Training and Rehabilitation Incentives

• What are continued payments under a vocational rehabilitation program? 
• What is the Ticket to Work?

Earnings-Related Incentives

• What is meant by the substantial gainful activity (SGA) limit?
• What are impairment-related work expenses (IRWEs)?
• What are “subsidies and special conditions”?
• What are unincurred business expenses?
• What are unsuccessful work attempts?
• What is a Plan for Achieving Self Support (a PASS plan)?

Health Coverage Incentives

• How can people with disabilities obtain or retain Medicaid coverage while working?

Work Incentives for Persons Receiving SSDI or SSI Payments

Individuals with disabilities can use one or more of the following work incentives to work on a part-time or full-time basis if they are receiving SSDI or SSI payments.

Training and Rehabilitation Incentives

• Continued Payments Under a Vocational Rehabilitation Program 
• The Ticket to Work Program

Earnings-Related Incentives

• Retaining Earned Income Up to a Certain Dollar Amount, also known as “earning up to the substantial gainful activity limit” 
• Impairment Related Work Expenses 
• Subsidies and Special Conditions 
• Unincurred Business Expenses 
• Unsuccessful Work Attempts 
• Establishing a Plan for Achieving Self Sufficiency (PASS plan)

Health Coverage Incentives

• Obtaining or Retaining Medicaid Coverage While Working

Training and Rehabilitation Incentives

What are continued payments under a vocational rehabilitation program?

If you medically recover and no longer meet SSA’s definition of disability, your monthly SSDI and/or SSI payments can continue if you are actively participating in an approved vocational rehabilitation (VR) program. To accept you, such a program must have the expectation that you will become self-supporting. Your monthly SSDI and/or SSI Payments can continue until you complete the program. Examples of “approved VR programs” include those provided by your State Rehabilitation Agency and Ticket to Work programs. Back to the Top

What is the Ticket to Work?

It is a “ticket” or voucher that someone on SSDI or SSI may request and use to obtain vocational rehabilitation, employment or other support services from an approved provider of their choice to help them go to work and achieve their employment goals.

You can get more information on the Ticket to Work program by calling Maximus, Inc., the ticket program manager, at 1-866-968-7842 toll-free (TTY 1-866-833-2967). Or you can call the toll-free number, 1-800-772-1213 (TTY number 1-800-325-0778) and ask for the publication, Your Ticket To Work (Publication No. 05-10061).

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Earnings-Related Incentives

What is meant by the substantial gainful activity (SGA) limit?The substantial gainful activity (SGA) requirements apply to those on SSDI and/or SSI. Simply put, this means that to receive SSDI the individual is only able to work — and, therefore, earn — a limited amount each month.

In 2005, most Social Security Disability beneficiaries can earn $830 per month and remain eligible for benefits. By law, blind persons can earn a somewhat higher SGA amount than those with other disabilities. In 2005, the amount is $1,380/month for persons who are blind.

In this way, therefore, the SGA limit itself can be seen both as a “work incentive” in itself – to work at least up to a certain income threshold – and as a disincentive to work in ways that exceed the SGA limits. It also means that in order to earn income that exceeds the SGA limit, a person on SSDI or SSI may need to take advantage of one or more of the additional incentives that are discussed below. Back to the Top

What are impairment-related work expenses (IRWEs)?

These are the cost of certain impairment-related work expenses (IRWEs) that someone incurs in order to work. Examples of impairment-related work expenses are things such as wheelchairs, personal assistance you pay for, certain transportation costs and specialized work-related equipment. SSA deducts these from your earnings if it decides you are performing substantial work. Thus, if you’re a person who has a disability with monthly earnings of $1,300 and monthly personal assistance costs of $500, SSA regards the $500 as an impairment-related work expense and deducts it making your monthly earnings $800 and your earnings are below SGA.

Special application to SSI: SSA also excludes IRWEs from your earned income when it figures your monthly SSI payment amount. Back to the Top

What are “subsidies and special conditions”?

These refer to support you receive on the job that could result in your receiving more pay than the actual value of the services you performed. These can include:

• You receive more supervision than other workers doing the same or a similar job for the same pay. 
• You have fewer or simpler tasks to complete than other workers who are doing the same job for the same pay. 
• You have a job coach or mentor who helps you perform some of your work

As with IRWEs, SSA deducts the value of such subsidies and special conditions from your earnings when it decides whether you are working at the SGA level.

Special application to SSI: Unlike with IRWEs, however, SSA does not deduct subsidies or special conditions when it figures your SSI payment amount. Back to the Top

What are unincurred business expenses?

