NON-TRADITIONAL FUNDING SOURCES AND
FUNDING STRATEGIES FOR ASSISTIVE TECHNOLOGY
© 2003 by Neighborhood Legal Services, Inc.

Creative Ways to Access Traditional AT Funding
Sources, Some Little-Know AT Funding Sources
and Funding Strategies


James R. Sheldon, Jr., Supervising Attorney
National Assistive Technology Advocacy Project
Neighborhood Legal Services, Inc.
295 Main Street, Room 495
Buffalo, New York 14203
Tel. (716) 847-0650 ext. 262; fax 716-847-0227
TDD (716) 847-1322
Email: jsheldon@nls.org; web site: www.nls.org

April 2003

TABLE OF CONTENTS

I.        Introduction

          A.       Purpose of this Handout

          B.       Using This Handout

          C.       How You Can Help Us

II.       Ensuring Eligibility For The Traditional, Big-Five Funding Sources

          A.       Medicaid

          B.       Medicare

          C.       State Vocational Rehabilitation (VR) Agencies

          D.       Private Insurance

III.      Alternative and Little Known Programs for Funding AT

          A.       Equipment Loan Funds

          B.       The Federal Adoption Assistance Program

          C.       The Crime Victims Compensation Fund

IV.      Funding Strategies, Generally Available That Do Not Involve a Program That Funds AT In a Conventional Sense

          A.       The Flexible Spending Account Under Federal Tax Law

          B.       Creative Structuring or Restructuring of a Child Support or Alimony Agreement to Obtain or Retain SSI and Medicaid

V.       Identifying Charities That Are Potentially Available to Fund AT

 

I.        Introduction

          A.       Purpose of this Handout

                     1.       Assistive technology (AT) advocacy has traditionally focused on several key funding sources. Generally, the following five funding sources receive the greatest attention:

                                a.       Medicaid

                                b.       Medicare

                                c.        Special education programs

                                d.       State vocational rehabilitation agencies

                                e.       Private insurance plans

                     2.       These “big five” funding sources may not meet an individual's specific AT funding needs for one or more reasons:

                                a.       The individual with a disability is either not eligible for the program or not eligible for a special benefit available through the program.

                                b.       Although the individual is eligible for the program and any special benefit categories within the program, the AT device sought is not covered by the program.

                                c.        The individual is eligible for the program (and any special program category) and the item in question is covered by the program. However, the individual has not demonstrated the “need” for the item under program criteria (i.e., medical necessity, educational necessity, vocational necessity, least costly alternative, etc.).

                     3.       Where one of the big-five funding sources is not available or appears not to be available, this outline will help the AT advocate identify other potential ways to fund the AT device in question in one of four ways:

                                a.       By identifying a way to make the individual eligible for the program.

                                b.       By identifying another program that may fund the AT device.

                                c.        By identifying a generally available funding strategy to pay for all or part of the AT device. Some examples might include:

                                           (1)      The use of anti-discrimination laws, like the Americans with Disabilities Act, or

                                           (2)      The use of tax provisions, like the Flexible Spending Account.

                                d.       By identifying sources of charity, including:

                                           (1)      National charities,

                                           (2)      State and local charities,

                                           (3)      Individuals who may make donations to needy persons.

          B.       Using This Handout

                     1.       Since this outline surveys many different sources of funding and funding strategies, none of the programs or strategies is covered in great detail.

                     2.       Wherever possible, we provide citations to law, regulation, policy, web sites, or other documents that discuss the topic in greater detail.

                     3.       Using this handout as a starting point, the AT advocate or person seeking the item may need to do further research and investigation to determine whether any of the ideas presented will work in their individual case.

          C.       How You Can Help Us

                     1.       This document represents a first attempt to identify, in one place, many of the “best-kept secrets” in the AT funding world.

                     2.       It is based on the insights of our staff at the National AT Advocacy Project and on input we have received from many individuals in our national AT advocacy network.

                     3.       If you can provide additional information about one of the funding sources or strategies discussed below, or if you can provide us with information about a funding source or strategy that we did not discuss, please contact the author by phone, fax, email, or mail (contact information is on the title page).

II.       Ensuring Eligibility For The Traditional, Big-Five Funding Sources

We start with this strategy because your best bet is always to find a way to qualify for one of the big-five funding sources and then satisfy that funding source that you qualify for funding of the AT device in question. Based on our experience at the AT Advocacy Project, Medicaid continues to be the the most important AT funding source among the big five. It is also the one funding source that offers the most opportunity in terms of creative eligibility approaches. For three of the other big-five funding sources, however, we will offer at least one comment that could serve as the beginning of an AT funding strategy.

