Title of Regulation: 12VAC30-40. Eligibility Conditions and Requirements (amending 12VAC30-40-280).

Statutory Authority: § 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: December 16, 2015.

Effective Date: December 31, 2015.

Agency Contact: Victoria Simmons, Regulatory Coordinator, Department of Medical Assistance Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219, telephone (804) 371-6043, FAX (804) 786-1680, TTY (800) 343-0634, or email victoria.simmons@dmas.virginia.gov.

Basis: Section 32.1-325 of the Code of Virginia grants to the Board of Medical Assistance Services the authority to administer and amend the State Plan for Medical Assistance. Section 32.1-324 of the Code of Virginia authorizes the Director of the Department of Medical Assistance Services (DMAS) to administer and amend the State Plan for Medical Assistance according to the board's requirements. The Medicaid authority, as established by § 1902(a) of the Social Security Act (42 USC § 1396a), provides governing authority for payments for services.

Purpose: The purpose of this action is to conform the Virginia Administrative Code to the federally approved State Plan Attachment 2.6-A, Supplement 8b, More Liberal Income Disregards. This action does not affect the health, safety, or welfare of citizens of the Commonwealth.

Rationale for Using Fast-Track Process: This action is noncontroversial because it is beneficial to disabled Medicaid individuals who wish to be employed.

Substance: The section of the State Plan for Medical Assistance affected by this action is 12VAC30-40-280.

MEDICAID WORKS was created under the flexibility permitted by the Deficit Reduction Act of 2005 (DRA). One of the issues faced by Medicaid enrollees who have disabilities is that while many have the capacity to be gainfully employed, the extra income earned has caused them to lose their Medicaid eligibility. Retaining Medicaid eligibility is very important to individuals who have disabilities because of the extremely high costs of their medical care. Because one purpose of the program is to provide incentives for Medicaid individuals to be employed, eligible enrollees who have disabilities are permitted higher income limits.

A previous regulatory action implemented an increase in the maximum allowable gross earnings for participants in the program to the maximum gross income amount allowed under the Ticket to Work and Work Incentives Improvement Act before a premium is required. This amount is calculated to be $75,000 in gross annual earnings. This previous change was mandated by Chapter 506 of the 2011 Acts of the Assembly. The previous regulatory action also adjusted MEDICAID WORKS policy to mitigate the negative impact (i.e., loss of Medicaid eligibility) of higher earned income or higher unearned income as a result of participating in this work incentive program. The State Plan was amended to enable a disregard for any increase in the amount of unearned income in the Social Security Disability Insurance (SSDI) payment resulting from employment as a worker with disabilities eligible for assistance under the Ticket to Work and Work Incentives Improvement Act, or as a result of a cost of living adjustment to the SSDI payment.

To disregard increases of monthly SSDI payments, the enrollee will be required to routinely deposit the amount of the monthly increase into his designated Work Incentive (WIN) Account. Additional policy also will disregard unemployment insurance payments received by an enrollee as a result of loss of employment through no fault of his own. This will protect the individual's MEDICAID WORKS eligibility for the existing six-month safety net or "grace" period triggered by loss of employment. A final policy change under this regulatory action is to discontinue the deeming of a spouse's income, or if the individual is younger than 21 years of age, the deeming of the income of the parents with whom he lives. This particular change will apply to eligibility determinations of both applicants and existing enrollees in the MEDICAID WORKS program.

Issues: The MEDICAID WORKS program permits individuals who are disabled, and Medicaid eligible as a result of their disabilities, to be employed. The advantage of this action is that it will permit such individuals to earn and retain more income without risking the loss of their Medicaid eligibility. There are no disadvantages to the public, the Commonwealth, or provider groups.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to direction from the federal Centers for Medicare and Medicaid Services (CMS), the Department of Medical Assistance Services (DMAS) proposes to: 1) specify an action to be taken in order for certain types of income to be disregarded when determining Medicaid Works program eligibility, and 2) disregard parental income when determining Medicaid Works program eligibility for individuals under 21.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact.

Medicaid Works program: The Medicaid Works program is a work incentive opportunity offered by the Virginia Medicaid program for individuals with disabilities who are employed or who want to go to work. It is a voluntary Medicaid plan option that enables workers with disabilities to earn higher income and retain more in savings, or resources, than is usually allowed by Medicaid. The program provides the support of continued health care coverage so that people can work, save and gain greater independence. To qualify for Medicaid Works, applicants must be determined to meet the income, asset and eligibility requirements for the Aged, Blind and Disabled (80% of the Federal Poverty Level) Medicaid covered group by their local Department of Social Services.