These are self-employment business support that someone provides to you at no cost. In deciding whether you are working at the SGA level, SSA deducts such expenses from your net earnings from self-employment. Examples of unincurred business expenses are (1) a vocational rehabilitation agency gives you a computer that is used in a graphic arts business; and (2) a friend works for your business as unpaid help. One way to identify an unincurred business expense is that the Internal Revenue Service (IRS) does not allow you to deduct the cost for income tax purposes because someone gave you the item or services.

Special application to SSI: SSA does do not deduct such unincurred business expenses when it figures your SSI payment amount. Back to the Top

What are unsuccessful work attempts?

An unsuccessful work attempt is an effort by a person with a disability to do substantial work that either stopped or produced earnings below the SGA level after 6 months or less because of:

• The individual’s disabling condition, or   
• Elimination of the special services or assistance that the individual needed in order to work.

Special application to SSI: SSA does not consider such attempts as a factor in determining your SSI payment. Back to the Top

What is a Plan for Achieving Self Support (a PASS plan)?

A plan for achieving self support is a document that allows you to use your income or things you own to reach a work goal and still maintain your eligibility for SSI and/or Medicaid.

PASS plans are typically used by SSI beneficiaries, but there are some ways that SSDI beneficiaries can use one both to set aside funds to achieve an employment goal and become eligible for Medicaid as well. For more information on how to create and make a PASS plan work for you see the following section, Additional Work Incentives Available to People with Disabilities on SSDI.

SSA has teams that can answer questions on such plans called PASS Cadres. For the location nearest you, go to: http://www.ssa.gov/work/ResourcesToolkit/cadre.htmlOr, you can call SSA at call 1-800-772-1213 from anywhere in the U.S.

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Health Coverage Incentives

How can people with disabilities obtain or retain Medicaid coverage while working?

Depending on what state you live in, Medicaid can offer people with disabilities access to the wide range of health care, equipment and supportive services they need to live and work in their communities. There are a variety of ways that people with disabilities can retain or obtain Medicaid coverage when they are employed by meeting certain requirements. It is important to point out this applies to employed individuals with disabilities who fall into one of the following categories:

• Certain persons with disabilities who are eligible for Medicaid only or are dually eligible for Medicare and Medicaid 
• Certain persons with disabilities who are eligible for Medicare only; and, 
• Certain other employed individuals with disabilities who can “buy into” Medicaid in their state even when their earnings and assets would otherwise make you ineligible.

About 2 million working age people with disabilities receive both SSDI and SSI and are dually eligible for Medicare and Medicaid as well. If you are one of these individuals, you may be able to use a combination of one or more of the SSDI and SSI work incentives that will be described in the following sections. The best way to know if you are dually eligible for Medicare and Medicaid is to look at your Medicaid card. If you have both Medicare and Medicaid, the state will make some notation on your Medicaid card so that providers for services can bill appropriately. If you receive both SSDI and SSI, then you are eligible for both Medicare and Medicaid.

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• Can a person with a disability on Medicare and/or Medicaid be employed?
• Do all work incentives apply to everyone on SSDI and SSI?

Editors’ Note: The information presented in this Section regarding SSDI and SSI work incentives is adapted or reprinted from material from the Social Security Administration’s 2004 Red Book, available online at http://www.ssa.gov/work/ResourcesToolkit/redbook.html. Similarly, information presented on Medicare and/or Medicaid coverage options for employed individuals with disabilities is based on information that is included in the Red Book or posted on the Centers on Medicare and Medicaid Services website at http://www.cms.hhs.gov/twwiia/factsh01.asp. Additionally, for background information on Medicare and Medicaid coverage, see the companion document to this publication, Navigating Medicare and Medicaid, 2005: A Resource Guide for People with Disabilities, Their Families, and Their Advocates.

Protecting Health Coverage For People With Disabilities Who Work

Few groups of adult Americans have higher rates of unemployment or lower rates of participation in the labor force than people with disabilities. While barriers to employment exist in a number of areas, protecting access to health care has historically been a significant barrier that prevented people with disabilities who would like to work from seeking employment.   

The program rules for Medicare and Medicaid with regard to work are complex. The standard of disability from which eligibility for both Medicare and Medicaid is determined is tied to the inability to be engaged in substantial gainful activity in the national economy—a substantial barrier that prevents people with disabilities enrolled in Medicare or Medicaid from working. However, there have been longstanding policies of both Medicare and Medicaid that permit employment in certain circumstances. Recently, Congress has enacted additional legislation to remove more of the disincentives to work and to make it easier for people with disabilities to work and to continue to receive health care coverage and long-term services and supports through Medicare and Medicaid—many of these services are frequently unavailable through private, employer-sponsored health insurance programs.

This guide will explain many of the complex issues and policies that can be used to help people with disabilities to keep their health coverage and seek employment.

Can a person with a disability on Medicare and/or Medicaid be employed?  

