Some long and winding roads...to Medicaid eligibility
The “Rerouting” function on my GPS is alternatively really helpful and impossible. Sometimes, when I miss a turn or misinterpret a step, it corrects immediately, and I can continue on my way via the slightly altered route, without delay. Other times, though it realizes that I have failed to follow its initial instructions, the system takes so long to “reroute” that I either have to pull into a parking lot and restart the whole mapping process, or, when there is no stopping place, continue blindly only to realize when the reroute finally emerges that I have already screwed that one up too. Due to the fact that most states have multiple pathways to Medicaid for people with disabilities and also the fact that all income is not treated in the same way, getting to one’s Medicaid eligibility can feel like driving with a GPS on constant buffering.
Last blog, we talked about some of the ways that people, who work too much to qualify for Medicaid, can nevertheless become or remain eligible for it, if they have a disability and need the Medicaid to pay for health care or support services. It is important to remember that 1619(b), which continues Medicaid for workers with disabilities who would otherwise qualify for Supplemental Security Income (SSI) were it not for their earned income, and Medicaid Buy-in, which is available to workers with disabilities who are willing to pay a small premium, are both only useful for establishing or maintaining Medicaid eligibility and services, when the hurdle to be overcome is too much earned income. Some people with disabilities fail to qualify for Medicaid not because their earned income is too high, but because their unearned income is too high or because they have too many assets. There are other routes to Medicaid eligibility that can be used in these situations. (photo courtesy of Capnsnap, via Unsplash.)
People, whose disability started before the age of 22, may be eligible to receive what is called a “Childhood Disability Benefit” (because it requires that the person’s disability date back to childhood) or a “Disabled Adult Child” benefit. This is a Title II benefit, based on the work record of one of the person’s parents. If a person previously qualified for SSI and hence for SSI-linked Medicaid, but then loses SSI eligibility because her/his new CDB/DAC benefit provides her/him too much unearned income to qualify, they are at least able to maintain their Medicaid eligibility under section 1634 of the Social Security Act.
If a person with a disability, who receives SSI or who is eligible for 1619(b) Medicaid continuation, also receives a Tittle II benefit, such as Social Security Disability Insurance on their own work record or Social Security Retirement Benefits, and the regular Social Security cost-of-living adjustment (COLA) increases their Title II benefits, such that they then have too much unearned income to qualify for Medicaid, then they may continue to qualify for Medicaid under the so-called Pickle Amendment (named after its Congressional sponsor, J. J. Pickle), provided the ONLY reason for their ineligibility is the accumulated COLAs.
In some cases, the person with a disability, who needs Medicaid either for health insurance or to fund adult services through a Medicaid waiver, does not fit into any of these categories. This is often because the person was never eligible for SSI. For example, if a parent has already retired at the time a young person below the age of 22 applies and is deemed eligible for Social Security benefits, then the young person will likely “skip” directly to a CDB/DAC benefit without ever having received SSI. This is because a CDB/DAC benefit, which can be as high as 50% of the amount that the parent is entitled to at her/his Full Retirement Age (FRA), is often greater than the maximum SSI benefit payable; and the formula, which under which unearned income reduces one’s SSI benefit dollar for dollar after the first $20, has reduced the SSI that could be payable to $0.
In these cases, it is necessary to reduce the amount of income that is “counted”, when the state agency is determining eligibility for Medicaid in general or for a particular Medicaid wavier program, since in some states, these have their own specialized criteria. There are two approaches. The first, which is most common, is to “spend down” the excess income. A person can do this by providing current, and to some extent, past but unpaid bills for Medicaid and certain personal assistance services. If the expenses are sufficient to eliminate the excess income, then the person has met her/his spend down and is thus Medicaid eligible. For example, if the Medicaid threshold is $1,000 and the person receives $1,200 of CDB/DAC benefits, then the person needs at least $200 of eligible expenses to meet her/his spend down. The spend-down route to Medicaid is sometimes called the “medically needy” or the “excess income route”. The list of what expenses can or cannot be used to meet a Medicaid spend down differ from state to state.
The following states take an “income cap” approach to Medicaid and to not permit an applicant to spend down excess income. These are: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Nevada, New Mexico, New Jersey, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, and Wyoming. In these states, an applicant can redirect excess income to what is known as a Qualified Income Trust (QIT) or a “Miller” trust. Note that although it is only necessary to deposit the excess income, and if the income is deposited from a certain source, the entirety of that income must be deposited. For example, if the Medicaid threshold is $1,000 and the person receives $1,200 in CDB/DAB benefits, the entire $1,200/month must be directed to the trust, even though the excess income is only $200. On the other hand, if the person has $1,000/month of CDB/DAC income and $200/month of income from some other source, the person will need to deposit only the $200 check each month. Money held in a Miller trust can only be used for certain purposes. Miller trusts are also payback trusts, meaning that Medicaid has first claim on any funds remaining in the trust, when the primary beneficiary dies.
We have been speaking in this blog about meeting the income requirements for Medicaid. Many Medicaid programs also place limitations on countable resources, which are generally cash and assets that can be converted easily into cash such as stocks, bonds, mutual funds, exchange traded funds, investment real estate, and the like. Navigating the way to Medicaid eligibility can be tricky when the applicant has income above the standard thresholds. We can guide you through with a minimum of “rerouting” detours, like an efficient GPS.