Volume V      Issue 4                                                                              Summer 2000
Copyright 2000, Neighborhood Legal Services, Inc.

Newsletter of the Assistive Technology Advocay Project
A Project of Neighborhood Legal Services, Inc · 295 Main Street, Room 495 · Buffalo NY 14203
(716) 847-0650 · (716) 847-0227 FAX · (716) 847-1322TDD atproject@nls.org · www.nls.org
Supported by NYS Office of Advocate for Persons with Disabilities,TRAID Project, a Project
Funded by The National Institute on Disability and Rehabilitation Research, U.S. Department of Education.
Opinions expressed herein are not necessarily those of either TRAID or NIDRR

This article, and one scheduled for our next issue, form a two-part series on Medicaid. They replace a three-part series, published in our November 1995, December 1995 and January 1996 issues of IMPACT. Because our newsletter is now longer than it was in 1995-96 (eight pages, compared to four pages), our two-part series will allow us to provide both updated and more in-depth information.

        Medicaid, also known as Medical Assistance, is an important program for persons with disabilities. It can pay for many items, including doctor and hospital bills, mental health treatment, prescription drugs, physical, occupational and speech therapy, home health care, and transportation to and from the medical provider. Medicaid can also pay for assistive technology (AT), such as power and custom-made wheelchairs, augmentative communication devices, and many other items.

        The Medicaid rules are a complicated maze of federal and state laws, regulations, court decisions, and policy that often are quite confusing. [See 42 U.S.C. §§ 1396 et seq.; 42 C.F.R. §§ 430 et seq.; N.Y. Social Services Law §§ 363 - 369; and 18 N.Y.C.R.R. Parts 360 (eligibility) and 358 (fair hearings).] This article provides a basic guide to Medicaid, with a more in-depth discussion on a number of special eligibility rules for persons with disabilities. Our next newsletter (Fall 2000) will describe how to obtain funding for AT, or what Medicaid calls durable medical equipment, through Medicaid’s prior approval process. Part II will also discuss how to appeal adverse decisions through both fair hearings and court appeals.

ADMINISTRATION OF MEDICAID

        Medicaid is a program for persons with limited income and resources. An applicant who meets eligibility criteria is "entitled" to Medicaid benefits. The amount spent by Medicaid on a particular recipient is generally not governed by any overall spending limit or cap. Eligibility for each service or item of equipment is governed by the person's need for it.

        The federal, state and local governments pay for Medicaid. It is administered at the federal level by the U.S. Department of Health and Human Services and at the state level by the State Department of Health (DOH). DOH also administers numerous policies governing Medicaid, including the Medical Assistance Reference Guide (MARG), Administrative Directives (ADMs), Informational Letters (INFs) and Local Commissioner's Memoranda (LCMs). Medicaid advocates should contact DOH to obtain the MARG and to be put on the mailing list for the ADMs, INFs and LCMs. At the local level, the county Departments of Social Services administer Medicaid, except in New York City where it is run by the Human Resources Administration. In this article both are referred to as the local DSS. Any local policies must be consistent with federal and state law, regulations and policies.

SSI AND WELFARE RECIPIENTS QUALIFY FOR MEDICAID AUTOMATICALLY

        In New York, Supplemental Security Income (SSI) recipients and recipients of cash welfare benefits [i.e., Temporary Assistance to Needy Families (TANF)(formerly the Aid to Dependent Children program), Safety Net benefits (formerly the Home Relief program)] qualify for Medicaid automatically. The applicant for TANF or Safety Net benefits must indicate on their application that they are applying for both cash benefits and Medicaid. As explained below, some former SSI recipients will also qualify for automatic Medicaid.

        Persons who do not receive SSI or welfare benefits, including recipients of Social Security Disability Insurance (SSDI) benefits, must apply for Medicaid through the local DSS, either in person or by mail. The applicant must satisfy both the categorical and financial eligibility requirements. The remainder of this section focuses on Medicaid eligibility criteria and approval/denial procedures for those persons with disabilities who do not qualify for SSI or welfare benefits.

        All applicants must establish categorical eligibility. An applicant is in the federal, "SSI-related" category if they meet the federal (i.e., SSI) standard of disability. Similarly, an applicant is in the federal, "Aid to Dependent Children (ADC) related" category if they meet the federal, ADC criteria (persons under age 21 and their caretaker(s), and pregnant women). (Note: Even though the ADC program has been replaced by the TANF program, the ADC-related category still exists for Medicaid purposes.) These applicants are in what is often referred to as the "Medically Needy" category. So, for example, an SSDI recipient who does not receive SSI will still be "SSI-related" based on their disability. A single parent who does not receive welfare benefits will be "ADC-related" based on their caretaker relationship to a child under age 21. [For a complete discussion of all categories of persons potentially eligible for Medicaid, see the Medical Assistance Reference Guide.]

