Improving the Work Incentives of the Wisconsin*s Medical

Report
Improving the Work Incentives in
the Wisconsin’s Medical Assistance
Purchase Plan (MAPP)
Ellie Hartman, PhD, OFCE, DLTC, DHS
Lara Rosen, OPIB, DHS
Amy Thomson, OFCE, DLTC, DHS
Dan Johnson, BADR, DLTC, DHS
Purpose of MAPP
• Remove financial disincentives to work;
• Allow participants to earn more income
without the risk of losing MA-funded health
care coverage;
• Allow participants to accumulate savings from
earned income in an Independence Account
to increase the rewards from working.
Proposed Changes to Further Program Goals
• Increase portability of Independence Accounts;
• Change premium calculations, so earnings do not
trigger large premiums;
• Change eligibility calculations, so increased
earnings are less likely to make individuals
ineligible for MAPP;
• Increase the work requirement to ensure
program functions as a work incentive;
• Proposal must be budget-neutral.
Employment Outcomes in MAPP:
February 2013
• 22,272 participants with average monthly
earnings of $121.86
– 79% of participants earned less than $121.86
average
– 18% of participants earned $0
– 32% of participants earned less than $10
– 4% of participants earned more than Trial Work
Period (TWP) amount of $750
– 1% of MAPP participants earned Substantial Gainful
Activity (SGA) amount of $1,040
Wisconsin Compared to Other States
• Lowest average annual earnings of all 37 states with buy-in programs
in 2009
– MAPP participant average of $4,652
– National Medicaid buy-in participant average of $8,677
• Employment rate of 47% in 2006, the third-lowest nationwide
Mathematica Policy Research, Inc. (April
2008). The Three E’s: Enrollment,
Employment, and Earnings in the Medicaid
Buy-In Program, 2006.
Minnesota Medicaid Buy-In Program
(MA-EPD)
• Average monthly earned income $537.38
(June 2011)
• 96% earned over $65 per month
• 55% earned between $201 and $720 (TWP in
2011)
• 24% earned over TWP
• 9% earned over SGA
•
https://edocs.dhs.state.mn.us/lfserver/Public/DHS-6250B-ENG
Asset Portability in MAPP
• Ability to use earnings to set up Independence
Accounts (IA) while enrolled in MAPP
– DHS−approved account that consists of savings
from income earned while an individual is covered
under MAPP
– Can deposit up to half of an individual’s earnings
• Some individuals may also be accumulating
retirement assets from the employer while on
MAPP
Current Disincentives to Increase Earnings:
Asset Portability
• Independence accounts and other retirement
benefits accumulated while in MAPP considered
countable assets for other MA eligibility
• Fear of losing accumulated retirement benefits is a
disincentive to work and save
• Very few participants use IA
– 92 (less than 1%) had an IA in February 2013
Solution: Increase Portability to Better
Incentivize Work and Savings
• When determining Medicaid eligibility and costsharing requirements, exclude independence
accounts and retirement benefits accumulated or
earned while on MAPP
• Must first be approved by the federal government
Current Disincentives to Increase Earnings:
Premiums
•
The current MAPP premium was created to favor earned income over unearned
income, but in practice, it is increased earnings that trigger high premiums
Single Person with Work Income and SSDI Benefit
Example 1
Example 2
Earned Income
Unearned (SSDI)
Total Income
$
$
$
325
1,111
1,436
$
$
$
315
1,111
1,426
150% FPL Level
$
1,436
$
1,436
Subject to Premium?