NOTE: If the individual is eligible for one of the big-five funding sources, but the AT device is still denied, an administrative appeal or even litigation may be in order. Strategies for pursuing those appeals will not be discussed in this outline.

          A.       Medicaid

                     1.       For persons with disabilities, there are several paths to potential eligibility#1:

                                a.       Through receipt of SSI in 39 states and the District of Columbia.#2

                                b.       Through the optional “medically needy” category, which allows an individual to spend down to the state's monthly income eligibility threshold if countable income is above that threshold.

                                c.        Through an optional home and community-based services (HCBS) waiver.

                                d.       As a child adopted pursuant to the federal Adoption Assistance Program. See section III.B, below.

                                e.       Through a state's optional Medicaid Buy-In program for individuals who are working.

                     2.       Obtaining or retaining SSI as ticket to Medicaid in most states

                                a.       Creative structuring, restructuring of a child support agreement or alimony agreement.

                                           (1)      Strategy is to minimize what counts as income or a resource under the SSI program to ensure SSI and automatic Medicaid eligibility.

                                           (2)      See section IV.B, below, discussing the use of these strategies.

                                b.       Creative structuring, restructuring of parental wages and benefit package to minimize deemed income to the child under 18.

Example: Darlene Green is a widow with three minor children, Chris, age 11, Carey, age 13, and Jason, age 16. Jason has cerebral palsy and receives a monthly SSI check of $442 with automatic Medicaid. Medicaid has paid for prescription medications, therapy not covered by private insurance, an $8,000 power wheelchair that must be replaced soon, a $6,000 augmentative communication device, and the co-payment amounts required under the private insurance policy. Keeping Medicaid is critical!

Jason's SSI amount is based on his mother's gross wages of $24,000 ($2,000 per month), working 60 percent time.#3 Darlene's employer would like her to work more hours, either 80 percent time ($32,000 per year/$2,667 per month), 90 percent time ($36,000 per year/$3,000 per month) or full-time ($40,000 per year/$3,333 per month). Darlene is willing to accept a reduction in Jason's SSI check, but cannot let go of the Medicaid. What should she do?

NOTE: Darlene will continue to pay $250 per month toward a family health insurance policy with her employer paying the remaining $500 toward the $750 per month policy.

                                           (1)      The monthly “break-even amount” (i.e., the amount of parental income at which Jason's SSI check is reduced to $0) is $2,885 per month. At that amount of gross monthly wages, Jason will lose his SSI check and lose his automatic entitlement to Medicaid.

                                           (2)      Four strategies that Darlene can pursue:

                                                     (a)      Accept the increase to 80 percent time. Jason's SSI check will be reduced by about $333 (i.e., by $1 for every additional $2 that Darlene makes). Jason will get an SSI check of $109 and automatic Medicaid.

                                                     (b)      Accept the 90 percent time job if the employer will restructure her salary and benefit package: paying her $2,800 per month/$33,600 per year in wages (just below the monthly break-even amount for SSI) and reducing Darlene's family health contribution to $50 per month. Since the SSI program will only count wages and not employer-funded health insurance, this allows Jason to retain a $43 per month SSI check and automatic Medicaid.

                                                     (c)      If the employer offers a flexible spending account pursuant to section 125 of the Internal Revenue Code (see section IV.A, below), accept the 90 percent time job and have $250 deducted each month and put into the flex account to pay the health insurance premiums. This pre-tax deduction reduces the taxable income from $3,000 to $2,750 per month, reducing the the monthly income “deemed” by the SSI program to Jason as well. Jason will now be eligible for a $68 monthly SSI check and automatic Medicaid. See POMS SI 00820.102 (providing that pre-tax wages set aside in a flexible spending account, or what the SSI program refers to as a “cafeteria plan,” will not be counted as income by the SSI program).

                                                     (d)      Wait until Jason's 18th birthday to accept additional hours and pay. At age 18, the SSI program will no longer consider any part of Darlene's income and resources as available to Jason. At that point, he will be eligible for a full SSI check and automatic Medicaid no matter how high his mother's salary is.

                     3.       Accessing the Medicaid Buy-In program, if it exists in your state.

                                a.       This provision is part of the Balanced Budget Act of 1997, as amended by section 202 of the Ticket to Work and Work Incentives Improvement Act of 1999. See 42 U.S.C. §§ 1396a(a)(10)(A)(ii) and 1396o.

