Erica Carter lost Medicaid after Iowa raised income limit to $36,450

Erica Carter was making $110,000 a year as a finance manager for the Omaha Nation public school district in Nebraska when Iowa’s Medicaid office told her she was about to lose her health coverage. The letter arrived in November 2023 and gave her two weeks to act. Iowa’s Medicaid for Employed People With Disabilities program caps income at $36,450 for a single-person household, so her salary disqualified her. Carter, 41, has been paralyzed from the chest down since her early 20s and relies on Medicaid for accessible housing and personal care services.

The timing is no accident. States are rushing to comply with a new federal rule that requires Medicaid recipients to prove they meet work requirements—80 hours per month of jobs, volunteering, or school. But for many disabled workers, the existing income and asset limits already force a brutal choice: take a raise or promotion and risk losing health insurance, or keep benefits and stay stuck below the poverty line. Advocates say the rules punish effort instead of rewarding it. Four states—Massachusetts, Minnesota, New Jersey and Rhode Island—have already scrapped income caps in their Medicaid buy-in programs, but Iowa has not.

Carter’s dilemma highlights a national pattern. Across 47 states that offer Medicaid buy-in programs, most still set strict income and asset limits that trap people with disabilities in part-time work or prevent them from saving for emergencies. Iowa’s limit of $36,450 a year is typical, even though her job pays three times that amount. She had no time to prepare and faced a stark choice: accept a lower-paying position to keep Medicaid or give up the coverage she needs. “I had a decision to make,” she said. Her case illustrates how well-intentioned policies can backfire, pushing disabled workers out of the labor force instead of helping them advance.

The outcome could reshape career paths for thousands. If Iowa raises or eliminates its income cap, disabled professionals like Carter could finally accept raises and promotions without fear. If it doesn’t, more will face the same impossible choice. The stakes are high: losing Medicaid can mean losing access to wheelchairs, caregivers, and life-saving treatments. Carter’s story is pushing Iowa lawmakers to reconsider the rules, but for now, the system still pits ambition against survival.