Yes, under certain conditions. Until fairly recently, federal law has made it extremely difficult for individuals with disabilities to be competitively employed and still retain vital Medicare- or Medicaid-funded benefits that often makes work possible. To correct this flaw, Congress has added several “work incentives” to the Social Security Act that enables you to:  

• Receive education, training and rehabilitation to start a new line of work;
• Keep some or all of SSDI or SSI cash benefits while working;
• Obtain or retain vital Medicaid coverage while working; and,
• Retain existing Medicare coverage while working. Back to the Top

Do all work incentives apply to everyone on SSDI and SSI?  

No. Some work incentives apply to people with disabilities regardless of the particular cash benefit they receive — SSDI or SSI. Certain incentives only apply to those receiving SSDI, while others can only be used others persons receiving SSI.   Generally speaking, the incentives that will be discussed are meant to help employed individuals with disabilities do one of three things: 

a. Retain some or all of their SSDI or SSI cash benefits;b. Obtain rehabilitation, training and employment support; and/orc. Retain vital health coverage through Medicare and/or Medicaid. 

Though these various types of incentives serve fairly distinct purposes, it is important to keep in mind that they also are interrelated and interactive with each other. For example, to retain Medicaid coverage while working you must keep your earnings below a certain level. Some people with disabilities are able to do this by using work incentives that enable one to deduct certain disability work expenses from your earnings. This, in turn, reduces the amount of income that a state counts to determine whether they are eligible for Medicaid.

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Congress created Medicare and Medicaid in 1965 to provide health coverage to two fairly distinct groups of Americans: workers who reach age 65 (that is, senior citizens) and certain groups of low-income people. While much has remained constant in Medicare and Medicaid in the past 40 years, both programs have evolved significantly. Collectively, they have come to play a major role in providing health care coverage and long-term services and supports for people of all ages with disabilities.

This guide explains the critical role Medicare and Medicaid have come to play in the lives and the futures of roughly 20 million children, adults, and seniors with disabilities—and gives people with disabilities new information to help them navigate these complex and confusing programs. 

Medicare and Medicaid provide health coverage and long-term services and supports to roughly one-third of the estimated 53 million people with cognitive, developmental, physical, and/or mental disabilities in the United States. Generally, these are people with severe disabilities and extensive need for health and long-term services. 

People with disabilities and their friends and advocates need to learn enough about these complex programs to navigate them and to work for policy improvements so these programs continue to evolve and meet the needs of people with disabilities more effectively.

Who Should Read and Use This Guide

The individuals who will benefit most from reading this guide are individuals with disabilities, and their families, friends, and advocates. Medicare and Medicaid are extremely complicated and confusing programs—and the details of how the programs work directly affect the lives of the people with disabilities who the programs serve. Nonetheless, this guide is intended to be understandable to people who are completely unfamiliar with Medicare and/or Medicaid. 

This guide does not provide you with a complete understanding of every aspect and complexity of the Medicare and Medicaid programs. Both writing and reading such a long—and boring—encyclopedia would prove an arduous, if not impossible, task. Rather, our hope is to offer you a sound introduction to the basics of Medicare and Medicaid and the income assistance programs that provide a pathway to receiving Medicare and Medicaid. 

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Supplemental Medicaid Coverage for Low-Income Medicare Beneficiaries

• How does an individual become a dual eligible?
• How are dual eligibles different from other Medicare beneficiaries?
• What does it mean to be a primary and/or secondary payor?
• In 2003, Congress enacted a Medicare reform law that included a prescription drug benefit. How does this law affect dual eligibles?

More than 7 million people receive both Medicare and Medicaid; these individuals are called “dual eligibles” or “dual enrollees.” While these people rely on Medicare for basic health services, Medicaid plays an essential role in paying Medicare’s premiums and cost-sharing and in covering critical services not covered by Medicare, including prescription drugs and long-term services and supports.

How does an individual become a dual eligible?

As discussed in previous sections, individuals are determined to be disabled by the Social Security Administration. People with permanent disabilities who have an adequate work history qualify for Medicare after the waiting period. Most people age 65 and over qualify for Medicare. As discussed earlier, certain adults who acquire disabilities in childhood sometimes qualify for Medicare if their parents are covered by Medicare. 

Full Benefit Dual EligiblesThe vast majority of dual eligibles (6.4 million) receive full Medicaid benefits. People with disabilities can also qualify for varying levels of assistance from Medicaid if their income is low enough. Persons who receive SSI—or persons in states that have expanded Medicaid eligibility to persons with disabilities up to the poverty level—qualify for full Medicaid coverage that supplements Medicare’s coverage, pays the Part B premium, pays any Medicare cost-sharing, and provides services not covered by Medicare such as long-term care.

