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Enhancing Earnings

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Title: Enhancing Earnings

1
Medicaid Buy In

Enhancing Earnings Employment for People with
Psychiatric Disabilities

Summary of a Research Synthesis by The Center
for Psychiatric Rehabilitation at Boston
University
Boston University Center for Psychiatric
Rehabilitation, Innovative Knowledge
Dissemination Utilization Project for
Disability Professional Stakeholder
Organizations/ NIDRR Grant (H133A050006)
2
Contributors

Medicaid Buy-In Study Group and Lead Reviewers
Brigitte Gavin, Marci McCoy of Roth of McCoy-Roth
Strategies
Additional Reviewers E. Sally Rogers, Vasudha
Gidugu, of the Center for Psychiatric
Rehabilitation

3
Table of Contents

Research Synthesis Background
What is Medicaid Buy In?
Why is Medicaid Buy In Needed?
Findings Earnings
Factors Influencing Earnings
Impact of MBI Earnings on State Budgets
Findings Employment
Other Findings
Findings Summary
Lessons Learned

4
Background

This report summarizes the Effectiveness of
State Medicaid Buy-In Initiatives on Earnings
Employment for People with Psychiatric
Disabilities.
Conducted by Center for Psychiatric
Rehabilitation at Boston University in 2010.
Supported by the National Institute on Disability
Rehabilitation Research.
30 National and State Studies thoroughly
reviewed.

Compiled by the Medicaid Buy In Study Group at
Boston University Center for Psychiatric
Rehabilitation. Innovative Knowledge
Dissemination Utilization Project for
Disability Professional Stakeholder
Organizations/ NIDRR Grant (H133A050006)
5
Medicaid Buy-In An incentive for going back to
work

Federal program for people with disabilities
designed to increase entry and continuance in
employment.
Enables continued Medicaid access for people with
disabilities who want to work and earn more than
is generally allowed under other Medicaid
categories.
Adopted by 45 states as of July 2010. (Alabama,
Colorado, Florida, Hawaii, Oklahoma, Tennessee,
District of Columbia do not participate.)

High unemployment for adults with psychiatric
disabilities so many hurdles
Fear of losing medical benefits if they enter the
labor market.

Overall, enrollment in the Medicaid Buy-In
program appears to result in increased earnings
40 of participants increased their wages.
Average increase in wages after one year of
enrollment, adjusted for inflation, was 2,582
higher than the previous year an almost 50
increase.

Participant concerns about losing Supplemental
Security Income (SSI)
and/or Social Security Disability Insurance
(SSDI) cash benefits
Participants are allowed to earn more than the
annual limit for SSI/SSDI disability and retain
health care benefits even though they lose their
cash benefits.
Program participants rely on SSI/SSDI to
supplement their earned income, so they keep
their income down to prevent losing SSI/SSDI.

State Program Structures Allowable Minimum
Maximum Earned Income
Participants have higher average earned income in
states that have a high minimum earned income to
gain eligibility and/or maximum earned income to
retain eligibility, i.e., both the floor and
the ceiling for earned income are higher.
Connecticut, New Hampshire, Massachusetts have
income floors participant earnings are some of
the highest in the country, and significantly
higher than the average participant earnings in
neighboring states.

State Program Structures Grace Periods
The shorter the grace period established by the
state, i.e., allowable period to not be working
and still retain eligibility, the higher of
participants employed and earning wages.
2006 data show that the mean earned income of
MBI participants in Wisconsin, a state that
allows lengthy grace periods, was 4,727, while
South Carolina enrollees, participating in a
program that allows no grace periods, earned an
average of 17,780.

Individual Participant Characteristics Age
The younger the participant, the higher the
earnings. (For every one-year increase in age,
the average MBI participant earns 91 less.)

Individual Participant Characteristics
Previous Recipient of Medicaid or SSI
Participants who have not previously been a
Medicaid or SSI recipient are likely to earn more
and to exceed the annual earnings threshold for
SSI and/or SSDI eligibility.
Increased earnings of Washington state
participants who had not received Medicaid
benefits was 97 higher than those who had.

Individual Participant Characteristics
Non-white
Nonwhite earners are more likely to be among the
top earners in the MBI program.
Nonwhite participants make up only 20 of MBI
enrollment, but 38 of the program's top
earners.

Individual Participant Characteristics Primary
Mental Illness Disability
Earnings tend to be lower than other MBI
participants, but more likely to earn wages (80
versus 69 ).
Wages rise more rapidly (46 had higher earnings
in the second year after enrollment, as compared
to 35 of other participants).
A 2 greater frequency of earning above the
Substantial Gainful Activity (SGA) amount than
the average MBI participant.

Individual Participant Characteristics
Participation in SSI work incentive programs
39 of participants with no participation in SSI
work incentive programs experience an earnings
increase vs. 57 for participants enrolled in
both Ticket to Work Trial Work Period.
Participation in work incentive programs
increases in states that have higher earnings
limits. (Nebraska has no earned income limit and
its participants are the biggest users of work
incentive programs.)

Lower Earnings
Participant concerns about losing Supplemental
Security Income (SSI) and/or Social Security
Disability Insurance (SSDI) cash benefits.
Previous recipient of Medicaid or SSI.
Primary Mental Illness Disability.

