MACY, Neb. – In the heart of the Omaha Nation school district, a vibrant tapestry of flowers and vegetables stretches across seven acres, a testament to the unwavering dedication of Erica Carter. As the finance manager for the district, Carter’s passion extends far beyond balance sheets; it blossoms in the community projects she champions, particularly a thriving garden that not only beautifies the campus but also provides invaluable employment opportunities for students in one of Nebraska’s lowest-income counties. For these young individuals, many receiving their first-ever paycheck, the garden represents a seed of hope, cultivated by Carter’s tireless efforts in securing crucial grants.
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Yet, behind this inspiring facade of community building and financial acumen, Carter, a 41-year-old Sioux City, Iowa resident, faces a deeply personal and increasingly common dilemma. Paralyzed from the chest down since a fall in her early 20s, she has navigated a successful career, earning an accounting degree and a master’s in human resource management, never allowing her disability to define her limitations. However, a letter received in November 2023 from Iowa’s Department of Health and Human Services delivered a stark ultimatum: her income, a hard-won $110,000 annually, was too high for her to remain on Medicaid. She was informed she could lose her essential health benefits within two weeks unless immediate action was taken.
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This agonizing choice faced by Carter underscores a critical, often overlooked flaw in public assistance policies designed to encourage employment among people with disabilities. While states are currently grappling with a new federal mandate to re-evaluate Medicaid recipients’ eligibility—often requiring proof of significant work, volunteering, or study hours—the existing framework for employed individuals with disabilities frequently creates a "benefits cliff." This precipice forces individuals like Carter to choose between professional advancement and access to life-sustaining medical care, directly contradicting the spirit of self-sufficiency these programs are ostensibly meant to foster.
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Erica Carter’s Personal Cliff: A Chronology of Choice
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Erica Carter’s journey, marked by resilience and a commitment to public service, took an unexpected turn with the arrival of the letter from Iowa HHS. Her role as finance manager for the Omaha Nation school district is multifaceted, involving not just the general financial oversight but also the crucial work of identifying and securing grants. These funds have been instrumental in launching programs like the seven-acre garden, which provides hands-on agricultural experience and paid internships for students, offering them a taste of financial independence. Carter speaks with evident pride about the students, “They’re out in the sun. They’re watering plants. It’s the first time they get a paycheck in their life.” Her efforts empower others, yet her own pathway to stability was about to be jeopardized by the very system designed to support people with disabilities in the workforce.
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The letter she received in late 2023 was not entirely unexpected, given the ongoing national push for Medicaid redeterminations following the end of pandemic-era continuous enrollment provisions. However, the abruptness and the draconian nature of the income limits were a shock. At $110,000 a year, Carter’s salary far exceeded Iowa’s 2023 income threshold for working people with disabilities, which stood at a meager $36,450 for a single-person household. This substantial disparity left her with virtually no room to maneuver.
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“I had no time at all to prepare,” Carter recounted, highlighting the rapid timeline given to make a life-altering decision. Her options were stark: either drastically reduce her income by finding a significantly lower-paying job—a move that would undermine her career progression and impact the very programs she helps fund—or forfeit her vital Medicaid coverage. The alternative, enrolling in the school district’s standard health plan, was not a viable solution, as it lacked coverage for many of the disability-specific services and equipment that Medicaid comprehensively provided.
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Ultimately, Carter made a decision that, while financially burdensome, aligned with her core values and professional dedication. She chose to keep her fulfilling job, accepting the inevitable loss of her Medicaid buy-in benefits. “I like getting up and going to work every day, and I really like what I do,” she stated, explaining her rationale. “Why would I throw that away?” This question encapsulates the frustration felt by many disabled individuals who are forced to choose between meaningful employment and necessary healthcare.
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The financial ramifications of this choice have been immediate and severe. Carter now faces an estimated $35,000 in out-of-pocket expenses annually. These costs cover critical services such as a home health nurse who visits three times a week, essential modifications to her vehicle, and frequent, costly repairs to her specialized wheelchair. Recalling a recent incident, she said, “I had the motors go out on my wheelchair. So that was like $4,000 to fix.” To cope with this crippling financial burden, Carter has been compelled to take on additional jobs and has even begun to draw from her retirement savings—funds intended for her long-term security. Her predicament is not one of seeking handouts, but of demanding fairness. “I want to pay my own way. I don’t mind paying taxes,” she asserted. “I just want an option. I have no options right now.”