                                           (1)      It allows persons who meet SSI's medical definition of disability to qualify for Medicaid even if the person has never received SSI and is currently earning a considerable annual wage.

                                           (2)      States have leeway to establish income eligibility limits at between 250 and 450 percent of federal poverty guidelines, after deducting all applicable SSI exclusions from earned income (including the special 50 percent exclusion from earned income). This will allow persons with disabilities to receive Medicaid with wages exceeding $40,000 per year, with earned income limits in excess of $70,000 in states opting for the highest income thresholds.

                                           (3)      For more detail on the buy-in and why it is so important to individuals with disabilities, see Work Incentives for Persons with Disabilities Under the Social Security and SSI Programs (August 2002), available from the National AT Advocacy Project in hard copy or through our website at: www.nls.org/wkboklet.htm.

                                b.       As this is written, the buy-in exists in the following 25 states: Alaska, Arkansas, California, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Maine, Minnesota, Missouri, Mississippi, Nebraska, New Hampshire, New Jersey, New Mexico, Oregon, Pennsylvania, South Carolina, Utah, Vermont, Washington, Wisconsin, and Wyoming. A very similar program, approved as a section 1115 waiver, is being implemented in Massachusetts. See the Social Security Administration (SSA) website at: www.ssa.gov/work/ResourcesToolkit/Health/states.html.

                                c.        The following eight states have Medicaid buy-in programs that are in various states of pre-implementation: Arizona, Colorado, Nevada, New York, Oklahoma, Rhode Island, Texas, and Virginia. Id. In New York, for example, the legislation is in place, but regulations and policies must be published to implement the program.

                                d.       Many of the remaining states have either legislative proposals pending or advocate interest in the buy-in identified. Id.

          B.       Medicare

                     1.       While not viewed as comparable to Medicaid as an AT funding source, a wide range of AT devices can be funded through Medicare Part B under its durable medical equipment provisions.

                                a.       Part B is an optional provision of Medicare and is subject to a $58.70 premium in 2003.

                                b.       A person with a disability becomes eligible for Medicare, including the optional Part B, after 24 months of entitlement to Social Security Disability Insurance benefits.

                     2.       One little known provision allows an SSDI beneficiary to become immediately eligible for Medicare, without going through the 24-month waiting period, if he or she has a diagnosis of ALS, commonly known as Lou Gehrig's disease.

                     3.       Two special programs, which are underutilized, allow your state's Medicaid program to pay the $58.70 month Part B premium if certain low-income criteria are met. These are commonly known as “Medicare Savings Programs.”

                                a.       Qualified Medicare Beneficiaries program (QMB, also known as “Quimby”): Requires every state to pay Medicare premiums, deductibles and coinsurance for disabled individuals who meet certain income and asset restrictions. In order to be eligible for QMB, a person has to:

                                           (1)      Be currently enrolled in the Medicare program;

                                           (2)      Have gross monthly income within limits set for your state (e.g., in New York, no more than $773 a month, or $1,035 for a couple);

                                           (3)      Have assets below the limits set for your state (e.g., in New York, $4,000 for an individual and $6,000 for a couple).#4

                                b.       Specified Low-Income Medicare Beneficiary program (SLMB, also known as "Slimby") program: Requires states to pay the Medicare Part B premium only. In order to be eligible for SLMB a person has to:

                                           (1)      Be currently enrolled in the Medicare program;

                                           (2)      Have gross monthly income within limits set for your state (e.g., in New York, no more than $923 per month or $1,237 for a couple) ;

                                           (3)      Have assets within limits set for your state (e.g., in New York, below $4,000 for an individual and below $6,000 for a couple).

                                c.        For links to state websites related to QMB and SLMB, go to the federal Medicare website at: www.medicare.gov/Contacts/Related/MSPs.asp.

          C.       State Vocational Rehabilitation (VR) Agencies

                     1.       Title I of the Federal Rehabilitation Act, 29 U.S.C. §§ 701 et seq., and its implementing regulations, 34 C.F.R. Part 361, allow state VR agencies to establish a financial needs test for the great majority of the services it funds, including the more expensive services like college tuition, rehabilitation technology, and AT. See 34 C.F.R. § 361.54(b).

