 12 states with Medicaid Buy-
                         In programs (all except Arkansas and Indiana). Indiana was awarded an Infrastructure
                         Grant in 2003.




                         Page 30                                            GAO-03-587 Medicaid and Ticket to Work
Table 6: Average Monthly Income for Ticket to Work Buy-In Participants in Four
States

                                        State-reported categories
                                              of average monthly                 Percentage of
    State                                  income from earnings                   participantsa
    Connecticutb                                      $200 or less                          23
                                                        $201-$600                           41
                                                        $601-$800                           17
                                                  $801 and greater                          19
    Illinois                                          $200 or less                          12
                                                        $201-$599                           49
                                                        $600-$799                           23
                                                  $800 and greater                          17
    Minnesota                                      Less than $200                           36
                                                        $200-$599                           41
                                                        $600-$799                           12
                                                  $800 and greater                          10
                                                                   c                               c
    New Jersey

Source: State-reported data.

Note: GAO analysis of state data, as of December 2002.
a
    Percentages may not add to 100 due to rounding.
b
    Connecticut’s data on earned income are from 2001.
c
    State did not provide these data.


Two of the four states we reviewed could identify whether participants
had increased their earnings once enrolled in the Buy-In. Forty percent of
Minnesota participants and 28 percent of Connecticut participants
increased their earnings between the time of initial enrollment and
December 2001, the most recent date for which these data were available.24
Average monthly increases over previous earnings were $306 in Minnesota
and $332 in Connecticut. New Jersey and Illinois were not able to provide
this information. Minnesota found that 64 percent of those in the state’s
Buy-In program as of December 2001 earned wages for at least one 3-
month period in the 2-year period prior to enrollment.25 Minnesota officials



24
  Connecticut officials said that as a part of their state’s Infrastructure Grant, their primary
research question will be to determine whether the Medicaid Buy-In, along with other
factors such as participation in vocational rehabilitation and a new benefits counseling
program, leads to increases in earnings among participants.
25
  Minnesota officials used data collected by the state’s Department of Economic Security
from employers who report information on employees who pay federal taxes.




Page 31                                                  GAO-03-587 Medicaid and Ticket to Work
                   cautioned that the analysis was limited by the lack of detail in the state
                   database; for example, they did not know whether participants were
                   disabled during this entire period, or whether individuals were
                   consistently employed.


                   We provided a draft of this report for comment to CMS and the 12 states in
Agency and State   our sample. In its comments, CMS said that, in addition to the states with
Comments           existing BBA and Ticket to Work Buy-In programs, at least three more
                   states are planning to implement a Medicaid Buy-In program within the
                   coming year, which would result in over half of the states offering health
                   insurance to workers with disabilities. CMS noted that the expansion of
                   Medicaid coverage to these individuals is encouraging particularly because
                   states are experiencing fiscal budget constraints. CMS also said that it is
                   collecting information on Medicaid Buy-In participants’ earnings and
                   Medicaid costs for the first 2 years of operation. In addition, CMS expects
                   to complete an extensive study of states’ experiences for 2001 and 2002
                   with the Buy-In programs authorized under both the BBA and the Ticket to
                   Work and Work Incentives Improvement Act of 1999 in the fall of 2003 and
                   to report its findings in 2004.

                   CMS also suggested that, in view of general concerns over racial
                   disparities and access to care in rural areas, it might be helpful for us to
                   comment on these demographic factors as part of our findings. We did not
                   include these factors in our scope of work, even for the four states where
                   we did more detailed work, and therefore cannot comment on them. CMS
                   provided technical comments, which we have incorporated as appropriate.
                   The full text of CMS’s written comments appears in appendix II.

                   Eleven of the 12 states responded with technical comments, which we
                   incorporated where appropriate.


                   We will send copies of this report to the Administrator of the Centers for
                   Medicare & Medicaid Services and other interested parties. We also will
                   make copies available to others upon request. In addition, the report will
                   be available at no charge on the GAO Web site at http//www.gao.gov.




