Advocacy and Public Policy

Freedom to Work Medicaid

Since passage of the Freedom to Work Medicaid for Individuals with Disabilities Act of 2003, eligible people with disabilities in Michigan have been able to work and increase their income beyond the usual cut-off amount, and keep Medicaid coverage. The purpose of Freedom to Work Medicaid is so people will not lose their Medicaid due to increased earnings or assets. This is a work incentive. Beneficiaries must be working to get it. The eligibility criteria for Freedom to Work Medicaid (FTW) is:

The individual is determined to be disabled under the Federal Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) programs, or would be found to be disabled if not for excess earnings above Federal guidelines
The individual is between the ages of 16 and 64
The individual’s unearned income (such as SSDI, stock dividends or trust fund income) is not more than the Federal poverty guideline ($10,400 annually for a single person in 2008)
Before working the individual was receiving or eligible for Medicaid (not including a Medicaid Deductible case.)
The individual is employed

The applicant's spouse's income and assets will not be considered in determining the applicant's eligibility for FTW. Once an individual is determined eligible for this program by a Department of Human Services (DHS) Medicaid worker, he or she gets Medicaid coverage free until his or her countable net earned income exceeds 250% of poverty for one person. Once earnings are more than that amount, a recipient may stay on Medicaid by paying a monthly premium to the state toward the cost of Medicaid coverage. This means the recipient may make up to approximately $50,000 annually in 2008 before he or she needs to pay premiums.

The monthly premium starts at $50 ($600 per year) and increases on an income-based sliding scale. The premium will be adjusted annually based on changes in income. There is no limit on earned income for people in the program.

Monthly premiums are sent to the Department of Community Health. Premiums not received by the due date each month will initiate a grace period during which the beneficiary is notified of case closure. There will be a "lock out" period of ineligibility if closure results from failure to pay premiums.

An individual in the program may also:

Save up to $75,000 (a house and vehicle don't count toward the $75,000)
Accumulate savings in retirement and individual retirement accounts without limits
Have breaks in employment up to 24 months due to medical necessity or involuntary layoff

Once a person is on Medicaid, (not including a Medicaid Deductible case) Freedom to Work is triggered either by earning more than the applicable Medicaid income limit or by saving more than $2,000. This should happen automatically without the need to sign up.

Once an SSI recipient earns above a certain amount, their SSI check will stop. However they will still have Medicaid under SSI until earnings exceed $26,318 annually. If income exceeds $26,318 annually the SSI case closes and the individual is moved into Freedom to Work Medicaid.

SSDI beneficiaries who are eligible for Medicaid (not including a Medicaid Deductible case) will move into Freedom to Work Medicaid when their earnings or assets increase above the applicable limit for the Medicaid category they are in.

In the past the move into FTW Medicaid has encountered some problems. Some FTW enrollees have mistakenly been cut off of Medicaid. Because they now make too much money, their Department of Human Services (DHS) worker assumed they no longer have a disability despite the fact that there has been no change in their medical condition. This is NOT the intent of the law. The good news is that the process at DHS is improving and the MiJob Coalition, which helped write and obtain passage of the law, is working to completely remedy this error. If you have mistakenly been put on a Medicaid Deductible case when you should be enrolled in FTW, or if you have been receiving Medicaid coverage through FTW and have been cut off, contact Michigan Protection and Advocacy at (800) 288-5923.

If you think you qualify for the Freedom to Work program, speak with a staff person at your county Department of Human Services. When speaking with or writing to a DHS worker, be sure to refer to PEM 174, a category in the Program Eligibility Manual. If you are denied FTW, you have the right to appeal the decision to an Administrative Law Judge.

Updated October, 2008

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