To enroll in Medicaid Works, applicants must first establish a Work Incentive (WIN) account at a bank or other financial institution. The WIN account is not a special account available at a bank, but can be a regular checking or savings account that the enrollee identifies for this purpose. Only earned income may be deposited in the WIN account. One or more WIN accounts must be designated by enrollees and used to deposit all earned income and to keep any resources, or savings, above $2,000 in order to remain eligible for this Medicaid program. By placing the earned income in the WIN account, enrollees can have resources in the account of up to $34,543 during calendar year 2015 and annual earnings of up to $75,000. There are no restrictions on use of funds in the above WIN account(s); so they may be used as needed.

Disregarded income for Medicaid Works eligibility: In determining continued eligibility for the Medicaid Works program, the current regulation indicates that the Commonwealth will disregard any increase in the amount of unearned income in Social Security Disability Insurance (SSDI) payment resulting from employment as a worker with disabilities eligible for assistance under the Social Security Act, or as a result of a cost of living adjustment to the SSDI payment. Per CMS' direction, DMAS proposes to specify that the increase in the amount of unearned income in SSDI payment must be deposited in the WIN account in order for it to be disregarded.

The current regulation also indicates that for the purpose of determining Medicaid Works eligibility, the Commonwealth will disregard any increase in the amount of unearned income due to the receipt of unemployment benefits. Per CMS' direction, DMAS also proposes to specify that the increase in the amount of unearned income from the unemployment cash benefit must be deposited in the WIN account in order for it to be disregarded.

Since there are no restrictions on the use of funds in WIN accounts, the proposals to add the language specifying that these increases in unearned income must be deposited in the WIN account in order for them to be disregarded for Medicaid Works eligibility will likely not be significantly burdensome for Medicaid Works participants. The Commonwealth's receipt of federal funds for Medicaid is partially dependent on federal approval of the state's programs. Thus the proposal to comply with this federal requirement should produce a net benefit.

CMS also requires that if the Commonwealth elects to disregard parental income when determining continuing eligibility of Medicaid Works' enrollees who are under the age of 21, then the Commonwealth must also apply the same disregard for applicants to the program who are under the age of 21. Thus DMAS proposes to exempt such income when determining eligibility for applicants and ongoing enrollees. Though this proposed change will not likely affect many people, it may help enable a few additional individuals with disabilities to benefit from the Medicaid Works program and be able to work without risking loss of health insurance.

Businesses and Entities Affected. The proposed amendments affect individuals with disabilities eligible or potentially eligible for the Medicaid Works program. Currently fewer than 100 individuals participate.

Localities Particularly Affected. The proposed amendments do not disproportionately affect particular localities.

Projected Impact on Employment. The proposal to disregard parental income for individuals under 21 may enable some young people with disabilities to become newly eligible for the Medicaid Works program. This would allow such individuals to increase working without losing health insurance.

Effects on the Use and Value of Private Property. The proposed amendment does not significantly affect the use and value of private property.

Small Businesses: Costs and Other Effects. The proposed amendments do not significantly affect costs for small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments will not adversely affect small businesses.

Real Estate Development Costs. The proposed amendments will not affect real estate development costs.

Agency's Response to Economic Impact Analysis: The agency has reviewed the economic impact analysis prepared by the Department of Planning and Budget. The agency concurs with this analysis.

Summary:

The amendments, which (i) specify certain types of income to be disregarded when determining Medicaid Works program eligibility and (ii) disregard parental income when determining Medicaid Works program eligibility for individuals younger than 21 years, are required by the Centers for Medicare and Medicaid Services for approval of the Department of Medical Assistance Services State Plan Amendment for Medicaid Works.

12VAC30-40-280. More liberal income disregards.

A. For children covered under §§ 1902(a)(10)(A)(i)(III) and 1905(n) of the Social Security Act (Act), the Commonwealth of Virginia will disregard one dollar plus an amount equal to the difference between 100% of the AFDC payment standard for the same family size and 100% of the federal poverty level for the same family size as updated annually in the Federal Register.

B. For ADC-related cases, both categorically and medically needy, any individual or family applying for or receiving assistance shall be granted an income exemption consistent with the Act (§§ 1902(a)(10)(A)(i)(III), (IV), (VI), (VII); §§ 1902(a)(10)(A)(ii)(VIII), (IX); § 1902(a)(10)(C)(i)(III)). Any interest earned on one interest-bearing savings or investment account per assistance unit not to exceed $5,000, if the applicant, applicants, recipient or recipients designate that the account is reserved for purposes related to self-sufficiency, shall be exempt when determining eligibility for medical assistance for so long as the funds and interest remain on deposit in the account. For purposes of this section, "purposes related to self-sufficiency" shall include, but are not limited to, (i) paying for tuition, books, and incidental expenses at any elementary, secondary, or vocational school, or any college or university; (ii) for making down payment on a primary residence; or (iii) for establishment of a commercial operation that is owned by a member of the Medicaid assistance unit.