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Supporting Data: The Medicaid Buy-In Landscape and its Limitations
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The "Medicaid for Employed People With Disabilities" program, which Erica Carter participated in, is part of a broader federal initiative approved by Congress in the 1990s. The explicit intent behind these Medicaid buy-in programs was to incentivize people with disabilities to enter or remain in the workforce without fear of losing critical health benefits. Iowa was an early adopter of this progressive policy, aiming to support its disabled residents in achieving greater financial independence.
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Currently, 47 states offer some form of Medicaid buy-in program. As of late January, Iowa’s program served 11,640 individuals, representing approximately 1.7% of all Medicaid recipients in the state. While these programs are designed to be beneficial, their effectiveness is often severely curtailed by stringent eligibility criteria, particularly strict limits on income and assets. These caps, often set at a percentage of the federal poverty level (FPL), create the very "benefits cliff" that snared Erica Carter.
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In Iowa, the income cap has seen modest increases since Carter’s letter, currently standing at $39,900 for a household of one—250% of the federal poverty level for 2024. This is still a stark contrast to a professional salary like Carter’s. Beyond income, the rules also impose tight restrictions on accumulated assets. The current cap in Iowa is $12,000 for an individual and $24,000 for a married couple, though certain assets like a primary home or vehicle are typically excluded.
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Disability rights advocates have long contended that these restrictive limits inadvertently punish success. Carlyn Crowe, public policy manager at the Iowa Developmental Disabilities Council, articulates this concern: “Work full-time and be able to buy a house, live in the community, buy a car. Those limits placed on what they can earn and save are keeping them from doing that.” Such policies force individuals to make impossible choices, hindering their ability to save for emergencies, invest in their future, or simply enjoy the fruits of their labor, effectively trapping them in a cycle of dependency on government programs or perpetual financial precarity.
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Indeed, a growing number of states are recognizing the counterproductive nature of these limits. Over the past five years, Massachusetts, Minnesota, New Jersey, and Rhode Island have taken significant steps to eliminate or substantially raise their income and asset caps for Medicaid buy-in programs, signaling a shift towards more equitable and truly work-incentivizing policies. These states serve as models for how policies can be reformed to genuinely support the economic empowerment of people with disabilities.
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Official Responses and Advocacy: A Battle for Reform
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The push for reform in Iowa has been persistent, driven by a coalition of disability advocates and organizations like the Iowa Developmental Disabilities Council, a federally funded entity dedicated to championing the rights of people with disabilities. Their central proposal is to abolish hard income and asset limits entirely, replacing them with a more flexible system where individuals pay a percentage of their income—for instance, 6%—to buy into the Medicaid program. This approach is inspired by a 2024 Tennessee law that established a Medicaid buy-in program with no income or asset limits, though Tennessee is still awaiting federal approval to implement it.
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These efforts have gained bipartisan support within the Iowa legislature, reflecting a growing understanding of the economic and social benefits of empowering disabled workers. In 2025, an Iowa House committee unanimously advanced a bill that sought to remove both income and asset caps. Despite initial promise, the bill ultimately stalled and died during the spring legislative session, a common fate for proposals that involve perceived increases in state spending.
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The legislative inertia is often rooted in broader fiscal concerns. States across the nation are facing significant federal reductions in Medicaid spending, estimated to exceed $900 billion over the next decade as part of the "One Big Beautiful Bill Act." This looming financial pressure makes states hesitant to expand eligibility for any Medicaid program, including the buy-in options. Alice Burns, an associate director of KFF’s Program on Medicaid and the Uninsured, articulated this apprehension: “The specific worry is that buy-in programs, though they’re a small part of the larger Medicaid system, could increase overall Medicaid spending if eligibility changes.” She further noted that “The premiums charged in buy-in programs are nowhere near close to the expected costs of covering people.”
