Medicaid Limits Pose Challenge for Disabled Workers in Iowa

Erica Carter’s Dilemma

Erica Carter lives in Sioux City, Iowa, and works as a finance manager for the Omaha Nation public school district in Nebraska. Her role involves securing grants to aid low-income students. Despite her enthusiasm for her job, Carter faced a difficult choice when she realized that her Medicaid benefits were at risk due to her high income.

Passionate about her work, Carter manages a garden project funded by grants she has helped secure. This garden, next to the school’s campus, engages students in its maintenance, providing them first-time paychecks. Carter is paralyzed from the chest down due to an accident in her early twenties. Her career progressed with an accounting role and a master’s degree in human resource management.

In November 2023, Carter received a letter from Iowa’s Department of Health and Human Services stating her income exceeded the Medicaid limit, risking her benefits. States are adjusting to a new federal mandate that requires productivity proofs such as work, volunteering, or study for those on Medicaid. This work requirement has angered some, including disabled Medicaid recipients, as it prompts tough decisions between working and retaining benefits.

Financial Impact on Carter

Carter earned $110,000 annually, significantly above Iowa’s disability working person Medicaid limit of $36,450 for a single household in 2023. Unexpectedly, she had to decide between her job or her Medicaid coverage. Her health insurance came from Iowa’s Medicaid for Employed People With Disabilities, requiring contributions from her income to retain benefits. Many states offer buy-in Medicaid programs but enforce income and asset limits. Advocacy for removing these limits is ongoing, with states like Massachusetts and Rhode Island having accomplished this.

Carter preferred her current job over a lower-paying option to keep Medicaid benefits. The district’s health plan lacked coverage for many disability-related expenses. Choosing the job meant Carter spent $35,000 annually on personal health costs, including nursing visits and car modifications.

Program Origins and Legislative Actions

Congress initiated Medicaid buy-in programs in the 1990s to motivate disabled persons to work. Iowa adopted this early, contributing to its current enrollment of 11,640 Iowans in the program. Income caps are set at 250% of the federal poverty level and exclude accumulating assets above $12,000 for individuals or $24,000 for married couples.

The cap has moved up since Carter’s notice, now $39,900 for a household of one. Advocacy groups push for rule changes allowing higher earnings without losing Medicaid. Legislative suggestions include a percentage-based income approach, proposed last in Tennessee, awaiting federal approval.

Despite momentum, an Iowa bill to remove income and asset caps failed in 2025. Legislators face Medicaid budget cuts exceeding $900 billion over a decade, part of the One Big Beautiful Bill Act. Changes in buy-in programs could raise Medicaid costs, though some argue that increased worker earnings offset initial expense spikes.

Ongoing Challenges and Smaller Adjustments

Iowa sought incremental adjustments this legislative session, raising the income cap to 300% of federal poverty and adjusting asset considerations. Ultimately, these changes were not passed. Future efforts to update buy-in program limits promise divided opinions.

Reportedly considering moving to Minnesota, which eliminated buy-in caps, Alex Watters, a disabled Sioux City council member, echoed the need for better solutions. Carter remains committed to her work at the school district, sustaining her medical expenses and her passion for helping students.

This article stems from NPR’s health reporting partnership with Iowa Public Radio and KFF Health News.