C. For the group described in §§ 1902(a)(10)(A)(i)(VII) and 1902(l)(1)(D), income in the amount of the difference between 100% and 133% of the federal poverty level (as revised annually in the Federal Register) is disregarded.

D. For aged, blind, and disabled individuals, both categorically and medically needy, with the exception of the special income level group of institutionalized individuals, the Commonwealth of Virginia shall disregard the value of in-kind support and maintenance when determining eligibility. In-kind support and maintenance means food, clothing, or shelter or any combination of these provided to an individual.

E. For all categorically needy and medically needy children covered under the family and children covered groups, (§§ 1902(a)(10)(A)(i)(I), 1902(a)(10)(A)(i)(III), 1902(a)(10)
(A)(i)(VI), 1902(a)(10)(A)(i)(VII), 1902(a)(10)(A)(ii)(VIII), 1902(a)(10)(C)(ii)(I) and 1905(n) of the Act), the Commonwealth will disregard all earned income of a child under the age of 19 who is a student.

F. For all categorically needy and medically needy individuals covered under the family and children covered groups (§§ 1902(a)(10)(A)(i)(I), 1902(a)(10)(A)(i)(III), 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V), 1902(a)(10) (A)(i)(VI), 1902(a)(10)(A)(i)(VII), 1902(a)(10)(A)(ii)(VIII), 1902(a)(10)(C)(ii)(I) and 1905(n) of the Act), the Commonwealth will disregard the fair market value of all in-kind support and maintenance as income in determining financial eligibility. In-kind support and maintenance means food, clothing or shelter or any combination of these provided to an individual.

G. Working individuals with disabilities eligible for assistance under § 1902(a)(10)(A)(ii)(XV) of the Act who wish to increase their earnings while maintaining eligibility for Medicaid must establish Work Incentive (WIN) accounts (see 12VAC30-40-290).

1. The Commonwealth shall disregard any increase in the amount of unearned income in Social Security Disability Insurance (SSDI) payment resulting from employment as a worker with disabilities eligible for assistance under § 1902(a)(10)(A)(ii)(XVI) of the Act, or as a result of a COLA cost of living adjustment (COLA) to the SSDI payment, if this additional amount of unearned income in SSDI payment from work or COLA, or both, is deposited into the individual's designated WIN account.

2. The Commonwealth shall disregard any amount of unearned income of an enrollee as a result of the receipt of unemployment insurance benefits due to loss of employment through no fault of his own if this unearned income from unemployment insurance payments is deposited into the individual's designated WIN account. This disregard shall only apply while an enrollee is in the six-month safety net, or "grace" period.

3. The Commonwealth shall disregard earned income up to $75,000 for workers with disabilities eligible for assistance under § 1902(a)(10)(A)(ii)(XV) of the Act. To be eligible for this earned income disregard, the income is subject to the following provisions:

a. Only earnings that are deposited into a Work Incentive (WIN) account can be disregarded for eligibility purposes.

b. All funds deposited and their source will be identified and registered with the department, for which prior approval has been obtained from the department, and for which the owner authorizes regular monitoring and/or and reporting of these earnings and other information deemed necessary by the department for the proper administration of this provision.

c. A spouse's income will not be deemed to the applicant Income from the individual's spouse, or if the individual is younger than 21 years, the individual's parents with whom he lives, will not be deemed to an applicant for MEDICAID WORKS or to an existing enrollee in MEDICAID WORKS when determining whether or not the individual meets the financial eligibility requirements for eligibility under this section.

H. For aged, blind and disabled individuals, both categorically and medically needy, with the exception of the special income level group of institutionalized individuals, the Commonwealth of Virginia shall disregard the value of income derived from temporary employment with the United States Census Bureau for a decennial census.

I. For all categorically needy and medically needy individuals covered under the family and children covered groups (§§ 1902(a)(10)(A)(i)(I), 1902(a)(10)(A)(i)(III), 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V), 1902(a)(10) (A)(i)(VI), 1902(a)(10)(A)(i)(VII), 1902(a)(10)(A)(ii)(VIII), 1902(a)(10)(C)(ii)(I) and 1905(n) of the Act), the Commonwealth will disregard income derived from the temporary employment with the United States Census Bureau for a decennial census.