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Writer's pictureAlexandra Baig, CFP®

With a disability, paying for Medicaid might make cents

While the variety of Medicaid eligibility categories can cause confusion, they are welcome to the extent that they allow people with disabilities in different situations to access the health benefits and services they need.  Having multiple possible categories for eligibility is especially important (unfortunately also especially complicated) for people with disabilities who work. 

 

As we noted in the first post in this series, the simplest Medicaid eligibility category is often the one created by the Affordable Care Act (ACA) if that is operable in your state.  As long as the person has income below 138% of the Federal Poverty Level (FPL) for her/his tax-household size, s/he is eligible.  The number, type, or extent of disabling conditions do not affect eligibility nor do assets, nor what Social Security and Medicaid refer to as “countable resources”.  The “tax household” part is fairly straightforward if the person with a disability is an adult and is not claimed as the IRS dependent of another.  However, 138% of the FPL amounts to only $1,731 per month or less than $21,000 per year, which is generally not much to live on.

 (photo by Kenny Eliason via Unsplash)

The AABD (Aid to the Aged, Blind and Disabled) Medicaid eligibility category, which is linked to SSI (Supplemental Security Income) eligibility, is much more generous income-wise because a worker with a disability can use the 1619(b) provision (explained in the previous blog) to maintain her/his Medicaid at income levels substantially above the ACE threshold.  Only approximately ½ is “counted” towards the state’s respective 1619(b) threshold.  However, 1619(b) eligibility requires that a worker had concurrent SSI and Medicaid eligibility in the past.  There are several reasons why this might not have been so the case.  Some workers with disabilities never apply for SSI because they feel that their earned income would so reduce SSI payable as to make it not worth the effort to apply.  Others may have worked sufficiently before applying for disability benefits that they already had enough credits for SSDI (Social Security Disability Insurance) and so they “skipped over” their SSI eligibility.

 

Workers with disabilities with these types of situations may still require Medicaid.  Even if they have health insurance through their employer, they may rely on the types of support services that are funded by Medicaid Waivers.  In fact, they may need these very services, for example, those of a personal assistant, to get ready for work, to go to work, and even while they are on the job.  IN this case, people with disabilities may be eligible for a Medicaid Buy-in program.  In Illinois, this program is called Health Benefits for Workers with Disabilities (HBWD).  A worker with a disability is eligible for HBWD as long as her/his income does not exceed 350% of the FPL.  People who are eligible for HBWD may have assets held in their own names of up to $25,000, which far exceeds the AABD asset (or “countable resource” ) threshold.  Moreover, for HBWD, retirement accounts, such as 401(k)s and IRAs are excluded from the “countable” category. 

 

As always, people with disabilities using HBWD can also exclude any assets that they hold in an ABLE account.  It is worth remembering that workers with disabilities (regardless of any Medicaid eligibility) are permitted to make contributions to their ABLE accounts in excess of the standard annual threshold, which is $18,000.  Workers can contribute up to the higher of their total earned income or an amount equal to the FPL for a single-person tax household.

 

If you are a person with a disability, who both works and requires Medicaid, it can be challenging to sort out into which Medicaid eligibility categories you might fall and, among those, which one is the most beneficial, given your situation.  The good news is that one will probably work for you, and we are here to help you do the analysis. 

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