Health insurance is a topic on the minds of many Americans given the changes that will go into effect under the Affordable Care Act (ACA). Recently, the Special Needs Alliance published a great article on how this new healthcare law affects individuals with disabilities. For more information about the law and your health insurance options, we suggest that you visit the Healthcare.gov website.
December 2013 – Vol. 7, Issue 9
This issue of the Voice was written by SNA member Shirley B. Whitenack of Schenck, Price, Smith & King, LLP and an associate at her firm, Crystal West Edwards. Shirley’s practice focuses on elder and special needs law and estate and trust litigation, planning and administration. She is a Fellow and the Vice President of the National Academy of Elder Law Attorneys (NAELA) and is a member of its Council of Advanced Practitioners (CAP). Crystal’s practice focuses on elder and special needs law. She is a member of the Elder and Disability Law Section of the New Jersey Bar Association, NAELA, and Secretary of the New Jersey Chapter of NAELA and the Garden State Bar Association.
The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010, and the Health Care and Education Reconciliation Act, which amended the PPACA, was signed into law on March 30, 2010, and are collectively referred to in this article as the Affordable Care Act (ACA). The ACA includes various mandates to ensure that all Americans obtain health coverage and seeks to improve the overall quality of the care provided, including Medicaid expansion, coverage for pre-existing conditions, continuous coverage for individuals until age 26, and the health insurance marketplace, which opened for business on October 1, 2013. Several key provisions of the ACA specifically will benefit individuals with disabilities and their families.
The ACA permits states to expand their Medicaid programs to insure non-disabled individuals between ages 19 and 64 who have met the citizenship requirements, are not entitled to Medicare, are not incarcerated, and have income below 133% of the federal poverty level. Without the ACA, this population would have remained uninsured and, unless blind or determined to be disabled, ineligible for Medicaid benefits.
As of November 2013, twenty-five states and the District of Columbia have announced they will participate in Medicaid expansion, four states are considering Medicaid expansion and twenty-one states are not expanding at this time. Information regarding the states that have adopted Medicaid expansion can be found at https://www.advisory.com/Daily-Briefing/Resources/Primers/MedicaidMap.
For those states that adopt the Medicaid expansion, the ACA eliminates the asset/resource eligibility test for Medicaid programs and the disability requirement applicable to most adults. Instead, eligibility for these programs is based solely on the applicant’s modified adjusted gross income (MAGI) to assess whether he or she is below the 133% threshold. Further, a five percent income disregard is applied, making persons with incomes up to 138% of the federal poverty level ($15,856 for an individual or $32,499 for a family of four in 2013) eligible for services. States participating in Medicaid expansion are required to establish income eligibility standards for applicants who do not file income tax returns.
The income-only eligibility rules of the Medicaid expansion portion of the ACA do not affect eligibility for the aged, blind, and disabled (traditional Medicaid) or SSI Medicaid programs. Applicants for these and other Medicaid waiver programs will continue to have financial eligibility determined by an income and asset/resource test. For many individuals with disabilities who do not qualify for Medicare but in the past could not qualify for Medicaid because of the asset requirements, the expanded Medicaid program will be an opportunity to obtain much needed health insurance.
Continued Health Insurance Coverage for Children
One of the immediate effects of the ACA was the ability for children to join or remain on their parents’ health insurance until age 26 regardless of whether the child is married, living with the parents, attending school, no longer financially dependent on the parents, or eligible to enroll in an employer’s plan. Until January 1, 2014, grandfathered employer plans do not have to offer coverage up to age 26 if the child is eligible for group coverage outside of the parents’ coverage.
The parents’ ability to have their adult disabled child covered under their health insurance until age 26 is a very important benefit. In the past, an uninsured adult disabled child was required to apply for Medicaid benefits, which often required a spend-down of assets and the establishment and funding of a special needs trust to hold the child’s assets. Now, however, if the disabled child does not need housing or day program supports and is ineligible for SSI, the special needs planner may advise the parents to defer applying for Medicaid benefits until such time that the child is unable to remain on the parents’ health insurance. This determination should be based on the estimated additional premiums (if any) to stay on the parents’ policy or whether Medicaid expansion, with no premium and no asset limit, is an option, as opposed to the cost of establishing a special needs trust and its stringent requirements. Space here does not allow an explanation of the potential merits of a special needs trust.
Health Insurance Exchanges
The ACA created a competitive marketplace, also known as a health insurance exchange, for individuals and small businesses to purchase affordable, comprehensive health insurance which will begin on January 1, 2014. Participants began enrolling on October 1, 2013. Individuals and families with incomes between 100% and 400% of the federal poverty level ($45,960 for an individual or $94,200 for a family of four in 2013) may apply for income-based subsidies to assist with coverage affordability. Likewise, small businesses will receive tax credits to assist with coverage affordability for their employees.
States may elect to establish an exchange on their own, establish an exchange in partnership with the federal government, or merely participate in the federally-facilitated marketplace administered through the US Department of Health and Human Services. So far, seventeen states and the District of Columbia have elected to establish a state-based exchange program and seven states elected to participate in a partnership exchange. The remaining states will participate in the marketplace administered by the federal government. As with Medicaid expansion, the health insurance exchanges are geared towards insuring a population that currently is uninsured.
Choosing the Best Options
Qualified special needs practitioners can counsel clients regarding the advantages and disadvantages of seeking traditional disability-based Medicaid benefits as opposed to purchasing a health insurance plan through a health insurance exchange or a Medicaid expansion program. Practitioners can also discuss with clients whether the purchase of a health insurance plan outweighs the cost and complications of establishing and administering a special needs trust.
The client’s care requirements are critical in determining whether purchasing a health insurance policy from the marketplace will provide sufficient coverage for the client’s medical circumstances. If a client requires skilled nursing care or assistance with activities of daily living, a Marketplace health insurance policy probably will be insufficient to provide for the client’s long-term care. Instead, the client’s only choice may be to establish eligibility in a traditional Medicaid program, which again includes an asset test.
In the past many individuals with disabilities either had no health insurance or were limited to two options: traditional Medicaid with very restrictive asset limits or, in some cases, Medicare. These provisions of the ACA-allowing children with disabilities to stay on their parents’ health insurance until age twenty-six, prohibiting insurance companies from denying coverage for pre-existing medical conditions, and providing affordable health insurance premiums-will ensure and expand health insurance coverage for all individuals, including those with special needs. As states decide how health insurance plans will be sold, and as regulations are developed and implemented at the state and federal level, special needs practitioners will review these developments so they can properly advise persons with special needs.
Reprinted with permission of the Special Needs Alliance – www.specialneedsalliance.org.