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• A study published in the Disability and Health Journal found that participants with any level of paid employment had a better quality of life, their self-reported health status was higher, and the per person per month Medicaid expenditures were less.3 Unfortunately, the Patient Protection and Affordable Care Act (ACA) creates a disincentive for individuals to seek paid or higher paid employment. Specifically, an individual enrolled in the parent and caretaker relative (PCR) coverage group whose income increases as the result of employment risks losing access to health coverage. This is due in large part to financial disincentives created by intersecting the ACA’s unconstitutional mandate of Medicaid expansion with federal marketplace exchange subsidies. States opting not to implement full Medicaid expansion pursuant to §1902(a)(10)(A)(VIII) of the Social Security Act (SSA) are faced with a so-called “subsidy cliff” whereby parents with incomes too high to qualify for Medicaid – 62% of the federal poverty level (FPL) in South Carolina with a 5% income disregard – also do not reach the income threshold of 100% FPL to qualify for marketplace subsidies on the federal exchange. This creates a perverse financial incentive for individuals to keep their incomes artificially low for risk of losing healthcare coverage and bearing the full cost of health services. Through this demonstration waiver, SCDHHS intends to correct this flawed program structure by creating a new program that eliminates the healthcare coverage gap for low-income families who are working. In this way, the Palmetto Pathways to Independence program will honor South Carolina’s longstanding policy of not increasing government dependence through the adoption of Medicaid expansion under the ACA, while also taking steps to remove perverse financial disincentives for employment. SCDHHS will accomplish this by seeking to create a new eligibility pathway for adults aged 19 to 64 who: • Meet the definition of a PCR at 42 CFR §435.110; • Have an income above 67% and up to 95% FPL with a 5% disregard; and • Meet work and/or community engagement requirements. Given the large role that state government plays in influencing the social environment of citizens, especially those dependent on social benefit programs, states must take responsible steps to address these needs holistically. Addressing these factors is a critical aspect of South Carolina’s efforts to improve the health of our citizens, reduce the costs of healthcare and eliminate health disparities. The purpose of this section 1115 demonstration waiver, hereafter referred to as “demonstration waiver,” is to reinforce the proven link between improved economic self-sufficiency and improved health by leveraging the Medicaid program’s financing mechanisms to remove health-related barriers to employment by eliminating the disincentives to employment created by the ACA coverage gap. Section 02: Program Description 3 Hall, J., Kurth, N., Hunt, S. Employment as a health determinant for working-age, dually-eligible people with disabilities. Disability and Health Journal. 2013.Volume 6, Issue 2 Pages 100-106. https://doi.org/10.1016/j.dhjo.2012.11.001. 5