                   Page 32                                  GAO-03-587 Medicaid and Ticket to Work
If you or members of your staffs have any questions regarding this report,
please contact me on (202) 512-7118 or Carolyn Yocom at (202) 512-4931.
Other major contributors to this report were Catina Bradley, Karen Doran,
Kevin Milne, and Elizabeth T. Morrison.




Kathryn G. Allen
Director, Health Care—Medicaid
 and Private Health Insurance Issues




Page 33                                GAO-03-587 Medicaid and Ticket to Work
              Appendix I: Methodology for Developing
Appendix I: Methodology for Developing
              Estimates and Characteristics of Working-Age
              Individuals with Disabilities


Estimates and Characteristics of Working-
Age Individuals with Disabilities
              To develop a national estimate and compare the characteristics of
              working-age individuals with disabilities with those for working-age
              individuals in the rest of the population, we analyzed data available from
              the Medical Expenditure Panel Survey (MEPS) household component,
              which provides data on individuals’ demographics, employment, health
              characteristics, and medical spending.

              MEPS, conducted by the Agency for Healthcare Research and Quality
              (AHRQ), consists of four surveys and is designed to provide nationally
              representative data on health care use and expenditures for U.S. civilian
              noninstitutionalized individuals. For our analysis, we used one of the four
              surveys—the Household Component. The Household Component is a
              survey of individuals regarding their demographic characteristics, health
              insurance coverage, and health care use and expenditures. The 1997 and
              1998 versions of the MEPS Household Component were the most recently
              available at the time of our analysis that had both (1) a pooled estimation
              file published by AHRQ that allows pooling 2 or 3 years of data, and (2)
              complete demographic, health insurance, and health care expenditure
              data. We pooled data from 1997 and 1998 in order to increase our sample
              sizes for individuals with disabilities. Using the Medical Care Consumer
              Price Index from the Bureau of Labor Statistics, we inflated 1997 medical
              care expenditures to 1998 values.

              Our estimate of working-age individuals with disabilities includes
              individuals aged 16 to 64 with one or both of these conditions: (1) needing
              help or supervision in performing activities of daily living (ADL) or
              instrumental activities of daily living (IADL) because of an impairment or a
              physical or mental health problem1 or (2) being completely unable to work
              at a job, do housework, or go to school.

              Our analyses of working-age individuals with disabilities are based on a
              sample size of 1,680, representing a population of 6.68 million individuals
              with disabilities. Table 7 shows the unweighted and weighted sample sizes
              on which our analyses are based.




              1
               MEPS identifies ADLs as basic physical activities such as bathing, dressing, or getting
              around the house and identifies IADLS as cognitive or social functions such as using the
              telephone, paying bills, taking medications, preparing light meals, doing laundry, or going
              shopping. MEPS offers a relatively expansive definition of disability in that it does not
              distinguish the number of ADLs or IADLs with which an individual may require assistance.




              Page 34                                          GAO-03-587 Medicaid and Ticket to Work
Appendix I: Methodology for Developing
Estimates and Characteristics of Working-Age
Individuals with Disabilities




Table 7: MEPS Sample and Estimated Population Sizes, 1997 and 1998

                                                             Individuals with      Rest of the general
                                                      disabilities aged 16-64   population aged 16-64
 Sample size (unweighted)                                               1,680                   32,068
 Estimated population size
 (weighted)                                                        6,682,106              166,509,028

Source: Agency for Healthcare Research and Quality.

Note: GAO’s analysis of AHRQ’s MEPS household component, 1997 and 1998.




Page 35                                                        GAO-03-587 Medicaid and Ticket to Work
              Appendix II: Comments from the Centers for
Appendix II: Comments from the Centers for
              Medicare & Medicaid Services



Medicare & Medicaid Services




              Page 36                                      GAO-03-587 Medicaid and Ticket to Work
           Appendix II: Comments from the Centers for
           Medicare & Medicaid Services




(290189)
           Page 37                                      GAO-03-587 Medicaid and Ticket to Work
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