How Earnings Impact Medicaid
You can use this toolkit to aid you in understanding and explaining to youth and their families: how Medicaid is impacted by earning; and that Medicaid will, in most cases, will continue under the 1619(b) work incentive when the monthly SSI payment is not available due to work and earnings.
The Medicaid Program: A Brief Summary
Medicaid, also known as Medical Assistance, is an optional federally-supported program. All states have opted to have a Medicaid program. When the state pays for federally-authorized services through Medicaid, the federal government reimburses that state for a percentage of those costs. State Medicaid programs operate on a basic structure of federally mandated and optional service categories, but no two state programs will be exactly alike.
You should contact yourstate Medicaid agency for basic information about the program and how to become eligible. This information can be shared with youth and families your are serving.
Establishing Medicaid Eligibility for Youth with Disabilities
Medicaid Eligibility is Automatic for SSI Recipients in Most States
In 41 states, the District of Columbia, and the Northern Mariana Islands an SSI beneficiary is automatically eligible for Medicaid. In most of those states, known as “1634 states,” there is no need for a separate Medicaid application. In eight states (Alaska, Idaho, Kansas, Nebraska, Nevada, Oklahoma, Oregon, and Utah) and the Northern Mariana Islands a separate Medicaid application is required and then SSI payment status is enough to establish Medicaid eligibility. Importantly, the SSI program stops counting parental income and resources at age 18, meaning an 18 year old with little or no income will financially qualify for SSI and Medicaid in these 41 states. Even if the youth gets a reduced SSI payment because of wages or unearned income, the youth will qualify for automatic Medicaid in these 41 states.
Medicaid Eligibility in the Nine Section 209(b) States
Medicaid eligibility is not automatic for SSI recipients in these states and is determined using state-specific eligibility criteria that are different from SSI criteria. These states include: Connecticut, Hawaii, Illinois, Minnesota, Missouri, New Hampshire, North Dakota, Oklahoma, and Virginia. VR counselors should become familiar with state specific Medicaid eligibility criteria for youth if they are in one of these states.
When Medicaid Eligibility Cannot be Established through SSI
States may have a dozen or more different ways that individuals or families can qualify for Medicaid, including the Medicaid Expansion option that became available through the Affordable Care Act in recent years (often called Obamacare). VR counselors can get materials from their state Medicaid agency to make available to youth and families about these many options in their state.
This section highlights two common options of importance to youth with disabilities: the Medicaid Needy or Spend-Down program; and the Home and Community Based Services (HCBS) waivers.
The Medically-Needy or Spend-Down Program: This option exists in two thirds of the states. It is for individuals who have high medical costs and too much income to qualify for Medicaid through SSI status or through another pathway available in their state. In 209(b) states, the medically needy program is mandatory meaning individuals who are blind or disabled must be given the opportunity to spend down to the medically needy eligibility level. States set their own income and resource eligibility thresholds. At state option, the Medicaid program can use a budgeting period of one to six months for determining an individual’s spend-down obligation.
Spend-down example: Tremaine gets monthly Social Security disability benefits of $920 which is too much to qualify for SSI. This is also $120 above the state’s $800 eligibility threshold for the spend-down program (her state uses a one-month budgeting period for determining the amount of her spend down). After excluding $20 of Tremaine’s income under state rules, he is still $100 above the eligibility threshold and will face a $100 per month spend down. Tremaine can establish Medicaid eligibility after paying for or incurring at least $100 in qualified medical bills. Some states may also allow him to pay $100 each month to the Medicaid agency to meet his spend down.
Medicaid Waivers: Every state has one or more of the optional HCBS waivers which operate under a unique state plan that must be approved by the federal Centers for Medicare and Medicaid Services. HCBS waivers often target a particular disability group, such as individuals with traumatic brain injuries or those with intellectual disabilities. Often an HCBS waiver program will waive Medicaid financial eligibility rules, e.g., ignoring parental income and resources for a minor child even though regular Medicaid rules would count that income and resources. When eligible for a waiver, a youth may get a range of services not available through the regular State Medicaid program, potentially including things like job coaching services, home modifications, or vehicle modifications. VR counselors can check with their State Medicaid Program to see what HCBS waivers (or other waivers) the state offers.