Medicare Saving Program (MSP) Dual EligiblesMedicare beneficiaries with disabilities with slightly higher incomes and limited assets can also qualify for partial benefits from Medicaid:

• Persons with incomes up to 100 percent ($776 per month in 2004) of the poverty level can qualify as Qualified Medicaid Beneficiaries (QMBs, pronounced “quimbies”). These individuals do not receive Medicaid supplemental benefits, but Medicaid does pay their Medicare Part B premium and cost-sharing.
• Persons with incomes between 100 percent and 120 percent ($776-$931 per month in 2004) of the poverty level qualify as Specified Low-Income Beneficiaries (SLMBs, pronounced “slimbies”). Medicaid pays the Part B premium for SLMBs.
• Block grant funding is available to states for Qualifying Individual (QI) coverage for individuals with incomes between 120 percent and 135 percent ($931-$1,046 per month in 2004) of the poverty level. Medicaid pays the Part B premium for QIs. Because this program is a block grant, this benefit is subject to having sufficient funding and is not guaranteed to all individuals. 

For information and help on determining whether you maybe eligible for this type of assistance, you should contact the State Health Insurance Assistance Program nearest you. For a list of where these programs are located, go to http://www.medicare.gov/contacts/static/allStateContacts.asp. Or, call 1-800-Medicare (1-800-633-4227), or 1-877-486-2048 TTY. Back to the Top

How are dual eligibles different from other Medicare beneficiaries?

Most dual eligible individuals have very low incomes: 77 percent have an annual income below $10,000, compared to 18 percent of all other Medicare beneficiaries. High-cost and sick or frail Medicare beneficiaries are concentrated among the dual eligibles. Nearly one in four dual eligibles is in a nursing home, compared to 3 percent of other Medicare beneficiaries, and one-third of dual eligibles have significant limitations in their activities of daily living (ADLs), compared to 12 percent of other Medicare beneficiaries. Back to the Top

What does it mean to be a primary and/or secondary payor?

When an individual has two sources of payment for the same service, one source must be billed first. This is the primary payor. In the case of dual eligibles, Medicare is the primary payor and Medicaid is the secondary payor, supplementing payments made by Medicare. Back to the Top

In 2003, Congress enacted a Medicare reform law that included a prescription drug benefit. How does this law affect dual eligibles?

The new Medicare law establishes a Medicare prescription drug benefit (Part D) that becomes effective on January 1, 2006. On this date, a major transition occurs: Medicaid will no longer provide drug coverage; rather individuals will have to enroll in a Medicare Part D prescription drug plan. Starting in January 2006, Medicaid programs are prohibited from receiving federal Medicaid funds to provide prescription drug benefits to persons who are eligible for Medicare. However, Medicaid coverage will remain important to dual eligibles, because they will still be able to receive other services through Medicaid, such as long-term care.

The legislation establishes a transitional drug discount program that is available until the drug benefit is implemented. Persons who have access to Medicaid drug coverage are ineligible to participate in the discount program. The drug discount card program expires the day before the new drug benefit goes into effect. 

Selecting and enrolling in a Part D plan prior to January 1, 2006 is very important for dual eligibles. Otherwise, these individuals will be randomly assigned to a Part D plan.

The drug coverage provided under Medicare Part D will not necessarily be the same as what dual eligibles currently receive under Medicaid and could differ dramatically depending on the state in which they reside and on how Part D is implemented.

¹The federal government updates poverty guidelines annually. At the time of publication, poverty guidelines for 2005 were not yet available. To find the latest poverty guidelines, go to http://aspe.hhs.gov/poverty/poverty.shtml.

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What does it mean to be “medically needy”?

Thirty-five states plus the District of Columbia operate medically needy programs. The medically needy option allows states to provide Medicaid to certain groups of individuals who are ineligible because of excess income, but who have high medical expenses. States often use the medically needy program to expand coverage primarily to persons who spend down by incurring medical expenses so that their income minus medical expenses falls below a state-established medically needy income limit (MNIL). The opportunity to spend down is particularly important to elderly individuals living in nursing homes and children and adults with disabilities who live in the community and incur high prescription drug, medical equipment, or other health care expenses, either following a catastrophic incident or due to a chronic condition. Back to the Top

What does it mean that Medicaid is an entitlement?

For individuals, Medicaid’s entitlement means that all people who meet Medicaid eligibility requirements have an enforceable right to enroll in Medicaid and receive Medicaid services on a timely basis. This means that a state cannot deny Medicaid coverage to individuals if more people enroll than a state expects, nor can states have waiting lists. The exception to this applies to those receiving Medicaid services under any type of Medicaid waiver. This is discussed further below.