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However, advocates argue that this perspective is myopic, focusing solely on immediate expenditures without considering long-term economic gains. Daniel Van Sant, director of disability policy at The Harkin Institute at Iowa’s Drake University, counters this viewpoint by emphasizing the broader societal benefits. “Three, five, seven years from now, you may be recouping those expenses by having people be able to work their way off,” Van Sant stated. He points out that an increase in employed individuals with disabilities translates into greater income tax revenue for the state. Furthermore, earning a higher income can enable some individuals to reduce or even eliminate their reliance on other government assistance programs, such as the Supplemental Nutrition Assistance Program (SNAP), creating a net positive for state budgets in the long run.
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In a more modest attempt at reform, Iowa lawmakers during this year’s legislative session considered raising the income cap to 300% of the federal poverty level and exempting pension accounts and a spouse’s income from the asset cap. This proposal, while a step in the right direction, was ultimately stripped from a larger public assistance bill. Even if it had passed, the new income limit, though among the highest in the country for a buy-in program, would still not have been sufficient to include individuals like Erica Carter, whose income significantly exceeds even this elevated threshold.
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The frustration with the slow pace of reform is palpable among those directly affected. Alex Watters, a former City Council member in Sioux City who, like Carter, is paralyzed from the chest down after a diving accident, testified before state lawmakers in February. He acknowledged the proposal as a positive step but stressed its inadequacy. “I fear that we’re going to lose people to other states,” Watters warned, revealing that he himself was contemplating a move to Minnesota, a state that has eliminated asset caps for its Medicaid buy-in program in 2024 and never had an income cap. This highlights a potential "brain drain" of talented and productive disabled individuals from states with restrictive policies to those that offer more supportive environments.
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Implications: The Broader Impact of the "Benefits Cliff"
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Erica Carter’s story is a powerful microcosm of a systemic issue that impacts thousands of working people with disabilities across the United States. The "benefits cliff" she encountered is not merely an administrative hurdle; it represents a fundamental flaw in the design of programs intended to foster independence. Instead of incentivizing work and financial growth, current policies often create a disincentive, forcing individuals to choose between professional fulfillment and essential healthcare.
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The implications of these restrictive policies are far-reaching:
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- Economic Disempowerment: By limiting income and asset accumulation, these programs prevent people with disabilities from building wealth, saving for retirement, or making significant investments in their future—such as buying a home or further education. This perpetuates economic vulnerability and hinders true financial independence.
- Exacerbated Health Disparities: For individuals with complex medical needs, like Carter, losing Medicaid coverage can mean a sudden, dramatic increase in out-of-pocket expenses for critical services, equipment, and personal care. This financial strain can lead to delayed or forgone medical care, ultimately worsening health outcomes and quality of life.
- Brain Drain and Talent Loss: As highlighted by Alex Watters, states with more progressive Medicaid buy-in policies risk attracting skilled disabled workers from states with more restrictive rules. This loss of talent not only diminishes the economic contributions of these individuals but also deprives communities of their valuable expertise and leadership.
- Moral and Ethical Dilemmas: The forced choice between a meaningful career and essential healthcare raises significant ethical questions about societal values. Is society truly committed to supporting the self-sufficiency of people with disabilities if it erects such formidable barriers to their success?
- Inconsistent Policy Goals: The original intent of Medicaid buy-in programs was to encourage employment. However, the current structure with its low income and asset caps often achieves the opposite, creating a disincentive to earn more or save, thereby undermining the very goal it was designed to achieve.
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Despite the personal sacrifices and ongoing financial strain, Erica Carter remains undeterred in her commitment. She continues her primary job at the Omaha Nation school district, tirelessly working seven days a week by taking on additional roles to cover her burgeoning medical costs. Her dedication is not just to her own well-being but also to the students she serves, ensuring that the grants continue to flow and the garden continues to flourish.
Her journey serves as a powerful call to action for policymakers to re-evaluate and reform Medicaid buy-in programs. The long-term vision must extend beyond short-sighted cost concerns to embrace a holistic view of economic empowerment and human dignity. By removing the "benefits cliff" and allowing people with disabilities to thrive professionally without fear of losing essential care, states can unlock the full potential of a valuable segment of their workforce, fostering greater independence, contributing to the tax base, and ultimately building more inclusive and prosperous communities for all. The options Erica Carter seeks are not just for her, but for every disabled individual striving to contribute and succeed.
This article is from a partnership that includes Iowa Public Radio, NPR, and KFF Health News. KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — an independent source of health policy research, polling, and journalism.
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