Sunday, September 6, 2009

Physical Disability v. Fiscal Disability

We received the following explanation of earning limits from our very smart, experienced lawyer who has a particular talent for simplifying & communicating the rules guiding participation in Medicaid programs. Keith & I are pretty astute and have had a reasonable amount of experience decoding legalese. We've had to read it a few times and I think the next step is drawing a diagram, LOL.

Start practicing your decoding now, it only gets more complicated!


I'm glad you asked. Here are responses as to the short-term and long-term questions:

1. Short-term: To prepare an answer, I constructed the attached spreadsheet for calculating how much income you can have under Buy-In. That in turn led me to review the new HHSC Buy-In rules, and I found that the $2,167 limit applies only to earned income. There is no limit on unearned income (such as SSDI income). That is because under the old rules, all but $674 per month of unearned income had to be paid as a premium for Buy-In coverage. The new rules cap the premium at $500 per month, but they still don't include unearned income in the income cap (250% of poverty level) on countable earned income. And the first $65 of earned income plus one-half the rest doesn't count. Therefore, bottom line, you can have a maximum of $4,399 of actual earned income (only $2,167 of which is countable), and you can have unlimited unearned income (of which you will have to pay $500 as a premium).

That puts Buy-In back in the running as a possibility, but I'm still strongly recommending you look first at StarPlus to see what level of benefits it offers. You can get into Buy-In at any time later as your earned income develops. We do still have the problem under StarPlus that any income over $2,022 per month (after deduction of medical premiums) has to be paid as a copayment; and that program counts all earned income (no deduction of $65 plus one-half the rest).

2. Long-term: Your more general question motivated me to research a Buy-In issue that has puzzled me: what does it really mean that to qualify for Buy-In you have to have a disability as defined by SSA, "except the requirement that the person be unable to engage in any substantial gainful activity does not apply."? Here is the answer I've come up with, somewhat tentatively (excerpted from my summary of Buy-In, attached):

Under the Social Security Disability rules, a person with actual gross earned income exceeding $980 per month is (with some exceptions) presumed not disabled. The above-quoted rule removes that presumption. Where does that leave us? The answer would appear to require reference to the Social Security Administration's disability determination rules, which state that person who is not currently engaging in "substantial gainful activity" as defined in the rules may or may not meet the disability definition. If not, the next inquiry is whether the person's impairments are "severe." If so, they ask whether the person has an impairment that meets or equals the definition of a "listed impairment." If the answer to that question is also "Yes," then the person meets the definition of "disabled." This may resolve the apparent paradox that one can be engaging in substantial gainful activity (making over $980 per month) as defined by the Social Security Disability rules, yet still meet the "disability" requirement of Medicaid Buy-In. Notice that an individual in this category is likely to lose the Social Security Disability benefit and, after 24 months, the Medicare benefit. However, they can still have full medical coverage under Medicaid (for a very low premium if they have no unearned income) and $4,399 per month earned income. (Footnote: The basic rule on the 5-step process is at 20 C.F.R. §404.1505. It is broken down more specifically at POMS DI 22001.001 et seq. See especially the chart at DI 22001.035. The author does not practice in the area of disability determination, and these complex rules can be difficult to apply. Therefore, it is particularly important that the planning decision in such a case be based on advice from a specialist in this practice.)

The C.F.R. and POMS provisions cited in the footnote are attached.

Bottom line, it appears you can keep Medicaid Buy-In as long as your earned income is below $4,399 per month, because your condition is clearly severe and I'm sure you have listed impairments.

Whether you can also keep SSDI income at that level of earned income is another question. If you look just at the 5-step sequential evaluation chart, it would seem not, because you would be engaging in substantial gainful activity the chart says you should be denied at the first step. However, see the attached excerpt from a treatise on disability determinations for some important conditions and exceptions. Most importantly, "impairment-related work expenses" are deducted from earned income for the purpose of determining whether you have $980 per month earned income; and there are lots of other deductions, trial work period rules, etc. From a quick reading of it, because substantial gainful activity is an exception to the rule that you keep the disability benefit as long as your impairment continues at the same level, I think that (after a trial work period) you would lose the SSDI and (after 24 months) Medicare if you had earned income on a sustained basis over $980 per month (after deductions for IRWE, etc.). However, that still leaves you with up to $4,399 per month earned income AFTER those deductions. For example, if attendant care and other IRWE costs $5000 per month, you can have up to $9,399 per month earned income.

In summary, I've found that Buy-In eligibility won't be affected by your SSDI income, and you can have up to $4,399 per month earned income while still qualifying for it. StarPlus is much more restrictive on income, essentially requiring (at your income level) that any earned income be paid as a copayment (but not counting Ruth's income or assets at all). Long-term, you can have acute-care benefits plus limited home care under Buy-In if you have as much as $4,399 per month earned income, AFTER deduction of whatever attendant care, etc. you can deduct as income-related work expenses (probably several thousand dollars per month).