Further, the individual entitlement means that people enrolled in Medicaid have a right to receive all Medicaid covered services when they are medically necessary, as determined by the state. To meet this standard, a physician or qualified health professional must determine that a service is needed and the individual may also need to meet certain clinical or functional criteria. When individuals are denied Medicaid eligibility or services to which they are entitled, they can go to federal court to force states to comply with Medicaid’s rules. While rarely used, individual enforcement of Medicaid, called a private right of action, has been important in protecting people with disabilities and others in Medicaid.

Medicaid is also an entitlement to the states. This means that if states follow Medicaid rules, they have a legal right to have the federal government pay its share of Medicaid expenses. The federal share of a state’s Medicaid spending is called the federal medical assistance percentage (FMAP). The FMAP formula is based on average per capita income. States with per capita incomes above the national average receive lower matching percentages. By law, the minimum FMAP is set at 50 percent, and the maximum is set at 83 percent. To learn what your state receives in federal Medicaid spending, go to the Medicaid Spending section in the Medicaid topic at www.statehealthfacts.org.

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Mandatory Medicaid Services

All states must cover:  

• Hospital care (inpatient and outpatient)
• Physician services
• Laboratory and X-ray services
• Family planning services
• Health center and rural health clinic services 
• Nurse midwife and nurse practitioner services
• Early and periodic screening, diagnostic, and treatment (EPSDT) services and immunizations for children and youth under age 21
• Nursing home care
• Home health services (including DME) for those eligible for nursing home care
• Transportation services for doctor, hospital, and other health care visits*

Most Medicaid beneficiaries are entitled to coverage for any of these services whenever they are medically necessary, as determined by the state.  

*Although not included in the Medicare law as a mandatory service, transportation services are required by federal regulations.

MEDICAID SERVICES AND ADMINISTRATIVE ISSUES

What benefits and services does Medicaid provide?

Medicaid requires states to cover certain mandatory services, which include coverage for physician visits and hospitalizations. The early and periodic screening, diagnostic, and treatment (EPSDT) benefit for children is mandatory and ensures that children on Medicaid are screened regularly, and if a disability or health condition is diagnosed, the state must cover its treatment, even if the state does not provide the same services to adults in Medicaid. Other mandatory services include laboratory and X-ray services, nursing home coverage, and home health services (including durable medical equipment) for persons entitled to nursing home coverage.

States can also cover additional services, called optional services. These are services that are frequently needed by people with disabilities and include prescription drugs, physical therapy, personal attendants, and rehabilitation services.

All states provide coverage for many optional services. But the specific services covered and the limitations they place on the level of a benefit provided vary substantially.

To find out which optional services are available in your state (as of January 2003), the Kaiser Commission on Medicaid and the Uninsured and the National Conference of State Legislatures have developed an easy-to-use web-based tool for determining which services each state covers. Go to www.kff.org/medicaidbenefits.

Optional Medicaid Services

States can choose to cover the following services, and the federal government will match state spending: 

Basic medical and health care services

• Prescribed drugs 
• Clinic services 
• Emergency hospital services 
• Diagnostic services 
• Screening services 
• Preventive services
• Nurse anesthetists’ services
• Tuberculosis-related services
• Chiropractors’ services  
• Private duty nursing 
• Medical social workers’ services
• Services that support people with disabilities to live in their communities
• Personal care services 
• Rehabilitative and/or clinic services
• Case management services
• Small group homes that operate as intermediate care facilities for persons with mental retardation and developmental disabilities (ICFs/MR) for 15 or fewer residents

Aids, Therapies, and Related Professional Services

• Podiatrists’ services 
• Prosthetic devices
• Optometrists’ services 
• Eyeglasses
• Dental services 
• Dentures 
• Psychologists’ services
• Physical therapy 
• Occupational therapy
• Respiratory care services
• Speech, hearing, and language therapy

Services involving short- or long-term institutional stays

• Inpatient psychiatric hospital services for children and young people under age 21
• Nursing facility services for children and young people under age 21
• At large intermediate care facilities for persons with mental retardation and developmental disabilities (ICFs/MR) with more than 15 residents 
• Inpatient hospital services for persons age 65 or older with mental illness in institutions for mental diseases (IMDs) 
• Nursing facility services for persons age 65 or older with mental illness in institutions for mental diseases (IMDs)

End-of-Life Care  

• Hospice care services

Special treatment for children: Through the Early, and Periodic, Screening, Diagnosis, and Treatment (EPSDT) requirement, states must provide children access to all Medicaid covered services (including optional services) when they are medically necessary, whether or not they cover such services for adult beneficiaries.

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What does the requirement mean that Medicaid services must be adequate in amount, duration, and scope?

