Some disabled people want to advance their careers. They say Medicaid rules stop them

Erica Carter of Sioux City, Iowa, says she enjoys her job as a finance manager for the Omaha Nation public school district in Nebraska, working to find grants and opportunities for low-income students. But when she learned her pay was too high for her to remain in an Iowa Medicaid program, Carter had to choose — leave the job or give up her benefits. Natalie Krebs/Iowa Public Radio hide caption

Erica Carter is passionate about her job, and she has 7 acres of flowers and vegetables to show for it.

Carter's specialty is reeling in grants to support students in the Omaha Nation school district, where she is a finance manager. One paid for the garden that sits next to the district's campus. Another allowed the school system, in one of Nebraska's lowest-income counties, to pay students to maintain it.

This story was produced in partnership with KFF Health News .

"They're out in the sun. They're watering plants," she said. "It's the first time they get a paycheck in their life."

Carter, 41, is paralyzed from the chest down, an injury she's lived with since a fall in her early 20s. It didn't slow her down as she built her accounting career and got a master's degree in human resource management.

But in November 2023, Carter — who lives in Sioux City, Iowa — got a letter from Iowa's Department of Health and Human Services. It said that her income was too high for her to stay on Medicaid and that she might lose her benefits in two weeks if she didn't take action.

States are scrambling to get ready for a new federal requirement to double-check that many people on Medicaid qualify for the benefit, by showing they are working, volunteering, or studying at least 80 hours per month. Politicians' focus on requiring work has angered many people with disabilities who have Medicaid and say current policies that apply to them have the opposite effect — making them choose between working or receiving benefits.

When Carter got the letter, she was making $110,000 a year, well above Iowa's 2023 income limit for working people with disabilities: $36,450 for a household of one.

"I had no time at all to prepare," she said. "I had a decision to make."

Healthcare In Nebraska, Americans begin to lose Medicaid under Trump's work rules At the time, Carter got her health coverage through Iowa's Medicaid for Employed People With Disabilities , a "buy in" program that allows working disabled Iowans to pay a part of their income to the state to maintain access to Medicaid benefits. Forty-seven states offer Medicaid buy-in programs , but most restrict eligibility through limits on income and assets.

For years, disability rights advocates have pushed state legislatures to change the limits, arguing that they prevent people like Carter from accepting raises or building savings, for fear of losing crucial medical benefits. Massachusetts, Minnesota, New Jersey and Rhode Island have eliminated such limits over the past five years.

To keep her Medicaid coverage, Carter would've had to find a job paying her far less than she was making. Or she could drop her Medicaid coverage and enroll in the school district's health plan. But that plan didn't cover many of the disability-related expenses that Medicaid did.

Carter decided to keep her job and leave the Medicaid buy-in program. In the end, the decision felt like a no-brainer, she said.

"I like getting up and going to work every day, and I really like what I do," she said. "Why would I throw that away?"

Erica Carter of Sioux City, Iowa, says she's helped write grants for projects such as a student-run garden and a new playground for the Omaha Nation public school district in Nebraska. She chose to give up her Medicaid coverage rather than quit her job as a district finance manager when her income surpassed the allowed income cap. Natalie Krebs/Iowa Public Radio hide caption

But it's been hard on her finances. Carter said she now spends about $35,000 a year out of pocket for expenses her old plan covered, such as the nurse who visits her three times a week, modifications for her car and wheelchair repairs.

"I had the motors go out on my wheelchair," she said. "So that was like $4,000 to fix."

Over the next year, Carter picked up extra jobs and cashed in some of her retirement savings.

"I want to pay my own way. I don't mind paying taxes," she said. She doesn't want to hide her income, either. "I just want an option," she said. "I have no options right now."

Congress approved the option for states to create Medicaid buy-in programs in the 1990s, intending to incentivize more people with disabilities to work. Iowa was one of the first states to adopt the program.

According to state data, 11,640 Iowans were participating in the buy-in program as of late January, or 1.7% of all Medicaid recipients in Iowa.

The income caps have inched up since Carter got her letter. Iowa's limit , set at 250% of the federal poverty level, is $39,900 for a household of one this year.

The rules also restrict recipients from accumulating too much in assets. The current cap is $12,000 for an individual or $24,000 for a married couple, excluding some assets, such as a primary home or vehicle .

Carlyn Crowe, the public policy manager at the Iowa Developmental Disabilities Council , said the limits can prevent disabled Iowans from reaching their goals. "Work full-time and be able to buy a house, live in the community, buy a car," she said. "Those limits placed on what they can earn and save are keeping them from doing that."

Health Deloitte-run systems denied Medicaid to disabled people. New laws could make it worse Crowe's organization, which has counterparts in every state, is federally funded and advocates for people with disabilities. In Iowa, such advocates have asked legislators to drop the hard limits on income and assets. Instead, they suggest that disabled Iowans pay 6% of their income to buy into the Medicaid program, an approach modeled after a 2024 Tennessee law that creat...

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