Keeping SSI While Working
Getting a Reduced SSI Payment and Keeping Medicaid
In all states, when an SSI beneficiary works the first $65 of gross wages is excluded ($85 if there is no unearned income) and an additional 50 percent of the remainder is excluded. The resulting “countable income” is subtracted from the state’s SSI base rate (federal benefit rate plus optional state supplement) to determine the new SSI payment amount. So long as the beneficiary continues to receive some SSI cash benefits, Medicaid will continue in the 41 states in which Medicaid is automatic for SSI recipients.
Example: Christina gets $771 per month in SSI payments and starts a job making $885 gross per month. She has no other income. Her countable income will be $400 ($885 – 20 – 65 = 800/2 = $400) and her new monthly SSI payment will be $371 ($771 – 400). Since Christina lives in a state in which Medicaid is automatic for SSI recipients, she will continue to be Medicaid eligible. If Christina lived in one of the nine 209(b) states in which Medicaid is not automatic for SSI recipients, her continued eligibility for Medicaid while working would vary from state to state.
If your state is one of 41 in which Medicaid is automatic for SSI recipients, you can tell the youth who gets SSI and the family that Medicaid will continue if work and wages result in a reduced SSI payment.
Keeping Medicaid after Losing SSI through Work and Wages: The 1619(b) Work Incentive
This work incentive is available in all states. When an SSI beneficiary loses the right to an SSI payment, due to work and countable wages, 1619(b) allows Medicaid eligibility to continue indefinitely in most cases. Every calendar year, the SSI program publishes an updated 1619(b) eligibility threshold chart for all states, the District of Columbia, and the Northern Mariana Islands. For 2019, those eligibility thresholds range from a low of $27,826 in Alabama to a high of $66,452 in Connecticut. Annual threshold rates are available online at https://www.ssa.gov/disabilityresearch/wi/1619b.htm
Example: Christina, from the example above, was earning $885 gross per month and getting a monthly SSI payment of $350 plus automatic Medicaid in her state. She starts working more hours and now earns $1,685 per month gross. Her countable income is now $800 ($1,685 - 20 – 65 = 1,600/2 = $800). Since countable income is more than the $771 SSI maximum for her state, she will no longer qualify for an SSI payment. Christina will continue to be eligible for Medicaid through 1619(b) if: her disability continues; she has a continuing need for Medicaid; she would still be eligible for SSI if her wages are ignored; and if her annual income is less than her state’s unique eligibility threshold.
Moving from 1619(b) status back to SSI payment status when wages are reduced or a job ends: The 1619(b) work incentive allows for free movement between SSI payment status, to Medicaid-only status, then back to SSI payment status without a need for a new application each time SSI payments are resumed. This is an important safety-net type of work incentive that should encourage youth to take jobs even if the long-term stability of the job or the amount of work hours is uncertain.
Example: Christina, from the above examples, worked her way from a reduced SSI payment to Medicaid only status, through 1619(b), as her wages went up. After working for several months at $1,685 gross wages per month, with no eligibility for an SSI payment, her employer’s business slowed down and her hours were cut. Christina’s gross wages will now be $1,085 per month and her countable income will be $500 ($1,085 – 20 - 65 = 1,000/2 = $500). She is now eligible for an SSI payment of $271 per month ($771 – 500). Christina will need to report her change in monthly income to the SSI program and a new SSI payment will be processed – without the need for a timely new application process!
See our Print and Go Tip Sheet, “The 1619(b) Work Incentive: Continued Medicaid Eligibility When SSI is Discontinued Due to Work and Wages” (includes example of higher, individualized eligibility threshold if there are unusually high medical expenses paid by Medicaid).
The Optional Medicaid Buy-In (MBI) for Working Individuals Program
This federally-authorized and optional program exists in more than 40 states and can provide Medicaid eligibility to working people with disabilities who are not eligible for 1619(b) Medicaid. It is described in detail in our Print and Go Tip Sheet, “The Optional Medicaid Buy-In (MBI) for Working Individuals Program.”