Medicaid delivers health coverage to nearly 75 million Americans. Typically, that includes low-income adults, children, pregnant women, elderly adults, and those with disabilities. Each state crafts and administers its own Medicaid program with oversight from the federal government. Both the federal government and states share the costs of the program. Created in 1965, Medicaid has evolved to serve more individuals, including a significant expansion to adults with income up to 138% of the federal poverty level (FPL) in 2010’s Affordable Care Act (ACA).
Though states determine specific health coverage, Medicaid requires certain services. States may elect to cover additional optional services like prescription drugs, eyeglasses, and dental care. Most beneficiaries have low incomes. Therefore, federal rules limit cost-sharing for some populations and services as well as total out-of-pocket costs. Without a Section 1115 waiver that includes monthly premiums or contributions, Medicaid does not allow states to charge premiums for access to Medicaid except in certain buy-in programs, explained below.
Family Opportunity Act
The Family Opportunity Act (FOA) is federal legislation passed as part of the Deficit Reduction Act of 2005. It created a Medicaid Buy-in program that expands Medicaid coverage to children. Those children must meet Supplemental Security Income (SSI) disability criteria and their family incomes must be too high to qualify for Medicaid but below 300% of the FPL. The federal government permits a state that implements an FOA Medicaid buy-in to charge premiums equal to 5% or less of a family’s monthly income.
States determine SSI disability through evidence from acceptable medical sources. A state considers a child disabled for SSI purposes if:
- there is a medically determinable physical or mental impairment and,
- that impairment results in marked and severe functional limitations and,
- has lasted or the evidence shows the impairment should last for at least one year or will result in death.
Which States Have FOA Medicaid Buy-ins?
Each state determines whether to implement the Family Opportunity Act Medicaid buy-in. States also have flexibility around who to cover, premiums paid for access to Medicaid, and other program designs.
Five states — Colorado, Iowa, Louisiana, North Dakota, and Texas — have implemented FOA buy-in programs. Three of those states — Colorado, Iowa, and Louisiana — offer a Medicaid buy-in to those with less than 300% of the FPL. North Dakota covers children up to 200% of FPL. Texas set its threshold at 150% FPL.
Of the states with FOA Medicaid buy-ins, Iowa does not charge premiums. The other states charge anywhere from $15 to $90 per month with North Dakota charging 5% of family income.
Working People with Disabilities
In the 1990s, Congress wanted to increase the number of Social Security disability beneficiaries who moved off disability rolls. They determined that many were failing to move off disability because working would limit their access to health care and other Medicaid services. As a result, 1997’s Balanced Budget Act (BBA) and the Ticket to Work and Work Incentives Improvement Act (TWWIIA) of 1999 passed Congress. These acts allowed states to create a Medicaid buy-in program specifically for disabled adult populations.
Today, most states (45 of 51) offer some type of Medicaid buy-in program or have expanded Medicaid to include working adults with disabilities. In many cases, access to this program requires a documented disability. It also requires a monthly income limit as well as an asset limit. The asset limits vary by state. Those asset limits sometimes do not take into account assets like retirement accounts and medical savings accounts.
The BBA set an income eligibility threshold of 250% of FPL. Meanwhile, the TWWIIA allowed states to set their own income limits. The majority of states set an income threshold of 250%. However, a few states have set no income limit for their buy-in program. Tthers are as high as 502% of FPL.
States also can limit the minimum income threshold that triggers a premium. For example, Alaska begins billing premiums at 100% of FPL while Connecticut is 200% of FPL. Some states have no premiums. Premiums themselves can range from a low dollar value, like California’s $20 per month, to a percent of income, like North Dakota’s 5% of gross income.
For more information, visit KFF’s Medicaid Financial Eligibility survey.
What Other Medicaid Buy-ins Have Been Proposed?
Recently, there’s been a push by states to leverage Medicaid buy-ins to improve the affordability of health insurance. These plans would leverage Medicaid infrastructure. States could expand Medicaid directly or offer a public plan with similar benefits, providers, and reimbursement rates as Medicaid.
For example, Nevada came close to a public option that would have operated within Medicaid but been sold on the state’s ACA exchange. New Mexico had a plan that would be similar to the state’s Medicaid program that would be offered outside of the health insurance exchange and which would be subsidized by the state.
Federal legislators have also gotten into the act, with US Senator Brian Schatz and US Representative Ben Ray Lujan introducing the State Public Option Act that would essentially open Medicaid to all Americans.
Today, Medicaid buy-in programs provide Medicaid benefits to hundreds of thousands of disabled children and adults. In the future, will they stand beside private insurance plans and be an option for a larger segment of the population? Nevada came close, but it’s likely going to take a significant political change for Medicaid buy-ins to be open to more Americans.
Certifi helps states with Section 1115 Medicaid waivers or Medicaid buy-in programs bill and collect payments thanks to a premium billing and collections module that is R3 certified for Medicaid.