Services must be provided in an amount, duration, and scope that are reasonably “sufficient” to achieve their intended purpose. States do have discretion to vary the amount, duration, or scope of the services they cover, but in all cases the service must be “sufficient in amount, duration, and scope to reasonably achieve its purpose.” For instance, a state may not limit coverage for inpatient hospital care to one day a year. Similarly, it seems unlikely that a state could provide attendant services for just five hours a week and still credibly say that this meets the benefit’s essential purpose of enabling people with disabilities to live in their own communities. Hence, this requirement provides some protection to those on Medicaid from receiving inadequate services. But states are often left to interpret on their own whether they are satisfying this critical requirement. Back to the Top

When people talk about Medicaid “consumer protections,” what do they mean?

Medicaid rules are intended to ensure that all people applying for Medicaid and receiving it are treated fairly. This includes requirements that services generally must be provided statewide, so that states cannot offer services to individuals in one part of the state and deny them to individuals in another. Generally, services must also be comparable. This means that, except in limited circumstances, whatever services a state covers, it must provide them equally to all Medicaid beneficiaries when they are medically necessary. This protection ensures that services are provided based on medical need and one group of Medicaid beneficiaries is not treated more favorably than others.

State Medicaid programs cannot reduce the amount, duration, or scope of mandatory services to a beneficiary “solely because of the diagnosis, type of illness, or condition.” This protects beneficiaries from arbitrary limitations on services and ensures that covered services are provided at an adequate level to be effective. The Medicaid program also guarantees Medicaid applicants and beneficiaries due process rights to ensure that individuals are treated fairly and that they have the right to appeal any decisions denying them eligibility or services if they disagree with these decisions. Back to the Top

What are Medicaid waivers?

Waivers are programs that allow the Secretary of Health and Human Services to permit individual states to receive federal matching funds without complying with certain Medicaid rules (such as the consumer protections described above). Unlike regular Medicaid services, waiver services can be provided to specific targeted populations or to persons in limited parts of a state. Back to the Top

What are home- and community-based services (HCBS) waivers? How do these programs differ from regular Medicaid programs?

The 1915(c) waiver, also called the home and community-based services (HCBS) waiver, is the most frequently used waiver for providing services in the community. These waivers are available to Medicaid-eligible individuals who, without the waiver services, would be institutionalized in a hospital or nursing facility. This type of waiver allows the Secretary to waive certain financial eligibility requirements and the Medicaid requirement that services must be “comparable” among beneficiaries and must be provided statewide. The Secretary also has the authority (which is regularly invoked) to impose enrollment caps to ensure the budget neutrality of HCBS waivers. This is done to prevent waivers from increasing federal Medicaid costs. Back to the Top

What are 1115 demonstration waivers? How do these programs differ from regular Medicaid programs?

The 1115 demonstration waiver gives the Secretary the broadest authority to waive compliance with Medicaid rules. While Congress has proscribed the waiving of certain parts of the Medicaid law, the 1115 demonstration authority gives the Secretary broad discretion to approve waiver programs that are “likely to assist in promoting the objectives” of the Medicaid law. States have used 1115 demonstrations to make changes to Medicaid that affect the entire Medicaid program. This type of waiver can also be used to waive Medicaid rules that cannot be waived under the 1915(c) waiver program. Recently, some states have sought to make wholesale changes to Medicaid through this type of waiver, in some cases asking essentially to eliminate the entitlement to Medicaid services. People with disabilities and their advocates have frequently opposed these types of waivers, which have resulted in capped funding for Medicaid services. Back to the Top Why can’t all people in Medicaid receive services in the community?

One of the shortcomings of Medicaid is that it has an institutional bias, meaning Medicaid funds are more likely to pay for institutional services rather than those that are provided in someone’s home and community. This is because nursing home coverage is mandatory, but coverage of the same types of services that are available in the community is optional.

While waivers have enabled states to experiment with different ways of providing community-based services, using them invariably results in significant inequities both across and within states in what people with disabilities receive. This, in turn, has led to long waiting lists to receive services in the community. Back to the Top

How do the Americans with Disabilities Act (ADA) and Medicaid relate to each other? 

Like all other public programs, the ADA requires that states administer Medicaid in a manner that does not discriminate against individuals with disabilities who are eligible for the health care and long-term services the program offers. To do this, states must take steps to ensure that persons on Medicaid with disabilities receive such services in the most integrated setting appropriate to their needs. This is known as the ADA integration mandate.

In its Olmstead v. L.C. decision, the U.S. Supreme Court ruled that the needless and unjustified institutionalization of people with disabilities is discriminatory, saying that institutionalizing a person who could live in his or her community with services and supports is a form of discrimination and segregation banned by the ADA. The Court further held that the practice violates the ADA requirement that services be provided to such individuals in the most integrated setting appropriate to their needs. To meet their obligations under the ADA, states must both remedy such discrimination when it has occurred and prevent it from taking place in the future. 

