Summary
Lately, 16 states have launched or are getting ready to launch auto-IRA packages that require employers with no retirement plan to auto-enroll their staff in an IRA. Though research have begun to doc outcomes within the nascent auto-IRAs, much less consideration has been paid to their interplay with different security web packages, notably Medicaid. This challenge makes use of a simulation mannequin to discover whether or not low- and middle-income households will delay or forego Medicaid recipiency due to their new auto-IRA financial savings. Particularly, it estimates what number of Medicaid-free years future households may purchase with their auto-IRA balances if a nationwide program had launched in 2019.
The paper discovered that:
- Employees with no faculty diploma accumulate significant new financial savings within the hypothetical auto-IRA, though the magnitude could be very delicate to modeling assumptions.
- Youthful cohorts specifically have time to construct up sizeable balances that might delay Medicaid recipiency.
- Older cohorts have extra modest balances and are unlikely to delay Medicaid.
- No matter age, most individuals will nonetheless flip to Medicaid for Lengthy Time period Companies and Helps.
The coverage implications of the findings are:
- Underneath present coverage, households with average auto-IRA balances could have a powerful incentive to spend down their financial savings to qualify for Medicaid.
- Alternatively, states may adapt their Medicaid asset checks to ignore all, or some portion of, auto-IRA financial savings.