                     2.       Beneficiaries of either SSI or SSDI benefits automatically are held to meet any needs-based criteria established by the State VR agency. Stated another way, they are totally exempt from any financial needs test. Id. § 361.54(b)(3)(ii).

                                a.       So long as the individual receives any amount of either SSI or SSDI benefits, he or she become eligible for all VR services without cost to the individual.

                                b.       The income and resources of responsible relatives, including parents and spouses, are irrelevant to the VR agency's financial need determination.

                     3.       In light of this linkage of SSI to financial eligibility for state VR agency services, all of the analysis in the Medicaid section (section II.A, above) and the discussion of creative family law settlements (see section IV.B, below) become relevant.

          D.       Private Insurance

                     1.       Continuation coverage under COBRA

                                a.       The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), 29 U.S.C. §§ 1161 et seq., applies to employers who customarily employed 20 or more employees on a typical business day in the preceding calendar year.

                                b.       COBRA provides an option for continuing insurance coverage for employees and their dependents after a lay off or job termination.

                                           (1)      Under COBRA, the employee or dependent has a minimum of 60 days to elect continued coverage. Id. § 1165.

                                           (2)      The employee or dependent is generally entitled to continued coverage, at their own expense, for a period of 18 months following the termination.

                                           (3)      The 18 months of continued coverage is extended to 29 months for individuals who are determined to be disabled under the SSDI or SSI programs when employment is terminated or when continuation coverage begins. To extend coverage to 29 months, the employee must provide notice of his or her disability before the 18 month continuation period expires. Id. § 1162(2)(A).

                                           (4)      COBRA limits the premium to 102 per cent of the group rate paid by the former employer and permits payment in monthly installments. Id. §§ 1162(3)(A) and (B). COBRA does not, however, apply to employees who are terminated as a result of gross misconduct. Id. § 1163(2).

                                c.        COBRA protects individuals during the period they are between jobs or awaiting Medicare eligibility. It protects an employee's spouse and dependent children when they lose eligibility under the group health plan as a result of the employee's death, entitlement to Medicare, termination of employment or reduction of work hours. Id. §§ 1163, 1167(3). COBRA also protects a spouse in the event of divorce or legal separation and protects dependent children who lose their right to coverage as dependants because they get older or marry. Id. §§ 1163(3) & (5).

                     2.       Continued coverage for young adult dependents with disabilities

                                a.       A typical insurance policy will cover dependent children only through a certain age or until they complete college.

                                b.       For example, one of the larger HMOs in New York covers dependent children until age 19 if they are no longer in school and will cover a college student through age 25.

                                c.        Many of these policies may have special provisions to cover adult disabled children indefinitely.

                                           (1)      Check any relevant policy to see if this kind of provision exists.

                                           (2)      Also, check the policy for what it uses as a definition of disability. The SSI/SSDI standard of disability will commonly appear as the standard.

                                d.       If one of these provisions exists, there will be no need to pay extra money to continue coverage under the COBRA provisions.       

III.      Alternative and Little Known Programs for Funding AT

          A.       Equipment Loan Funds

                     1.       Many states operate some kind of AT or equipment loan program, offering low-cost loans to persons with disabilities who meet the criteria of the program.

                     2.       These programs have typically originated in one of two ways:

                                a.       Many of the newest programs have been funded as “alternative financing” programs under Title III of the AT Act. Currently, 16 states receive funding in this manner. See RESNA website at: www.resna.org/AFTAP/state/index.html.

                                b.       Many of the oldest programs were established with funds other than Title III funds. Currently, 23 states have programs established without Title III funding. See RESNA website at: www.resna.org/AFTAP/state/otherloans.html.

                     3.       Typical way these programs operate:

                                a.       The loan program will offer one of three methods to deliver low-interest financing for AT: a revolving loan, a loan guarantee, or an interest buy down. Some programs will offer two of these methods, some all three.

                                b.       Dollar limits for loans. These will vary, typically between $10,000 and $30,000, with some programs having no set dollar limit.

                                c.        Interest rates will vary from a 0 percent rate to an 8 percent rate. Some offer interest rates below the federal prime lending rate.

                                d.       The term for repayment is typically in a range of 5 to 7 years, but some programs offer a longer repayment period for home equity loans.

                     4.       The most common items purchased with loan funds:

                                a.       Transportation-related, including vehicle modifications

                                b.       Computers and costs associated with computer access

                                c.        Mobility equipment, including wheelchairs and scooters

                                d.       Equipment for daily living, such as environmental control units

                                e.       Hearing aids, vision aids

                     5.       For more detail and links or contact information for programs in more than 35 states, see the RESNA website for its Alternative Financing Technical Assistance Project: www.resna.org/AFTAP/index.html.