The Court’s decision did not prohibit the institutional placement of Medicaid beneficiaries, and the ADA does not require states to make “fundamental alterations” in its services or programs. Further, the Court provided a defense against lawsuits claiming a violation of the standards articulated in the Olmstead decision by saying that a comprehensive, effectively working plan for placing qualified individuals in less restrictive settings, with a waiting list that moves at a reasonable pace not controlled by a state’s efforts to keep its nursing homes full, would meet the requirements of the Olmstead decision. But the key requirement of the decision, and the ADA, itself, is to take reasonable actions to rectify the discrimination today. Back to the Top

What is managed care? 

Managed care is a way of getting services through a health plan that coordinates many aspects of your care. Instead of finding their own doctors and seeing any doctor who accepts Medicaid, individuals must agree to follow the managed care organization’s (MCO) rules, which often include seeing only certain providers who participate in the MCO’s network. Individuals generally also have a primary care provider (PCP) who is their main doctor and who must give his or her approval before an individual can see specialists. Back to the Top

What types of managed care programs operate in Medicaid? 

While managed care exists in many forms, there are two dominant models for such care: capitated managed care and primary care case management (PCCM) programs.

Capitated managed care programs transfer the risk for paying for health care services from the payor (that is, the state Medicaid agency) to organizations that contract with the payor to deliver health care services, called managed care organizations (MCOs). Commonly, MCOs, in turn, often transfer some of the risk for paying for health care services from the MCO to physicians or other health care providers. Capitation involves paying an established fee on a per person per month basis for all persons enrolled in an MCO, whether or not an individual receives any services. In exchange, the MCO accepts responsibility for delivering all medically necessary services covered under the contract between the state Medicaid agency and the MCO. PCCM programs use many of the management techniques of MCOs, and Medicaid programs pay the PCCM agency a fee for providing management services. Unlike capitated programs, however, PCCMs are not at risk for the cost for health services, and Medicaid agencies continue to pay for health care services on a fee-for-service basis. Back to the Top

Can a Medicaid program require a beneficiary to enroll in a managed care program?

Yes. Congress enacted the Balanced Budget Act of 1997 (BBA), which paved the way for greater use of managed care in Medicaid. Previously, states that wanted to require Medicaid beneficiaries to enroll in managed care programs had to request federal permission, through a waiver. Now, states can require most Medicaid beneficiaries, except children with special health care needs and dual eligibles (i.e. persons enrolled in both Medicare and Medicaid), to enroll in an MCO without getting federal approval for this requirement.

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MEDICAID APPEAL RIGHTS

What rights do applicants and beneficiaries have to appeal Medicaid decisions?

Medicaid beneficiaries must receive “due process” whenever benefits are denied, reduced, or terminated. The Supreme Court has defined essential components of due process for Medicaid to include: prior written notice of adverse action, a fair hearing before an impartial decision-maker, continued benefits pending a final decision, and a timely decision measured from the date the complaint is first made.

Medicaid also gives applicants and beneficiaries additional rights:

1. The right to request a fair hearing by a state agency for any individual who has been found ineligible for benefits, has been denied benefits, or whose request for services has not been acted upon with reasonable promptness.
2. The right to file an internal grievance within an MCO.
3. Medicaid beneficiaries may enforce their rights in federal court through a private right of action. This refers to an individual filing suit against a state Medicaid program in federal court claiming the state is denying him or her a right guaranteed by federal law. Back to the Top

What is a Medicaid fair hearing?

There are fairly detailed requirements mandating how states can satisfy the fair hearing requirement. Medicaid applicants have the right to a hearing if they believe their application has been denied or if the states have not given them a decision within a reasonable amount of time. Beneficiaries who have enrolled in Medicaid have a right to a hearing if they believe the state Medicaid agency has made an incorrect decision, such as denying coverage for a service they believe they need.

In most states, the state fair hearing decision can be appealed in state court. Back to the Top

What additional appeals rights apply to persons enrolled in a Medicaid MCO?

Medicaid beneficiaries can dispute MCO decisions or other features of the MCO in two ways: they can appeal an action or they can file a grievance. An action includes MCO activities, such as denying a service, refusing to pay for a service, reducing or suspending the amount of a service it will authorize, or failure to act in a timely manner on a request for a service. MCO enrollees can also file a grievance if they are dissatisfied with activities of the MCO that are not actions. For example, if a health care worker treats an MCO enrollee rudely, or if the enrollee is unhappy with the quality of services received, the enrollee can file a grievance.

