Income Caps -- Why They Don't Work
Note: Income caps on the MFTD Waiver were eliminated 7/22/2013, before ever going into effect. We are keeping this page up in case families in other states need this information for battles in their states.
The SMART Act places an income cap on the MFTD Waiver that is equivalent to 500% of the federal poverty line. While 500% FPL seems like a substantial income, mathematically it simply is not enough.
POINT #1: No other state in the country has an income cap on this type of program. There's a reason why this is true -- income caps almost universally INCREASE costs to the state because middle class families are forced to either institutionalize their children or quit their jobs.
POINT #2: HFS director Julie Hamos claimed an income cap was required to place copays on families in this program. We have found no evidence from any federal documents that this is true. In fact, Equip for Equality wrote a letter to HFS stating it was not true. (In truth, it appears copays are illegal for this program as well, but that's a separate issue.)
POINT #3: Let's do some simple first grade math. The average cost per child in the program is $188,210 (2010 data). A family of three at 500% FPL earns $95,450 (2012 data).
$95,450 < $188,210
This means that a family at 500% FPL would have to pay about DOUBLE their family income to keep their child at home.
Here's a little chart we obtained that shows what each income level family would have to pay to keep their child at home. A family at 1500% FPL would have to pay virtually all of their after-tax income for their child's nursing care! Note that this is for the AVERAGE child. A child who has a higher level of nursing care needs would cost even more, and families would only break even if they earned more than $500,000 (which is slightly more than 2500% FPL).
POINT #4: So what is a family to do if they no longer qualify financially? They have several options:
- Put their child in a hospital/institution, where he/she then qualifies for Medicaid under institutional deeming rules
- Quit their jobs or reduce work hours so they qualify for Medicaid
- Get divorced so they qualify for Medicaid
- Give up custody of their child so their child qualifies for Medicaid
Let's see the financial impact of these options on the state. In other words, how much it would cost the state of Illinois if families were forced to choose one of these options.
|average cost to state|
|Hospitalize Child||$56,000/month; state is required to pay for hospital care|
|Quit/Reduce Job||$15,684/month, but family pays less tax dollars to state; if parent loses private insurance, the monthly cost may increase to about $25,000 to $42,000 a month|
|Give Up Custody||$56,000/month until a foster home is found; thereafter, $25,000 to $42,000 a month because foster families are granted more hours than biological families, receive a monthly subsidy, and the child would no longer be covered by private insurance|
THE BOTTOM LINE: These kids always end up Medicaid one way or another! Keeping them on the waiver is the cheapest way to care for them. Income caps DON'T SAVE MONEY, especially when they are mathematically unreasonable! So what should the income cap be? We don't believe there should be one, because even families earning 2500% FPL may have difficulty paying for their child's care out-of-pocket. There are only about 10 children currently in the program who come from families that earn more than 800% FPL. Virtually all of these families still cannot mathematically afford their child's care. This is not a program full of millionaires who are abusing the system. These are families who have no other option to afford their child's care.