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Medicaid: Not All Flavors Taste the Same

On January 1, 2014, like many states, Illinois expanded Medicaid under the Affordable Care Act (aka “Obamacare”). The ACA Medicaid covers adults who earn up to 138% of the Federal Poverty Level. The adult no longer has to be a senior or a person with a disability, or be the caretaker of dependent children, or be pregnant as with traditional Medicaid. The implementation of this expansion means that any adult with a disability, applying for Medicaid in 2014 or later could be

enrolled either through the traditional Assistance to the Aged, Blind or Disabled (AABD) eligibility or simply as a low-income adult through ACA eligibility. Coverage, including both health care and long-term care via Medicaid Waivers, is the same regardless of the eligibility route. However, the eligibility criteria for income and assets are different for the two routes. This is not a problem for people who do not work, or work only a little, but the differences become very relevant for adults with disabilities who work more, or who have a goal of working more. So, let’s explore.

At first glance, the ACA Medicaid eligibility requirements would seem more conducive to work because the income threshold of an effective 138% of the FPL, which is the equivalent of $16,392 for 2018 (the 2018 threshold is based on the 2017 FPL), is higher than the income threshold for traditional Medicaid, accessed through AABD eligibility. Moreover, unlike traditional Medicaid, ACA Medicaid has no resource limit. Traditional Medicaid recipients are limited to $2,000, titled directly in their own names. Assets held in a properly written Special Needs Trust, ABLE account or PASS do not count towards this limit as I have explained in other blogs.

The problem comes in when a Medicaid recipient, enrolled through the ACA, who received support services funded by a Medicaid Waiver then finds a position that pays more than $16,392. Since the only criteria for ACA Medicaid is having sufficiently low income, there is no provision to allow people with disabilities to stay on the program once they cease to be “poor” even though their new income is not enough to cover both their living expenses and the services that they had relied on Medicaid to provide and without which they are unable to work.

This limitation on ACA Medicaid stands in contrast to traditional Medicaid which does have such provisions. If you are on traditional Medicaid because you are a person with a disability, and your earnings begin to exceed the threshold, you can then use one of two provisions to keep your Medicaid. The first is a spend-down. With a spend-down, the person with a disability is not eligible for Medicaid coverage in any month unless s/he has already spent a certain amount on medical treatment or equipment or personal support services. It works somewhat like the deductible on your insurance policies. For persons who receive Waiver services, the value of the Waiver services counts towards the spend-down as do other medical expenses, non-insured expenses for durable medical equipment, etc. In months where the person does not have enough expenses to meet the spend-down, s/he can choose to pay the difference to Medicaid. This is called pay-in/spend-down.

The other option is called Health Benefits for Workers with Disabilities (HBWD). HBWD is open to people with disabilities who have Medicaid and continue to meet all the criteria for receiving Medicaid in that they continue to have the same disabling condition and the same need for medical and/or personal support. They begin to earn a higher income, but it is still insufficient to cover all the support that they need to live and work and that Medicaid has been paying. Health Benefits for Workers with Disabilities allows the recipient to earn up to $42,490 (for 2018) while retaining Medicaid. As an added benefit, the person can have up to $25,000 in assets, held directly in his/her own name.

Medicaid provides necessary supports and services for people with disabilities. Most people with disabilities want to work and have the capacity to contribute to pay at least some of their own way but only if they continue to receive their services and supports. The fact that there is more than one route to enroll in Medicaid, and the fact that each route has different criteria are both needlessly confusing but, at this point, it is the way the system is structured. It is critical that working people with disabilities understand their enrollment, its limitations and their other options. Medicaid has many flavors, but only one will taste best in your particular situation.

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