          B.       The Federal Adoption Assistance Program

                     1.       Federally funded adoptions are governed by the federal Adoption Assistance and Child Welfare Act of 1980. 42 U.S.C. §§ 620-28, 670-676.

                     2.       States are authorized to enter into adoption assistance agreements with parents “who adopt a child with special needs.” Id. §§ 673(a)(1)(B), 675(3).

                     3.       For children with disabilities, the child is held to meet the criteria as a child with special needs if the child meets all the eligibility requirements for SSI. Id. § 673(a)(2)(A)(ii).

                                a.       For such children, the state “may make adoption assistance payments to such [adoptive] parents directly through the State agency or through another public or nonprofit agency, in amounts to be determined.” Id. § 673(a)(1)(B)(ii).

                                b.       These payments are commonly referred to as “adoption subsidy payments.”

                                c.        States have leeway to make adoption assistance payments based on individual circumstances, but they cannot be higher than foster care payments would have been if the child had remained in or entered a foster home. Id. § 673(a)(3).

                                d.       In the case of adopted children with disabilities, states may continue the adoption assistance payments under the child is 21. Id. § 673(a)(4).

 

NOTE: The law specifically provides that a child with a disability will not be considered a child with special needs unless: (a) the state has determined that the child cannot or should not return to the home of his or her natural parents; (b) the state has determined that because of the child's disability (or other special factors, such as ethnic background) it is reasonable to conclude that the child cannot be adopted without providing adoption assistance; and (c) a reasonable but unsuccessful effort has been made to place the child without providing adoption assistance or Medicaid. Id. § 673(c).

                     4.       Automatic Medicaid eligibility. If the following criteria is met, the adopted child with a disability is automatically eligible for Medicaid [Id. § 673(b)(1)]:

                                a.       The child meets the criteria of “child with special needs” by meeting the eligibility requirements for SSI.

                                b.       There must be an adoption assistance agreement in effect, even if adoption assistance payments are not being made pursuant to that agreement.

                     5.       Automatic Medicaid Eligibility, at state option

                                a.       States may choose to provide Medicaid coverage for children who are receiving benefits from state or local (non-federal) adoption assistance programs. 42 U.S.C. §§ 1396a(a)(10)(A)(ii), 1396d(a)(I).

                     6.       Additional services to adoptive parents will vary from state to state.

                                a.       These may be available through one of two sources: the state Title 20 plan, a comprehensive social services plan describing services which are available to all adopted children; or through optional state adoption assistance benefits. This section will discuss the latter.

                                b.       The adoption assistance agreement is to include any additional services that are to be provided to the family or child. Id. § 675(3)(A).

                                c.        The federal law does not provide any federal funds for these additional services, but states may make additional benefits available with state or local funds.

                                           (1)      Advocates will need to become familiar with what special services are available under state law and policy.

                                           (2)      In Minnesota, for example, adopted children are entitled to a range of items that would be categorized as AT, including [see Minnesota's adoption subsidy rule 9560.0083]:

                                                     (a)      Specialized communications equipment

                                                     (b)      Ramps

                                                     (c)      An accessible shower

                                                     (d)      Elevated bathtubs and toilets

                                                     (e)      Blinking lights and tactile alarms as alternate warning systems

                                                     (f)       Lowered kitchen work surfaces

                                                     (g)      Disability-related modifications to a vehicle

          C.       The Crime Victims Compensation Fund

                     1.       This program, operated through each state by a federal grant, is authorized by the Victims of Crime Act of 1984 (VOCA), as amended, 42 U.S.C. § 10601. Final guidelines were published at 66 Fed. Reg. 27158 - 27166 (5/16/01).

                     2.       The VOCA authorizes federal financial assistance to states (up to 40 percent reimbursement for approved expenditures) for the purposes of compensating and assisting crime victims, funding training and technical assistance, and serving victims of federal crimes.

                     3.       For updated information on the crime victims program, see website of the National Association of Crime Victims Compensation Boards: www.nacvcb.org. For links to the websites of most of the state Crime Victims Boards, see: www.nacvcb.org/statelinks.html.