Yes
Premium Calculation – Approximate
3% of Earned Income
Unearned Income minus $813 minus any deductions
Total Premium
$
$
$
Income Minus Premium
$ 1,118.45
9.75
298.00
307.75
No
$
$
$
-
$ 1,386.00
Solution: Change Premium Structure to
Better Incentivize Increased Earnings
• Restrictions:
– Need to be cost-neutral
– MAPP participants below 150% FPL cannot have a
premium
• Solution
– Premium increases should not exceed increases in
earnings
 Treat earned and unearned income the same
– Individuals over 150% FPL paying no premium (15%
of participants in February 2013)
 Set minimum premium of $50
Solution: Change Premium Structure to
Better Incentivize Increased Earnings
MAPP Premium Methodology
Current
Total Income for Premium
150% FPL (for family size)
Eligibility
Portion of Unearned Income Any unearned income
Paid as Premium
(minus deductions) above
$813
Portion of Earned Income
Paid as Premium
3%
Round Premium
Minimum Premium
(if total income above 150%
FPL)
Proposed
150% FPL (for individual)
3% after deductions
3% after deductions
Down to nearest $25
Down to nearest $25 above
$50
None
$50
Solution: Change Premium Structure to
Better Incentivize Increased Earnings
• Deductions apply to both earned and unearned income, not just unearned
• Premium is 3% of both earned and unearned income (after deductions)
Single Person with Work Income and SSDI Benefit
Example 1
Example 2
Earned Income
Unearned (SSDI)
Total Income
$
$
$
325
1,111
1,436
$
$
$
315
1,111
1,426
150% FPL Level
$
1,436
$
1,436
Subject to Premium?
Yes
No
Premium Calculation – Approximate
3% of Earned and Unearned Income (minus $813 and any deductions)
$
18.69
$
-
Add-on to $50.00 Minimum
Total Premium
$
$
31.31
50.00
$
$
-
Income Minus Premium
$ 1,386.00
$ 1,436.00
Current Disincentives to Increase Earnings:
Income Eligibility
• Increased earnings may cause someone to become
ineligible for MAPP.
• Restrictions
– MAPP authorized under Section 4733 of the Balanced Budget Act of 1997
– Individual’s family income (except income excluded under federal SSI
rules) must less than 250% of the FPL
Solution: Change Income Eligibility to Better
Incentivize Increased Earnings
• Solution
– Treat earned and unearned income the same
– Deduct portion of health care costs from total income
MAPP Income Eligibility Criteria
Current
1. Take earned income (applicant & spouse)
2. Subtract $65
3. Divide by 2
4. Subtract IRWE
5. Add unearned income (applicant & spouse)
6. Subtract $20 general disregard
Proposed
1. Take total earned & unearned income (applicant & spouse)
2. Subtract $65
3. Divide by 2
4. Subtract IRWE
5. Subtract $500 in MREs and LTC costs
6. Subtract $20 general disregard
Compare total to 250% FPL for family size
Compare total to 250% FPL for family size
Current Disincentives to Increase Earnings:
Work Requirement
• Unclear definition of gainful employment in MAPP
• In-kind work fulfills work requirement
• Low employment among MAPP participants
– 18% of MAPP participants with $0 earnings
– 32% of participants with less than $10 earnings
Solution: Increase the Work Requirement
• In exchange for more generous premiums and income
eligibility, ask participants to engage in work for which
they are paying taxes
– In-kind compensation no longer sufficient
– Documentation of tax payment or withholding required
• Income, FICA, Medicare or self-employment taxes
• People who do occasional odd jobs are eligible for
MAPP as long as they pay taxes on their income.
Solution: Increase the Work Requirement
• Time to comply with new requirements
– 6 month grace period
– Health Counseling Employment (HEC) program will continue
• Up to 9 months with a 3 month grace period
• Can participate twice in a five year period
• http://www.dhs.wisconsin.gov/WIpathways/HEC.htm
• Similar to MN Medicaid Buy-In, but does not include
minimum earned income ($65 per month in MN)
• http://www.positivelyminnesota.com/All_Programs_Services/Pathw
ays_to_Employment/For_Service_Providers_Community_Partners/
Medical_Assistance_for_Employed_Persons_with_Disabilities.aspx
Conclusion
• Proposed changes should increase work
incentives in MAPP
• These changes include:
– Asset portability
– Changes in premium and eligibility calculations,
treating earned and unearned income the same
– Increasing the work requirement

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