How to Satisfy State Medicaid Work Requirements When Self-Employed
In January, 2018 President Trump's administration announced it is allowing states to impose work requirements for Medicaid, the largest health insurer in the United States. States at the moment still need to have their applications approved to move forward with enforcement. And while it will take at least a few months to a year before proposed work requirements would fully roll out, the idea is causing trepidation for self-employed people already insured by Medicaid.
This is because media announcements that stipulations for Medicaid would be fulfilled by "work, training, education, job search, volunteer activities and care-giving" do not specifically address sole proprietors, who navigate other public benefits with a different set of rules and paperwork.
Kentucky was the first state to be approved for community engagement/work requirements on January 12, 2018. Their program has an expected roll-out of July, 2018, and some of their proposed rules might change before the program kicks off.
How the Sole Proprietor is Likely to Be Affected
It is expected that the work requirements for Medicaid for the self-employed will somewhat reflect those already intact in the SNAP program — the nation's largest food safety net program — also known as food stamps.
Kentucky Medicaid Aligns with SNAP/Food Stamp Guidelines Which Include Self Employed Individuals
How Self-Employment Can Fulfill Medicaid Work Requirements
If food stamp guidelines are followed in a work-for-Medicaid benefits program, independent contractors should:
- Earn 30 x the hourly minimum wage per week, or
- Report 30 hours of work per week regardless of the wage earned (for example, people who do piece work who earn below minimum wage).
- Calculate this income post-expense and pre-tax on an estimated annual basis.
- Provide self-employment ledgers or tax returns for proof.
- Coverage would be most likely with income at or below 138% of poverty in states that expanded Medicaid.
In some states it is expected that 20 hours per week will suffice. You might be completely exempt if you have a child or are a caregiver to a relative.
Sole proprietors pay federal, state, local, and self-employment taxes, and are part of America's productive work force. While they have access to Medicaid, most are not protected under the Federal-State Unemployment Insurance Program which helps regular employees after being laid off from a job. For this population, having public health insurance is especially important in lean times.
Federal Poverty Guidelines
Legal Ramifications for the States
The states that have filed applications with the Centers for Medicare & Medicaid Services (CMS) to enforce new work rules — Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah and Wisconsin — are likely to be only the first group of states that attempt to initiate such mandates. As each state's specific request is signed, it is expected that lawsuits against CMS will ensue.
Nick Bagley, a University of Michigan health law specialist, said CMS will need to defend the work guidelines in two areas if it's sued: It will have to prove that they promote Medicaid’s goals, and that they are actual tests in policy, designed to experiment a hypothesis regarding the relationship between health and work for recipients.
The work-for-Medicaid idea is likely not the only proposed change that will affect those on Medicaid. There are state proposals for time limits for able bodied adults as well as a pay-for-Medicaid program. In 2016, Ohio officials tried to pass a measure that would enforce thousands of Medicaid enrollees to pay 2% of their income to maintain their public health coverage. For most people on Medicaid they are already barely able to afford their rent or mortgage and bills without added expenses. Still, paying a 2% fee is better than losing coverage. The measure, however, did not pass.
An Increasing Self-Employed Population on Medicaid
People such as independent contractors have increased their numbers on Medicaid in recent years after the American Healthcare Act was passed into law. It gave many Americans the opportunity to take the leap from working for someone else to working for themselves. Since many entrepreneurs are low-income in either their starting years or on a continual basis, this health insurance helps fuel the American dream for work independence.
Research done by Gareth Olds of Harvard Business School shows that public health insurance programs increase entrepreneurship because the social safety net affords people the security of knowing programs such as Medicaid and CHIP are there for them in case of low-income hardship. It is important that measures for independent contractors are included in all phases of public healthcare advocacy.
- The New York Times: https://www.nytimes.com/2018/01/11/us/politics/medicaid-work-requirements.html
- NPR: https://www.npr.org/sections/health-shots/2018/01/11/577307947/hhs-will-let-states-require-people-to-work-for-medicaid
- The New England Journal of Medicine: http://www.nejm.org/doi/full/10.1056/NEJMhpr1500791
- Entrepreneurship and Public Health Insurance: http://www.hbs.edu/faculty/Publication%20Files/16-144_d9ce8326-eeaa-4650-a8af-6ff03c3f7e77.pdf
- Axios: https://www.axios.com/new-medicaid-rules-will-face-lawsuit-1515716117-fd60156a-959b-44f5-adb0-c25a0999ec85.html?source=sidebar
- The Columbus Dispatch: http://www.dispatch.com/content/stories/local/2016/01/18/medicaid-premiums-impact-debated.html
- Kentucky Cabinet for Health and Family Services: http://chfs.ky.gov/NR/rdonlyres/5F3948BB-18FB-43FD-8707-0C148F462676/0/GeneralKentuckyHEALTHOverviewPresentation.pdf
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