Persons with severe disabilities will find it hard, perhaps impossible, to earn a living, or even perform such basic activities of daily living as eating and drinking, bathing, dressing, walking and grooming without assistance. Moreover, the nature and scope of the disabilities may very well cause the persons with special needs to require a tremendous amount of medical care, possibly even long term custodial care in a skilled nursing facility or group home at some point.
Medical and long-term care costs have been growing dramatically over the years. In the greater New York City area, the cost of a long-term care facility can top $10,000.00 per month. The cost of such medical and long-term care can be devastating. A recent study performed by Harvard researchers indicted that roughly one-half of all bankruptcy cases filed in 2001 were attributable to medical expenses.
There are three basic ways these expenses can be covered: you can pay privately if you have the means; you can obtain health insurance coverage or long-term care insurance, if it is available; or you can seek the government’s assistance. This article addresses one of the governmental assistance programs – Medicaid. Since Medicaid rules may vary from state to state, this article will cover some of the general principles; however, you should look to your state rules regarding specific entitlement criteria for Medicaid. For those who are internet-savvy, most states have state-specific Medicaid information on their Health Department or similar websites.
Medicaid provides health care and long-term care coverage for certain groups of people who have very low income and limited assets. Medicaid is a joint program of the federal and state governments. Funding for Medicaid is shared by the federal and state governments; however, Medicaid is administered by the state. In most states, persons who receive Supplemental Security Income (SSI) automatically receive Medicaid. In addition, persons who are blind, disabled or over 65 may qualify for Medicaid directly if they meet the financial tests, even though they do not receive SSI.
For persons with disabilities, there are three criteria that must be met in order to qualify for SSI or Medicaid without SSI (Medicaid-Only programs): disability; asset test; and income test. For SSI, these tests are set out in federal laws and regulations. For Medicaid, federal rules also set out financial criteria; however, for Medicaid-only programs, states are allowed to modify the basic income and asset tests to make them more lenient than the federal rules. You should contact your state Medicaid agency to get the specific income and asset limits in effect in your area.
Most programs for persons with disabilities use the Social Security definition of disability. A person under 18 is “disabled” if the person has a medically determinable physical or mental impairment which results in marked and severe functional limitations and can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months. If the person is over 18, the test changes somewhat: an individual age 18 and older is “disabled” if the medically determinable physical or mental impairment prevents the person from engaging in any “substantial gainful activity” and can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months. Generally speaking, “substantial gainful activity” is measured by the ability to earn an income. For 2009, the Social Security “Substantial Gainful Activity” income limit for a person with disabilities is $980.00 per month.
In order to qualify for SSI and Medicaid in states where Medicaid is automatic for persons on SSI, as well as in most states that provide Medicaid-only coverage to persons who are not on SSI, a person cannot have more than $2,000.00 in countable assets. Countable assets include bank accounts, stocks, bonds, and other investments, including most retirement assets if they can be withdrawn, as well as real estate. There are some assets that are not counted, including the person’s primary residence, an automobile of limited value, clothing and personal property, and some other assets that are specifically exempted by law. Some states have increased the permissible asset limit beyond $2,000.00 for Medicaid-only programs, so check with your local state Medicaid agency.
Income limits and the calculation of income for purposes of the income test are very complex. Following are some general guidelines. For SSI purposes in 2009, if a person only had earned income (such as salary from a job) and received more than $1,433.00 per month in earned income, the person would lose SSI. If the person only had unearned income (interest, dividends) and received more than $694.00 per month in unearned income, the person would lose SSI (an explanation of the calculation for a person having both earned and unearned income is beyond the scope of this article). If the person was in a state where Medicaid was automatically given to SSI recipients, the person would lose Medicaid as well.
Important to remember: since the financial tests for state Medicaid-only programs may be more lenient, you should check with your local state Medicaid agency with respect to income limits for Medicaid-only programs. A person with disabilities may qualify for Medicaid-only even if the person does not qualify for SSI.
Often, a person with disabilities may meet the asset test, but make a bit too much income to qualify for state Medicaid-only programs. In order to avoid loss of coverage simply because the income is too high, some states have another type of program, sometimes referred to as “Medically-needy” or “Medicaid Spend-down” programs. These programs usually have the same asset test limitations as the Medicaid-only programs, but allow the person with disabilities to spend down excess monthly income on medical expenses until the remaining income is below the state’s permissible income limits. Once the excess income is spent in any given month, Medicaid will pick up any additional medical expenses in that month.
These are only a few of the options available for medical coverage afforded to persons with disabilities. Many states have instituted other medical insurance programs for persons with disabilities, beyond Medicaid-only and Medically-needy programs. Always check.