The iodine skin test is a controversial way to test for iodine deficiency. Our research has shown that the fading of the iodine does not depend on body sufficiency alone, but also on many environmental factors such as temperature , humidity of the air around us. Etc. However many people do feel that it at least gives a pretty good idea , especially if very deficient and the disappearing of the dark iodine stain within a few hours shows a strong need for more iodine.
Probably the best test for iodine deficiency is the iodine loading test as offered by Dr. David Brownstein. In this test you ingest a loading dose of iodine, collect urine for 24 hours and then measure the amount of iodine excreted. This pretty accurately tells how much iodine is retained from the loading dose and thus the need.
Dr. Sircus however feels most people are deficient and can forego any testing. With now low-salt diets, use of non-iodized salts etc. we do not get enough for our needs. He advises on starting on a low dose of iodine and slowly going up... cutting back if symptoms develop.
You can read more about this in the Iodine e-book: