Medicaid and Medicare are crucial pieces of the financial plan for many people with disabilities and they do have complicated rules. But the rules have caveats and exceptions. Understanding the rules and using them to advantage can help a person with a disability to live her/his fullest life including the challenge of work.

GETTING AND KEEPING MEDICAID AND MEDICARE EVEN WHEN CIRCUMSTANCES CHANGE

BY ALEXANDRA BAIG, MBA, CFP®

When my clients and I build financial forecasts for the family member with a disability, medical care (including therapies and prescriptions) and the support services are almost always the main drivers of the expense side of the equation. Finding a way to pay for these costs over the entire lifetime of the person with a disability is generally the key to the plan's success. Unless the client family has very deep pockets – think multi-millionaire type deep – the person's own income and family contributions will be insufficient to cover these costs over decades.

Medicaid and Medicare are the primary public resources the person with a disability will want and need to access in order to pay for their health care and services and make the plan "work." One of the primary services I provide to clients with disabilities and their families is helping them qualify for both of these government programs.

Some people with disabilities are able to qualify for Medicaid before they turn eighteen, if they have significant health and/or support needs or their family comes from a position of extreme economic disadvantage or both. The majority of families, though, have too many financial resources and too low a level of support needs to qualify the person with a disability for Medicaid when s/he is a child. This is because income and assets belonging the parents are "deemed" to be available for the child's support, even if the child her/himself has no income or assets to speak of. However, once the young person turns 18, s/he can apply for Medicaid as a household of one. The challenge at this point is meeting the adult eligibility requirements.

Prior to the passage of the Affordable Care Act ("the ACA" or "Obamacare"), Medicaid eligibility for people with disabilities was linked, in most states, to eligibility for the cash welfare benefit called Supplemental Security Income or SSI. To qualify for SSI as an adult, a person must 1) Have a physical, developmental, mental or emotion condition that is expected to last more than one year or end in death; 2) that condition must prevent the person from performing Substantial Gainful Activity or "SGA" and 3) must have countable resources of $2,000 or less For 2020, performing SGA is defined as working at a level where one earns more than $1,260 gross income per month. Most applications for SSI and Medicaid fail on the applicant's inability to provide sufficient evidence of the second requirement.

In states that expanded Medicaid under the ACA, people with disabilities have access to Medicaid under via a second route. They do not have to supply evidence of disability and there was no limitation on countable resources as long as the person's income was below 138% of the Federal Poverty Level. Medicaid obtained under the ACA and SSI-linked Medicaid as "Assistance to the Aged, Blind and Disabled [sic]" can both fund the same array of health and support services. There is a subtle difference, though, because a person qualifies for AABD Medicaid primarily because s/he has a disability but qualifies for ACA Medicaid primarily because s/he has low income. As a result, there are programs for continuing Medicaid under AABD criteria even if income rises. These exceptions to not apply to ACA Medicaid.

Medicaid is crucial for many people with disabilities because Medicaid waivers are the main funding sources for almost all adult disability services in all states. Medicaid eligibility is thus required to access these services unless one can private pay for them. For this reason, I advise my clients with disabilities to apply for SSI and Medicaid as soon as they turn 18, or at the earliest possible date following the onset of the disability— and we work diligently to prepare and present the documentation required to demonstrate eligibility. Medicaid may also be the only health insurance available to some people with disabilities. In many cases, though, Medicaid alone is insufficient. This is because the Medicaid reimbursement rates to providers are much lower than the rates offered by Medicare or private health insurance.

While the general population thinks of Medicare as a health care program for seniors, people with disabilities can qualify for Medicare at a much earlier age. People with disabilities under the age of 65 become eligible for Medicare once they have received a Social Security Disability Insurance (SSDI) Benefit for 24 months. If the person with a disability has worked or is working, s/he may accumulate enough credits to be eligible for and SSDI benefit on her/his own work record. If that does not happen, the person may become eligible for a so-called "Childhood Disability Benefit" or "CDB" on a parent's work record if the person's disability started before the age of 22. Despite the name, CDB (also sometimes called "Disabled [sic] Adult Child" or "DAC" bene fits) are paid to people 18 and over and may be paid for the remainder of her/his lifetime. Either own-record SSDI or CDB/DAC receipt will generate Medicare eligibility after two years.

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LIMITED ACCESS: Some people with disabilities are able to qualify for Medicaid before they turn eighteen, but the majority of families have too many financial resources and too low a level of support needs to qualify the person with a disability for Medicaid when s/he is a child.

Having obtained Medicare and Medicaid, people with disabilities are understandably reluctant to do anything that might cause them to lose the benefits. The Social Security requirements for "having a disability," which tie into AABD Medicaid as well as pre-65 Medicare eligibility and the Affordable Care Act requirements for accessing Medicaid are all related to income. A key concern for my clients and their families is: "What happens if the income of our family member with a disability increases to the point where s/he becomes ineligible for Medicaid and/or Medicare." This is a valid concern, certainly, but one that almost never plays out in real life. Here is why.

Let us take a hypothetical example of Amanda, a 30-year-old woman with a developmental disability. Amanda qualified for SSI and Medicaid at age 18, when she was still a student and was unable to perform SGA. Amanda had work experience in her high school transition program and continued to work after leaving school at 21. At 28, she had accumulated enough work credits of her own to receive a small SSDI benefit but earned too little to eliminate her Medicaid. At thirty, Amanda has SSI, SSDI, Medicaid and Medicare. She has also been promoted and given more work hours. As a result, she begins to earn enough money that she is no longer eligible for SSI. However, she is able to maintain her Medicaid under provision 1619, which provides this continuation for "special groups of former SSI recipients."

Six years later, one of Amanda's parents retires and claims Social Security. Amanda adds a CDB benefit to her SSDI. Now, she has too much unearned income as well, but provision 1634 allows Amanda to continue her Medicaid because her income increase is attributable to a parental benefit. If Amanda's earnings were to continue to increase, she might reach a point where she was consistently earning over the SGA level and so became ineligible for her SSDI and CDB. However, she could continue her Medicare under a Social Security Work Incentive for up to 93 months for free and thereafter for a small premium.

Had Amanda never received SSI, she would still be able to access Medicaid for Workers with Disabilities, which is sometimes called Medicaid Buy-in because it may require a small premium. In many states, Amanda might also be able to qualify for Medicaid under a "cost-sharing" or "spend-down" program, which would require her to pay a portion of her health care and/or support service costs before becoming or remaining eligible for Medicaid, which then would pay the rest.

Medicaid and Medicare are crucial pieces of the financial plan for many people with disabilities and they do have complicated rules. But the rules have caveats and exceptions. Understanding the rules and using them to advantage can help a person with a disability to live her/his fullest life including the challenge of work.•

ABOUT THE AUTHOR:

Alexandra Baig, MBA, CFP® is a fee-only financial planner and an employment network service provider who helps people with disabilities make the most of government benefits and personal resources to support their work and life goals. Alexandra has previous experience running L'Arche Chicago, an innovative residential community for people with and without disabilities.