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It Does Matter What Kind of Medicaid You Have.

In Shakespeare’s Romeo and Juliet, the heroine asks “What is in a name? That which we call a rose by any other name would smell as sweet.” Tragically, the rest of her birth family as well as her would-be in-laws are so far from agreeing with her that both the star-crossed lovers ended up dead together. One possible moral of the scene is that sometimes what you call something does matter. This came to a head in a decidedly less dramatic (but still frustrating) way with someone who sought my input. It was a situation I had run across before. Prior to the Affordable Care Act (ACA, aka “Obamacare”), a person with a disability obtained Medicaid coverage by 1) having a significant enough disability to meet the Social Security definition and 2) having very low income and assets. Originally, this was the only route to Medicaid in Illinois and one’s Medicaid was coded “AABD” for “Aid to the Aged, Blind and Disabled [sic]”. Then, Illinois expanded Medicaid access under the ACA. This offered a second route with more relaxed criteria. Disability was not one of the criterion. Nor was the applicant’s amount of assets considered. And, the income threshold was higher by some $350+. As a result, many people with disabilities who applied after 2010 were approved and obtained Medicaid under the ACA category rather than the AABD category.

Some disability-planning professionals reassure clients that it did not matter whether they were coded as AABD or ACA Medicaid as both offer the same coverage, including both health care and long-term services and supports. This is absolutely true. However, there is a key difference between AABD Medicaid and ACA Medicaid. Because one of the criteria for AABD Medicaid is “having a disability” and Social Security has programs, designed to help people with disabilities work, there are also programs that support people with disabilities to keep their Medicaid when their income from work rises high enough that they no longer meet the AABD income criterion. Because the sole criteria for ACA Medicaid is low income, once a person exceeds the income threshold, they cannot keep their Medicaid. It is often critical that a person with a disability keeps Medicaid, because it covers not only health care, which could be covered elsewise, but also long-term services and supports. In addition, because a person’s tax household is relevant to certain benefits under the ACA, when parents claim their adult child with a disability as a IRS dependent, they are sometimes asked to provide their own financial information as well as that of the adult child, when the latter comes up for Medicaid redetermination. For AABD Medicaid, once the recipient if 18, s/he is considered a household of one and parental financial information is irrelevant, regardless of whether the person is claimed as a dependent for IRS purposes.

AABD and ACA are only a few of the confusing abbreviations, related to public benefits. Here is a continuation of last week’s guide to translating disability-related acronyms and abbreviations.

  • SSA. This abbreviation stands for the Social Security Administration or the government entity through which retirement, disability, and welfare cash benefits are provided and managed. SSA does NOT refer to any particular type of cash benefit. Each one has its own abbreviation, which will be discussed below. In other words, it would be accurate to say, “My daughter received a letter from the SSA confirming her eligibility for benefits,” but not “My daughter has started receiving her SSA check.”

  • AIME. This stands for Average Indexed Monthly Earnings. A person’s AIME is calculated by applying and indexing factor to a person’s historical earnings to put those earnings in “today’s dollar” terms. Or to be more accurate in “two-year’s-ago’s dollar” terms, since the indexing is not applied to the final two year’s earnings before the date of application.

  • NH. This stands for “Number Holder”, which is the term the SSA uses for a person, who has accumulated Social Security credits and is applying for retirement or disability-related Social Security cash benefits for her/himself and her/his dependents, also called “auxiliaries.” The NH’s PIA (see next bullet) is the reference point for all these benefits as well as the “family maximum,” that limits the amount that can be paid out on any one Social Security number.

  • PIA. This abbreviation stands for Primary Insurance Amount, which is the number on which Social Security benefits are calculated for both a NH and her/his “auxiliaries” which include the spouse, minor children, children of any age with a disability, and (in certain cases) dependent parents. An NH’s PIA is calculated by applying a weighting formula to that person’s AIME. The first $960 of a person’s PIA is given the most weight in recognition that the people who rely more on Social Security benefits are lower-income workers.

  • FRA. This abbreviation stands for Full Retirement Age. Originally set at age 65, FRA was increased to age 66 for people born between 1943 and 1954 and creeps up gradually to age 67 for people born from 1955 on. One’s benefit amount at FRA is generally equal to one’s PIA.

  • RIB. This abbreviation stands for Retirement Insurance Benefit, which is the type of benefit that people think of first when they say: “Social Security.” This benefit is available beginning at age 62 to people who have worked and paid into the Social Security system enough to be fully insured. Note that if you start your benefits between your age 62 and your FRA, the monthly amount will be permanently reduced below your PIA.

  • ET. This abbreviation stands for Earnings Test. If you start your retirement benefit prior to your FRA and continue to work, your RIB monthly payment will be reduced by $1 for every $2 you earn over an annual exemption amount. The reduction is slightly less in the year you reach your FRA. Once you reach FRA, your benefit is recalculated to include the parts withheld while you were working.

  • DRC. This abbreviation stands for Delayed Retirement Credits. If you delay starting your retirement benefits until after your FRA, your benefit amount will be increased by 8% for each additional year until age 70. Since there are no DRCs awarded after age 70, there is no reason not to start your benefits by that age at the latest. Note that any auxiliaries that may be able to claim on your work record, for example, your spouse or your child, will not start receiving their benefits until you start yours.

  • SSI. This abbreviation stands for Supplemental Security Income. SSI is a welfare-type payment, which requires that a person be either over 65 or blind, or have a disability other than blindness and have few assets and low income. Following an intake interview, the SSA will decide if the applicant qualifies for SSI. A person need not have worked to receive this benefit.

  • SSDI. This abbreviation stands for Social Security Disability Insurance. A person must have worked and obtained enough credits to be insured and then must meet the Social Security definition of having a disability to receive SSDI.

  • AABD Medicaid. This refers to the category of Medicaid that requires a person to meet both financial eligibility criteria AND be elderly or blind or have another disability. One must have less than $1,041/month (2019) in income at the time of application and must maintain less than $2,000 of countable assets both to start and to continue receiving Medicaid. Special programs permit working individuals with disabilities to continue their Medicaid if their income from their work subsequently increases. These programs make it possible for workers with disabilities to retain Medicaid even with very high-income levels assuming that their disability continues, and their income cannot cover their health care and personal support in addition to their daily living expenses.

  • ACA Medicaid. This refers to the category of Medicaid added in states like Illinois that expanded the program under the Affordable Care Act. The initial threshold is higher than AABD at 138% of the federal poverty level for the previous year or just under $1,400 for 2019. Because low income is the only criteria to qualify for ACA Medicaid, there are no provisions for continuing Medicaid eligibility as one’s income from work rises.

Confusing AABD Medicaid and ACA Medicaid does not cause a Shakespearean tragedy, but it could result in a very confusing redetermination process and even temporary ineligibility for and cessation of Medicaid-funded services. If you have any questions about your or a family member’s Social Security, Medicaid or Medicare benefits, consider clicking the big red button on this website to schedule a consultation.

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