        The Medicaid budgeting rules for those in the SSI-related or ADC-related categories can be very complicated and are beyond the scope of this article. If a person appears to be in both the SSI and ADC-related categories (e.g., a single parent with a disability), the local DSS must consider eligibility under both the SSI and ADC-related rules. It must then allow the applicant to choose the budgeting method which is most advantageous.

        As discussed below, the applicant who is in a federal category of assistance qualifies for the more generous federally-related income and resource guidelines, the more generous income deductions and, unlike those in a state category of assistance (e.g., adults who do not meet the disability standard), may qualify for Medicaid with a spenddown.

        All applicants must verify monthly income and the value of any resources they own. This chart illustrates New York's 2000 income and resource limits based on household size (these limits go up as household size increases):

1 person                                      $600                                              $3,600
2 people                                      $875                                              $5,250
3 people                                      $884                                              $5,300
4 people                                      $892                                              $5,350
5 people                                      $992                                              $5,950

        All income must be verified, including earned, unearned and in-kind income. The rules for determining what income will be counted are very complicated. Some sources of income will be excluded in part, other sources will be excluded altogether. Therefore, we encourage people to apply for Medicaid, even if their income appears to be over the limit.

        Those persons with excess income, i.e., income above the monthly limit, may qualify for a spenddown. For example, Jack is disabled, lives alone and receives $720 per month in SSDI benefits. Medicaid will disregard the first $20 of his income as an unearned income exclusion, leaving him with $700 in countable income or $100 more than the one-person monthly limit. Jack can qualify for Medicaid if he pays the first $100 each month of his medical expenses. He can also qualify after he incurs $100 in medical expenses. Medicaid will now pay for his remaining expenses. If Jack has medical bills each month that are well above $100, his local DSS should allow him to pay his $100 spenddown directly to the Medicaid office.

        All resources must be verified, including liquid and non-liquid resources. Certain resources, like a person's home or vehicle, will be exempt. The amount of available resources held by the household cannot be in excess of those allowed by Medicaid. When in doubt it is always best to apply for Medicaid, even if resources appear to be over the limit.

        Under state regulations, the applicant is the primary source for providing information to support the Medicaid application. Failure to provide DSS with requested information can result in a Medicaid denial. If the applicant has made a reasonable effort to provide information from a third party, but has been unable to obtain it, he or she should tell the DSS caseworker immediately and request their assistance. Medicaid recipients must immediately report changes in income, resources and household composition.

        Medicaid must inform the applicant of its decision to approve or deny the application within 30 days of the application date. If eligibility is dependent upon disability status, the agency has 90 days within which to notify the applicant of its determination.

        If the application is approved, the notice must inform the applicant of its approval, the application date, the period the applicant is covered by Medicaid, and any limitations on coverage. If the application is denied, the notice must inform the applicant of its denial, the application date, the reason(s) for the denial, and the regulations allowing the agency to deny the application. The notice must also inform the applicant of the right to a fair hearing.

        A Medicaid recipient is entitled to a similar written notice if the local DSS seeks to terminate benefits or change the terms of eligibility (e.g., impose a spenddown). Also, if a recipient's right to a particular service, such as home health care, or an item of equipment, such as a wheelchair, is subject to prior approval, the person is entitled to a similar notice when that service or item is approved or denied.

        A typical denial will be one based on excess income. For example, Laura has $770 in Veterans disability benefits. After the first $20 of this unearned income is disregarded, she will have $750 in countable income or $150 above the $600 per month limit for a household of one. The local Medicaid office should send Laura a notice advising her that: 1) she has excess income of $150, and 2) that she can obtain or retain Medicaid by meeting the $150 per month spenddown. To make a complicated issue even more confusing, some local agencies send out two separate notices: one denying the application based on excess income, and a second notice (often sent much later) advising the person they qualify for Medicaid with a spenddown. Advocates must be aware that any person with a disability who is in a federal category, i.e., SSI or ADC-related, will be entitled to a spenddown when they have excess income.

        The Medicaid notice, discussed above, must advise the applicant or recipient that they have 60 days within which to request a fair hearing. The person can request a hearing by calling the number or writing to the address listed on the notice. Even if it appears that the matter can be resolved through an informal conference, we recommend requesting the hearing to preserve that right. Part II of this two-part series will discuss the fair hearing process in much greater detail.

        This section presents several special rules that allow persons to obtain or retain Medicaid: despite a loss of SSI; despite income or resources above Medicaid limits; or by reducing countable income. We also provide some important citations to the relevant laws, regulations and policies. Be aware that in many cases a more thorough review of the relevant laws, regulations and policies will be necessary.