MCOs are required to give enrollees reasonable assistance in completing forms and taking other procedural steps. This includes providing interpreter services, when necessary, and ensuring access to toll-free TTY/TTD telephone lines.

MCOs must consider and resolve grievances and appeals as quickly as the enrollee’s health requires, within state-established time frames. The maximum time an MCO has to resolve a grievance is 90 days, and the maximum time to resolve an appeal is 45 days. There is also a process for expedited appeals if a regular appeal would “seriously jeopardize the enrollee’s life or health or ability to attain, maintain, or regain maximum function.” The general standard for expedited appeals is three working days.  Back to the Top

What is the relationship between the managed care grievance and appeal process and the right to a fair hearing?

Medicaid beneficiaries enrolled in MCOs have a right to a state fair hearing, but the state is permitted to decide whether it will require beneficiaries to go through the managed care appeals process before having access to a fair hearing. This is called an exhaustion requirement.

In states without an exhaustion requirement, the state must allow individuals to request a fair hearing within a reasonable time frame (decided by the state). At a minimum, the state must allow an individual to request a fair hearing not less than 20 days from the date of notice of the MCO’s action. In no case can a beneficiary request a fair hearing more than 90 days after the date of notice of the MCO’s action.

States with an exhaustion requirement can set a reasonable time frame for allowing individuals to request a fair hearing that is no less than 20 days and no more than 90 days from the date of notice of an MCO’s resolution of an appeal.  Back to the Top

Where can people with disabilities turn if they need assistance navigating the appeals process?

Many community and national resources are available to help people with disabilities navigate the health system, including Medicaid. Individuals needing assistance are encouraged to check out the following resources:

• Protection and Advocacy Programs. Contact the National Association of Protection and Advocacy Systems (NAPAS) at (202) 408-9514 or www.napas.org for contact information for the protection and advocacy program in your state. The protection and advocacy system is a federally funded network that seeks to ensure that federal, state, and local laws are fully implemented to protect people with disabilities. While the capacities of state programs vary, many protection and advocacy programs actively assist people with disabilities in accessing Medicaid.
• Health Assistance Partnership. This program of Families USA (a national consumer advocacy organization) supports a network of consumer assistance programs (ombudsman programs) throughout the country. To find out if there is a program in your community, contact the partnership at (202) 737-6340 or infohap@healthassistancepartnership.org.disability.
• Advocacy Organizations. Many local, state, and national advocacy organizations assist people with disabilities to access Medicaid and resolve problems they encounter. Such organizations also may be a good way to get referrals to programs that assist people with disabilities in your community.

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The most recent Kaiser Health Poll Report found that Americans believe prescription drugs are improving their lives, but most also say that the drug industry cares more about profits than people. The current report analyzes the new data as well as related polling information from earlier surveys by the Kaiser Family Foundation and other organizations.

News Release

Survey Toplines (.pdf)

Medicaid Financing Issues: Intergovernmental Transfers and Fiscal Integrity

Since its enactment in 1965, Medicaid has been a joint venture between the states and the federal government. While each state administers its own Medicaid program within broad federal guidelines, the federal government provides over half of the program’s financing. As a result, Medicaid represents a spending item, but it is also the single largest source of federal revenue to the states.

In recent years there has been much discussion about states’ use of creative financing to draw down additional federal funds for Medicaid financing. Some suggest a curb on these practices and the President’s FY2006 budget includes provisions targeting inter-governmental transfers (IGTs). This fact sheet provides an overview of Medicaid financing, the use of IGTs by states, and the current policy issues surrounding IGT rules.

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A joint survey conducted by the Washington Post, Kaiser Family Foundation and Harvard University explores the public’s knowledge about the Social Security program and their attitudes about Social Security reform.

Survey Toplines (.pdf)

Dual Eligibles: Medicaid’s Role for Low-Income Medicare Beneficiaries

This fact sheet and set of tables describe the over 7 million “dual eligibles,” the low-income elderly and persons with disabilities who are enrolled in both Medicare and Medicaid. The fact sheet describes why this population needs Medicaid, what services they receive from Medicaid, and the current policy challenges related to dual eligibles, including the new Medicare prescription drug benefit. The set of tables, prepared by the Urban Institute for the Kaiser Commission on Medicaid and the Uninsured, presents the most current state-by-state data on Medicaid enrollment and expenditures for dual eligibles.

Fact Sheet (.pdf)

This document summarizes the final regulations to implement the new Medicare prescription drug benefit. The regulations were published by the Centers for Medicare and Medicaid Services (CMS) as a final rule in the Jan. 28 Federal Register. It provides an overview that allows interested parties to obtain information about specific provisions of the law. The summary was prepared by Health Policy Alternatives Inc. on behalf of the Kaiser Family Foundation.

Issue Brief (.pdf)