Higher Earnings
High Allowable Minimum Maximum Earned Income.
Shorter Allowable period to not be working and
still retain eligibility (grace period).
Younger participants.
Non-white participant.
Participation in SSI work incentive programs.
Higher Rate of Earnings Increase Frequency
Earning above Substantial Gainful Employment
Amount
Primary Mental Illness Disability

18
Impact of MBI Earnings on State Budgets

Increased income tax revenue
Kansas calculated that, between 2003 and 2006,
MBI participants sharply increased the amount of
state income taxes from an average of 74 in 2003
to 123 annually in 2006.

Increased economic activity
In New Hampshire, that states evaluators
calculated the aggregate earnings of its MBI
participants as 20 million from 2002 to 2006,
11 million more than what would have been in the
states economy without the MBI program.

Reduced demand for social services
Washington State participants with prior Medicaid
coverage reduced dependency on the Supplemental
Nutritional Assistance Program (SNAP) by 217 per
month those without prior Medicaid coverage
reduced SNAP dependency by 300 per month.
Kansas frames the reduced dependence in terms of
participant lossesthe state found that 20 of
its MBI enrollees have lost income-support
benefits such as energy assistance as a result of
increased income.

Reduced medical expenditures health costs
In Kansas state medical expenditures had
decreased 45 per person between 2004 and 2007,
and in Michigan, the state realized a 53 direct
savings in reduced healthcare costs, a reduction
in average costs per person from 947 to 446.

Increased income tax revenue
Increased economic activity
Reduced demand for social services
Reduced medical expenditures health costs

MBI participants work and work more than before
enrollment as compared to control groups.
Nationally, the average employment rate of all
MBI participants stood at 69 in 2006 and range
from a low of 40 in Iowa, to a high of 100 in
Rhode Island.
As with increased earnings, both increased
employment more hours worked are associated
with state program structures - short grace
periods, high income limits, and work
verification policies.

In most states, MBI enrollment has increased at
rates higher than anticipated.
Between 2001 and 2006, MBI enrollment nationwide
more than tripled, from 29,398 to 97,491
participants.
Even with increased enrollment, reaching the
total population of MBI-eligible participants
remains a challenge, e.g., In New York, 5,677
persons were enrolled in 2007, but more than
472,000 persons were potentially eligible.

Participants experience improved health
outcomes.
Kansas found that MBI participants had greater
access to critical health services.
Early results from much-anticipated experimental
studies also show participants experiencing
improved health outcomes.
In Kansas, 59 of Working Healthy participants
reported improved mental health status.

Premium structures of state MBI programs vary
drastically.
In Michigan in 2006, no single participant paid a
premium because the threshold for premium payment
was set at 250 of the federal poverty threshold
(approximately 48,000 at the time).
Washington States MBI participants pay an
average of 90 per month in premiums, primarily
determined by a sliding income scale.

Overall, enrollment in the MBI program appears
to result in increased earnings.
MBI participants work and work more than before
enrollment as compared to control groups.
In most states, MBI enrollment has increased at
rates higher than anticipated.
Participants experience improved health outcomes.
Premium structures of state MBI programs vary
drastically.

There is a trade-off between continuous
enrollment in the program and higher employment
and earnings averages.
While shorter grace periods are the design
feature most strongly associated with improved
outcomes, longer grace periods are associated
with continuous enrollment, which is linked with
an increased sense of financial security and
improved long-term income.

Targeting younger participants, improving
linkages to other SSI work incentive programs can
improve the likelihood of participants earning
more.

Shorter grace periods and strict work
verification policies increase earnings, but
leave more persons with disabilities with the
difficult decision to choose between working for
employment and critical health care.
Reaching out to younger participants can result
in improved earnings and greater employment.
States with higher-than-average numbers of
participants using work incentive programs have
more enrollees earning above the SGA threshold.

States can recoup some of the costs of MBI
programs if premium structures are properly
designed.
Washington State participants pay an average
premium of 90 per month but, no participants in
Michigan have yet paid a premium because the
income threshold at which premium requirements
kick in is quite high.
Wisconsin and Michigan are exploring creating
two tier premium options that trade off higher
premiums for higher allowable earnings limits.

States should improve their capacity for program
communication and support strategies.
New York conducts a needs assessment using
Census or other demographic and income data and
geographically tailors MBI marketing material to
increase participation among those eligible, but
unaware of the program.
Rather than focusing on increasing enrollment
numbers, the goal can be improving program
understanding and utilization of those already
enrolled by increasing clarity and decreasing
complexity.

States should improve their capacity for program
communication and support strategies.
A more person centered approach may be more
effective at engaging consumers, e.g.,
capitalizing on consumer preference for favorable
sources of information. (Participants in
Michigan view Centers for Independent Living as
dependable resources for information, as compared
to other agencies.)

There is a trade-off between continuous
enrollment in the program and higher employment
and earnings averages.
Targeting younger participants, and improving
linkages to other SSI work incentive programs can
improve the likelihood of participants earning
more.
States can recoup some of the costs of MBI
programs if premium structures are properly
designed.
States should improve their capacity for program
communication and support strategies.