        SSI provides cash benefits to persons with limited income and resources. In New York, an SSI recipient qualifies for Medicaid automatically. In several situations a person who loses SSI due to increased income can continue on automatic Medicaid.

        A person who loses SSI when they become entitled to Social Security widow's or widower's disability benefits will retain automatic Medicaid if SSI eligibility would continue in the absence of the Social Security benefits. Eligibility continues only for so long as the person remains ineligible for Medicare -- a period of 24 months following eligibility for Social Security. 42 U.S.C. § 1383c(d).

        Recipients of Social Security Child's Insurance Benefits, often referred to as Disabled Adult Child's (DAC) benefits, can continue automatic eligibility for Medicaid if, after July 1, 1987, they lost SSI due to entitlement to or an increase in DAC benefits. If the person would still be eligible for SSI if the DAC benefits or increase in DAC benefits were ignored, he or she is eligible for continued Medicaid. 42 U.S.C. § 1383c(c); 95 Administrative Directive (ADM) 11; 92 Local Commissioner's Memorandum (LCM) 41; 95 LCM-28.

        Consider James, a man in his 30s with mental retardation, who receives $535 in monthly SSI. His father dies and James becomes eligible for $720 in Social Security DAC benefits. James will lose SSI benefits because his DAC income is too high. Since he loses SSI, ordinarily he would now have to apply separately for Medicaid and pay a $100 per month spenddown to retain eligibility. Under these facts, however, James is eligible for continued automatic Medicaid without a spenddown.

        This provision was the subject of a statewide, class action lawsuit. McMahon v. Dowling, filed in 1991, challenged the failure of the State Department of Social Services (the agency which administered Medicaid in 1991) and the Social Security Administration to properly implement this provision. A partial settlement of McMahon was approved in 1995, giving thousands of New Yorkers the right to be put back on Medicaid and, in many cases, receive reimbursement for out-of-pocket expenses (including spenddowns paid to retain eligibility). For more information on McMahon, call attorneys for the plaintiffs, Edwin J. Lopez-Soto, the Greater Upstate Law Project at 800-522-4369, or Judith Munger, Heritage Centers at 716-856-4201

        If an SSI recipient works, the first $65 they make each month is not counted (or $85 if there is no unearned income). The SSI check is then reduced by $1 for every additional $2 they make in gross monthly wages. For a person who lives alone, SSI eligibility will cease if they make $1,283 or more per month in 2000. This is because countable income, at this rate of pay, would be equal to the SSI living alone rate of $599 per month (i.e., $1283 - 85 = 1198 ÷ 2 = $599).

        Section 1619(b) allows automatic Medicaid to continue if a person loses SSI due to increased wages. If the person is still disabled and would be eligible for SSI if the wages were not counted, Medicaid should continue under this provision. In New York, the 1999 income limit is $31,907 in wages per year. (The 1619(b) income limit for 2000 was not yet announced as this article was written.) The income limit can be even higher if medical expenses are high enough. 42 U.S.C. § 1382h; 20 C.F.R §§ 416.266 - .269; Social Security Program Operations Manual System (POMS) SI 02302.010B. [For a more thorough discussion of 1619(b), see Benefits Management for Working People with Disabilities: An Advocate's Manual (2000), pp. 35-36 (can be ordered through the AT Advocacy Project); see also IMPACT, Jan.-Feb. 1999, The SSDI and SSI Work Incentives: Funding Assistive Technology to Make Work a Reality.]

        If a person is not eligible for SSI or welfare benefits (or eligible for continued Medicaid as a former SSI recipient under one of the special provisions discussed above), they must apply separately for Medicaid. A single individual with a disability will be eligible, under 2000 rules, if countable income is no more than $600 per month and resources no more than $3,600. If income is more than $600 they will qualify only with a spenddown. If countable resources are above $3,600 they will not qualify for Medicaid.

        The Medicaid rules for disregarding income are nearly identical to SSI's rules. The first $20 of unearned income is disregarded. The following amounts are disregarded from earned income or wages: the first $65 (or $85 if there is no unearned income); impairment related work expenses; one half of remaining earned income; blind work expenses, for persons who are legally blind; up to $1,200 per calendar quarter, but not more than $1,620 per year for a full-time student under age 22; and any income set aside in a Plan for Achieving Self Support. [For a listing of all income disregards, see 18 N.Y.C.R.R. § 360-4.6(a).]

