For families with significantly disabled children, healthcare is a lifelong concern. With the Trump administration’s threats to already limited Medicaid expansion, many are struggling to meet their children’s needs – and they’re taking a variety of precautionary steps. From opening ABLE plans to couples divorcing to reduce their income level, families bankrupted by caring for medically frail children are worried about what lies ahead.
Medicaid is the United States’ safety net program for disabled individuals, and in recent years, several states voted to expand this coverage to those below the income cut-off for ACA tax credits. The Trump administration, however, largely opposes such expansion, which is why his guidelines suggest states require Medicaid recipients to show that they are working, seeking work, or, at a minimum, participating in community service activities.
In January 2018, Kentucky was the first state to implement this approach, though children receiving Medicaid, pregnant women, and the medically frail are exempt from the work requirement.
It’s not just changes to Medicaid that have parents of disabled children on edge, but the entire structure of this safety net system, with the core problem being the simple fact that Medicaid is means tested. That means that, in order to qualify, recipients must have minimal income, savings, and assets. Of course, disabled children don’t have any income or assets, so this shouldn’t be a problem, but because their health insurance is based on their parents’ income, many are initially covered by private insurance – and quickly hit lifetime coverage caps. Yet, they still may not qualify for Medicaid. This is where Medicaid planning becomes vital.
Families that know they may need to access Medicaid for their children – or themselves – may consult lawyers who can help them determine the best ways to meet asset caps and income limits. This includes advising clients regarding establishing a trust, prepaying expenses, and otherwise spending down assets. For parents of disabled children, Medicaid planning can mean forcing themselves into poverty.
In order to meet the strict financial requirements associated with Medicaid, families are turning to a variety of ingenious strategies. For example, the Fernandez family of Newton, MA funded a special needs trust using their life insurance to ensure that their autistic son, Alex, would have the care he needs after they’re gone. In order for Alex to still qualify for Medicaid and SSI, however, this trust needed to be funded with third-party assets – in other words, assets that don’t belong to Alex. As a disabled person, Alex isn’t allowed to have more than $2,000 in personal assets, even though he is technically an adult now. For parents of underage children, such asset limits, which are slightly higher for couples, mean the entire family, including any non-disabled siblings, must live at this poverty level, putting everyone at risk.
Small Steps Forwards
For now, programs like tax-exempt ABLE plans give families small ways to plan for their disabled children’s future, but the biggest problem is keeping medically frail children alive that long when their health insurance is threatened. Insurance caps on private plans and time spent spending down and rearranging assets could be better spent attending to existing healthcare needs. Perhaps the greatest irony of the situation, though, is that while programs like Medicaid, SNAP, and SSI are designed to lift people out of poverty, for families of disabled children, they are the very thing that can drive them into the red. It’s a precarious position to be in, and one that punishes society’s most vulnerable.