Relating to the personal needs allowance under the medical assistance program

Description

Senate File 476 relates to the personal needs allowance (PNA) for residents of certain facilities enrolled in the Medical Assistance Program (Medicaid) and does the following:

• Increases the PNA from $50 per month to $65 per month.
• Provides that a resident with an income of less than $65, rather than $50, per month must receive a supplement from the State in the amount necessary to receive a PNA of $65 per month.
• Provides that beginning July 1, 2026, the Department of Health and Human Services (HHS) must annually increase the PNA by a percentage equal to the annual percentage change in the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index (CPI) for all urban consumers for the Midwest region, all items, or a successor index.
• Provides that the PNA must not exceed $100 per month.
• Provides that beginning January 2027, the HHS must review the PNA, in consultation with the State Long-Term Care Ombudsman, and biennially submit a report relating to the review to the General Assembly on or before the second Monday in January.

Background

A PNA is a monthly stipend for individuals to spend on personal items and services. Iowa Code section 249A.30A provides for the PNA for Medicaid beneficiaries who are residents of nursing facilities, intermediate care facilities (ICFs) for persons with an intellectual disability, ICFs for persons with mental illness, or psychiatric medical institutions for children (PMICs). The PNA was last increased from $30 to $50 in 2006 Iowa Acts, chapter 1113 (Medical Assistance Program — Personal Needs Allowance Act). The federal government requires that the PNA be no less than $30 per month and no more than $200 per month.

Assumptions

• The total population of nursing facility, ICF, and PMIC residents in Iowa is 12,626.
• There are 11,300 residents with incomes of $50 or more per month.
• There are 1,300 residents with incomes less than $50 per month.
• The annualized increase per resident is $180.
• The CPI is estimated to be 3.0% annually.
• The State will pay 37.16% of Medicaid costs, while the federal government will pay 62.84% of the costs for residents with incomes of $50 or more per month.
• The State will pay the full amount of the costs for residents needing a supplemental PNA.
• One-time information technology (IT) expenses, including IT staffing and vendor costs, will be necessary for the HHS’s Medicaid eligibility system at approximately $308,000 in FY 2026. The State will pay 42.73% of costs for IT staffing, while the federal government will pay 57.27%. The State will pay 25.26% of vendor costs, while the federal government will pay 74.74%.

Fiscal Impact

Senate File 476 is estimated to increase total Medicaid costs by approximately $2.6 million in FY 2026 and the same amount in FY 2027. The State will be responsible for approximately $1.1 million of the total cost in FY 2026 and the same amount in FY 2027.

Source

• Department of Health and Human Services