        Consider June, who is deaf and receives $650 in SSDI benefits. After disregarding $20, $630 of this income will be counted by the SSI program, which is too high to receive an SSI check. It is also $30 more than the $600 income limit for Medicaid, meaning that June will have a $30 per month Medicaid spenddown. June goes to work and earns $465 gross per month. The Medicaid program will disregard the first $65 which June earns and disregard an additional 50 percent, leaving her with $200 in countable wages ($465 - 65 = 400 ÷ 2 = $200). Her total countable income is now $830 per month ($630 unearned + $200 earned), making her spenddown $230 per month. Thus, as her income went up by $465, her spenddown increased by $200. June’s countable income could be reduced further if she were to put all or part of this $230 into an approved Plan for Achieving Self Support (see immediately below)

        The PASS is best known as an SSI work incentive. It allows a person to take income or resources that would be counted by SSI and exclude the money by using it to help the person achieve a vocational goal. SSI's PASS has, for example, been used to take SSDI benefits or wages and use the money for items like tuition, computer equipment, or a vehicle. When the PASS is approved, the person qualifies for SSI without counting the excluded income. Typically, this allows the person to qualify for a higher SSI check. [See Benefits Management manual, pp. 37-68; see also the May-June 1997 issue of IMPACT, SSI's Pass: Where Do Things Stand after 1996 Changes to Policy and Procedure.]

        Medicaid’s PASS: A PASS can also be used to exclude income or resources that would be counted by Medicaid. 18 N.Y.C.R.R. § 360-4.6 (a) (2) (xxiii). For example, consider Mary who is spinal cord injured. She receives $970 in SSDI benefits each month. After the first $20 of her SSDI is excluded, Mary's monthly income is $350 above the one-person Medicaid limit of $600.

        Mary proposes to set aside $250 per month ($3,000 per year) in a PASS to save toward the purchase of a modified van and a laptop computer to pursue a career in accounting. If approved by Medicaid, Mary's countable income is reduced from $950 to $700 and her spenddown is reduced from $350 to $100 per month. If Mary sets aside $350 in an approved PASS her spenddown will be eliminated altogether. Mary can also reduce her countable resources below the $3,600 limit by designating part of her savings toward PASS expenses.

        A PASS can fund a wide range of items, including child care, equipment or supplies to start a business (including a business operated from the home), and modifications to vehicles or buildings to allow use by a the person with a disability. So long as the cost is connected to the long-term vocational goal, it should be allowed under Medicaid's PASS.

        Medical expenses incurred or paid by a program of the state, county or city must be counted as medical expenses under the spenddown provisions. 42 U.S.C. § 1396a(a) (17)(D); 18 N.Y.C.R.R. § 360-4.8(c)(1); 91 ADM-11. Examples of such programs are: the Physically Handicapped Children's Program (PHCP), programs administered by the Offices of Mental Health (OMH) or Mental Retardation and Developmental Disabilities (OMRDD), the Aids Drug Assistance Program (ADAP), and the Child Health Insurance Program (CHIP). Medical expenses paid by public school districts, counties or municipalities on behalf of children with handicapping conditions are specifically mentioned in 91 ADM-11 as qualifying under this provision.

        How might this provision work? Consider the case of Kevin, age 13, who has cerebral palsy and receives speech, physical and occupational therapy at his public school as special education services. Kevin lives with his mother and, based on his mother’s income, he is not eligible for SSI and is eligible for Medicaid with an $900 per month spenddown. We learn that the special education program incurs $650 per month for the therapies mentioned above and also incurs $200 per month in expenses as payments the school makes for an augmentative communication device which it purchased for Kevin. These $850 in school-based medical expenses will reduce the spenddown to $50 per month. This means that for $50 per month, Kevin’s mother can obtain Medicaid coverage for him. This will now provide a payment source for a power wheelchair, prescription drugs, doctor visits, occasional stays in the hospital, home health care, and a range of other services. (Note: If Kevin’s mother was required to contribute for premiums in an employer-provided health insurance plan, those payments would further reduce the spenddown. For example, if the insurance payments were $50 or more per month, the spenddown would be eliminated.)

CONCLUSION

        This newsletter has summarized basic Medicaid eligibility rules. It also summarized some special Medicaid rules which apply to persons with disabilities. Many of these special provisions are either not well-known or are under-utilized. In many cases, persons who appear to be ineligible for Medicaid can use these special rules to establish eligibility or to drastically reduce a Medicaid spenddown. Advocates, persons with disabilities and others who work with them need to become familiar with these provisions. They also need to become familiar with the special Medicaid waiver programs which will be the subject of a future newsletter.

        Do you have decisions of interest relating to assistive technology in the following areas? Medicaid, Medicare, Vocational Rehab, VA, Special Education, Physically Handicapped Children’s Program, Private Insurance, etc.

        Other advocates can benefit from your experience. If you have fair hearing decisions or are involved in or have completed litigation in these areas, we want to know about it.

Medicaid Part II: The Prior Approval Process for Funding Assistive Technology; Appealing Adverse Decisions

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