How to Get Medicaid When You Think You Have Too Much Income
Updated: Apr 23, 2020
At first glance, you may think that you (if you have a disability) do not or your family member who has a disability, does not qualify for Medicaid because you have too much income. In fact, there are alternate roads to Medicaid for people who have incomes above the standard Medicaid threshold, but otherwise have qualifying needs for the health care or services that Medicaid funds. (photo below courtesy of Nick Fewings via Unsplash).
Let us look at an example. Meet Staci, who is 30 years old and has a developmental disability that began before birth. Staci currently lives at home with her parents, and her family currently provides the support services she needs. However, once Staci’s parents get older, they may not be able to provide all the support that she needs, particularly if she moves into her own apartment, where she may need more help. In addition, she is concerned that she may need additional employment supports if something changes at her job or if she needs to change jobs. A local disability-services agency can provide both supports for activities of daily living and also employment supports. However, since these support services are funded by a Medicaid waiver, Staci needs to have Medicaid to access them. Staci’s total income is too much to qualify for Medicaid in her home state. What can she do?
The first thing to do is to look at whether Staci ever qualified for Supplemental Security Income (SSI) in the past and whether she qualified for Medicaid as an SSI recipient. For the most part, people with a disability who qualify for SSI also qualify for Medicaid, even though in some states the person has to file a separate application. When a person with a disability once qualifies for Medicaid due to SSI, there are several Social Security regulations that allow them to continue their Medicaid eligibility, even when they are no longer eligible for SSI because their income has increased. This is why I advise all people with disabilities, particularly those with developmental disabilities, to apply for SSI and Medicaid, even if they will only have and use these benefits for a short time.
In our example, Staci applied for SSI and Medicaid as soon as she turned 18. She was not able to qualify for either before her age 18, because her parents’ income and assets were deemed to her, and the family had too high of an income and too many assets for Staci to meet the child’s financial eligibility criteria. However, at 18, Staci was considered on her own as a person with an independent household. At that time, she had less than $2,000 in her bank account, and she was able to demonstrate that she was not (at that time) able to perform Substantial Gainful Activity (SGA). At that time, since Staci was still in high school, she was only working on a very part-time basis and needed a job coach.
Subsequently, Staci completed a certificate program in horticulture at the local community college and was hired in the garden and greenhouse department of a large home-improvement store. Gradually, her reliance on the job coach decreased and her hours of working increased. Her state also increased minimum wage. As a result, Staci’s monthly earnings are now reaching the point where she will no longer qualify for SSI. She is also now concerned that she will also lose her Medicaid eligibility, which is tied to her status as an SSI recipient. But, in fact, she will not. This is because the Social Security regulations include a provision in section 1619. A person who formerly qualified for SSI and Medicaid and subsequently ceases to qualify for SSI solely because her/his work earnings are too high, remains eligible for Medicaid provided that 1) s/he still has the disabling condition(s) and 2) s/he is not earning enough from work to cover both daily living expenses and the health care or support services expenses that are covered by Medicaid.
Suppose instead that Staci did not lose her SSI eligibility because her work income grew too high, but because one of her parents files for Social Security Retirement benefits and Staci, as an adult child with a developmental disability, began to receive a “Childhood Disability Benefit” or “CDB” based on her parent’s work record. It is because of this unearned income that Staci ceases to qualify for SSI. In this case, she is covered by section 1634, which maintains Medicaid eligibility for people who lose their SSI because their unearned income increases solely due to the receipt of a CDB. Let’s now say that Staci’s CDB had been small enough that she did not lose her SSI at first, but later, Cost of Living Adjustments (COLAs) increased the CDB to the point where she then lost her SSI. In that case, Staci would maintain her Medicaid eligibility, according to the so-called “Pickle Amendment” to regulations.
All of the above situations provide that Staci can access Medicaid and services, paid through Medicaid waivers, despite having income that is above the Medicaid eligibility threshold. But the caveat is she must have had SSI-linked Medicaid eligibility first. Suppose instead that Staci expected to work at or above SGA levels as soon as she completed high school. She did not apply for SSI because she expected that she would only receive the benefit for a short time. She did not need Medicaid for health insurance because she was covered under her parents’ policy first and then by her employer. But now, she is concerned that she may need Medicaid-funded services in future. In this case, she can apply for her state’s Medicaid for Workers with Disabilities. These programs are generally available to workers with income up to a certain level, which varies by state and can be found here. These programs are also called Medicaid Buy-In, because they generally require the Medicaid beneficiary to pay a small premium.
For people with disabilities who want or need to access Medicaid but have too much income and do not fit into any of the above situations, there are two additional routes to Medicaid eligibility. Some states have a category for Medicaid eligibility called “medically needy”. Staci will fall into this category, if she has significant needs for Medicaid health care or services despite having income that is too high to qualify. Staci could therefore “spend down” her income each month by paying for health care and/or services. Once she has “spent down” to the income threshold, she is eligible for Medicaid, which will then pay any additional health care or service costs. Suppose Staci’s income is $1,500/month, but her state’s Medicaid threshold income threshold is $1,200. Once Stacy has spent $301 on health care and services, she becomes Medicaid eligible, and she can maintain this eligibility for every month in which she spends $301 or more on health care and services. Other states, called “income cap” states, do not permit spend down. If she lives in an income cap state, Staci could create a Qualified Income Trust, sometimes called a “Miller” trust. In this case, she would redirect at least $301 of her monthly income into the Miller trust and thereby qualify for Medicaid. The use of the trust funds would be restricted to certain expenses and any funds left in the trust at Staci’s death would be reclaimed by Medicaid.
There are many ways that a person with a disability like Staci, who would seem to have too much income to meet the eligibility criteria at first glance, but can still qualify for Medicaid with proper research and planning. Some people have too many assets (countable resources) to qualify for Medicaid. Those situations require different planning strategies.