Memorandum of Impact – LSB 5348YC (HSB 696)

February 11, 2026

Chairpersons and honorable members of the Committee. My name is Catherine E. Johnson. I am the Executive Director of Disability Rights Iowa (DRI). DRI is an independent, non-profit agency which serves as the designated protection and advocacy system for people with disabilities in the state of Iowa, pursuant to federal mandates. The mission of the agency is to advocate for justice, to advance human and legal rights of Iowans with disabilities and to protect Iowans with disabilities.   I appear before you today to share DRI’s questions and concerns regarding the impact of HSB 696 on the Disability Community.

Overview of HSB 696:

HSB 696 is broad and impacts all public assistance programs under the purview of the department of health and human services. The proposed legislation changes eligibility requirements, DRI’s comments are focused on the proposed changes to the medical assistance programs, specifically Division II (Medical Assistance Program),  and Division III (Eligibility for Certain Programs).

Division II (Medical Assistance Program)  

Medicaid for Employed People with Disabilities (MEPD)

Iowans with disabilities want to participate in Competitive Integrated Employment (CIE). Medicaid for Employed People with Disabilities (MEPD) is a Medicaid coverage group that was designed to promote employment for people with disabilities. Medicaid provides access to resources (e.g., personal care attendants, adaptive equipment, community living supports, and waiver services) that are not covered by traditional insurance. However, it has restrictions like income and resource/asset limits which create barriers for individuals and families and disincentivizes employment.

HSB 696 the Proposed Amendment Increases Healthcare Access Based on Income

Proposed amendment, increase MEPD income limit to 400% the Federal Poverty Level and counts the income of the entire household.

The bill with the proposed amendment would remove the income limit for Iowans with disabilities and encourage individuals with disabilities who want to work to accept additional hours and wage/salary increases without the worry of losing the services they need for employment through Medicaid. Additionally, Iowans with disabilities who are not currently eligible due to an employed spouse would not be disqualified from the program.

HSB 696 Proposed Amendment Increases Healthcare Access Based on Assets

Remove the maximum available resource limit for both individuals and couples.

Iowans with disabilities, regardless of when they became disabled and how much they saved for retirement and life expenses, would be eligible for MEPD. The bill with the proposed amendment would encourage individuals with disabilities who want to work to pursue employment and be able to save for the future without fear of losing their healthcare coverage.

Change in Premium Calculation

HSB 696 states “An individual’s monthly program premium amount shall be based on a sliding fee schedule adopted by the department and shall be based on a percentage of the individual’s.” Currently, under MEPD, individuals with a gross income (both earned and unearned) below 150% of the federal poverty level do not pay a premium.  DRI recommends the sliding fee schedule start for individuals above 400% of the federal poverty level will pay a monthly premium based on a stated chart on the MEPD website. HSB 696 does not specify how the fee schedule will be calculated, or what percentage of the individual’s income will be considered om the fee schedule.

Section 10.  249A.32D Waivers – cost neutrality

Cost neutrality is already a requirement under the Federal Medicaid Act. 

Division III Eligibility for Certain Programs:

• HSB 696 changes residency requirements for public assistance programs to at least twelve months of continuous residency within the state, unless prohibited by federal law.

• This requirement violates current Iowa and Federal law residency requirements.

• Iowa Statute 38.17 – for income tax purposes: residency means an individual maintains a permanent place of abode within the state or the individual is domiciled in the state.

• Iowa Statute 75.101  – residency for medical assistance:
  • Persons aged 21 and over
  • People who are not residing in an institution the state of residence is where the person is:
    • Living with the intention to remain there permanently or for an indefinite period of time
    • Living and has a job commitment or seeking employment
  • Federal Medicaid – 42 CFR 435.403
    • Residency generally defined for individuals not residing in an institution as:
      • Over 21 years of age
      • The state where the person is living and intends to reside
      • Fixed address is not required
      • If seeking employment and over 21 or have a job commitment
      • Children are resident of the state in which they reside or where their parent or caretaker is a residence.

Americans with Disabilities Act

Congress enacted the Americans with Disabilities Act over thirty-four years ago. Congress intended to create a world where individuals with disabilities have the opportunity for equal opportunity, independence, and self-sufficiency. Engaging in competitive employment is key to achieving these goals set by Congress. More than three decades after the ADA, only 19.1 percent of the national workforce comprises people with disabilities.

According to the attached July 2024 Edition of Iowans with Disabilities: 2024, only 105,988 of Iowans with disabilities between 18-64 were employed in 2022 – roughly 26.3 percent of the disabled population. 52.3 percent of this population worked only part-time. Iowans with disabilities comprised only 7 percent of the labor force. The unemployment rate for Iowans with disabilities was over twice that of Iowans without disabilities – 7.4 percent compared to the 3.5 percent.  The median earnings for disabled Iowans was $15,227 less than nondisabled Iowans – about 35.7% less. These numbers highlight a major issue for the disability community in Iowa – employment and the ability to participate in the greater society.

Disability Rights Iowa’s 2024 State of and Barriers to Employment in Iowa for People with Disabilities Survey & Report

In 2024, DRI designed and executed a qualitative survey to better understand the state of employment for Iowans with disabilities.  DRI’s survey was offered to all interested participants anonymously from June through November 2024. It was organized with the intent of gathering perspectives and experiences from Iowans with disabilities on the state of and barriers to their employment goals.   

147 Iowans with disabilities participated in the survey.  Aggregate survey results provide relevant information for members of the Sub-Committee to consider as applied to Division II of HSB 696.  The results highlight significant barriers with Medicaid income and asset limits that prevent disabled Iowans from accepting initial employment offers and/or increased wages that could lead to greater self-sufficiency. DRI’s full report can be found on our webpage at: https://driowa.org/digital-resources/frequently-asked-questions/employment-report/

Key Medicaid related survey results include:

1. Approximately half of the survey participants reported they received their health insurance through Medicaid.

• Survey participants overwhelming reported that the Medicaid income and asset limitations impact their ability to work more hours, accept promotions, and accept a salary increase.

3. Survey participants reported they declined a promotion, a job, a salary increase, and/or an increase in hours due to Medicaid income limitations.

4. 69.3 % of survey participants reported a desire to increase their hours or wages/salary, accept a promotion, etc., if the Medicaid income and asset limits were removed.

5. Survey participants reported on the importance of work for them and their families, along with the importance of contributing to Iowa’s economy.

DRI respectfully requests that HSB 696 be amended to include the following proposed amendments. 

1. Income:  Amend income to less than 400% of the most recently revised official poverty guidelines published by the United States department of health and human services.

• Remove the maximum available resource limit for both individuals and couples.

• Premiums:  Keep the MEPD affordable by setting the premium amounts at $0 for Iowans with gross income under 400% percent of the federal poverty level.

• Remove the 12 month residency requirement.

DRI is opposed to HSB 696.  DRI welcomes the opportunity to discuss this in more depth with any member of the Iowa Legislature. Thank you in advance for your thoughtful deliberation of our testimony in opposition of HSB 696.