                     4.       Eligibility guidelines for victim compensation

                                a.       Compensable crimes. States must include crimes whose victims suffer death or physical injury as result of:

                                           (1)      Terrorism

                                           (2)      Driving while intoxicated

                                           (3)      Domestic violence

                                           (4)      Intentional or attempted defacement of any religious real property because of: its religious character; or the race, color or ethnic characteristics of any individual associated with the religious property.

                                b.       Compensable expenses.

                                           (1)      VOCA mandated expenses. At a minimum states must award compensation for a list of expenses when they are attributable to a physical injury resulting from a compensable crime. These include:

                                                     (a)      Medical expenses, including eyeglasses and other corrective lenses, dental services, prosthetic or other devices (see 42 U.S.C. § 10602(d)(2))(no definition of “prosthetic and other devices” appears in the federal law or guidelines)

                                                     (b)      Mental health counseling and care

                                                     (c)      Lost wages

                                                     (d)      Funeral expenses

                                           (2)      Optional allowable expenses. States may offer compensation for other types of expenses as authorized by state law, regulation, or established policy.

                                                     (a)      These include “[n]ecessary building modification and equipment to accommodate physical disabilities resulting from a compensable crime.”#5 (No definition for these terms appears in the federal law or guidelines.)

                                c.        Payor of last resort. The federal guidelines provide that the compensation program is the payor of last resort “with regard to federal or federally financed programs.”

                     5.       AT advocates may need to forcefully advocate for AT, on behalf of crime victims, under either the mandated “prosthetic or other devices” clause or the optional “necessary building modification and equipment” clause.

                                a.       A quick review of state websites suggests that many states do not even mention these two categories of compensation in its policies, application forms, or other literature describing the program.

                                b.       Many of the state programs offer some specific appeals process if requested compensation benefits are denied.

                     6.       According to the National Association of Crime Victims Compensation Boards website, the average maximum compensation per case, allowed by states, is about $25,000.

IV.      Funding Strategies, Generally Available That Do Not Involve a Program That Funds AT In a Conventional Sense

          A.       The Flexible Spending Account Under Federal Tax Law

                     1.       These accounts, known as “flex plans,” “cafeteria plans,” or “125 plans,” are authorized by section 125 of the Internal Revenue Code.

                     2.       If an employer offers this alternative to its employees, the employee may designate a certain amount of pay that is then set aside, pre-tax, to cover items or expenses not otherwise covered by health insurance.

                                a.       This can be used to cover traditional medical costs such as health insurance premiums, co-payments on doctor visits and prescription drug purchases, AT-related purchases, and uncovered services such as chiropractic visits.

                                b.       It can also be used to cover expenses that have nothing to do with medical needs, such as dependent child care, adoption expenses, and parking fees.

                     3.       Sample list of disability-related expenses, including AT-related expenses that can be deducted if paid by the employee#6 :

                                a.       Braille-books & magazines

                                b.       Chiropractors

                                c.        Co-insurance amount you pay

                                d.       Co-pay amount you pay

                                e.       Contact lenses & eyeglasses plus eye examination

                                f.        Cosmetic surgery medically necessary and recommended by Physician (restricted by IRS regulations)

                                g.       Cost of operations and related treatments

                                h.       Crutches

                                i.         Deductible medical coverage amounts you pay

                                j.         Dental fees

                                k.        Prescription drugs

                                l.         Medical supplies

                                m.      Hearing devices & batteries

                                n.       Home improvements motivated by medical considerations

                                o.       Physician recommended swimming pool or spa equipment costs (is restricted by IRS regulations)

                                p.       Telephone, special for deaf

                                q.       Television audio display equipment for deaf

                                r.        Wheelchair

                     4.       Benefits to individuals who use the flexible spending plan.

                                a.       Through tax savings, an indirect subsidy toward the cost of necessary medical expenses, including expenses for AT devices. The actual tax savings will depend on the tax payer's tax bracket (or what is known as the marginal tax rate, i.e., the rate on the last dollar earned).

                                b.       By reducing countable income for IRS purposes, this will also work to the tax payer's advantage with many needs-based programs that use taxable income as their yardstick for eligibility.

                                c.        Example #1: Let us return to the example of Darlene Green and her son, Jason, who were first described in section II.A.2.b, above. As described there, Ms. Green was able to pay her $250 per month share of family health insurance premiums through her flex plan. By doing so, she was able to benefit in two ways:

                                           (1)      Here income taxes would be reduced as her annual income would be reduced by $3,000.

                                           (2)      More importantly, because the SSI program will not count this income when determining Jason's SSI eligibility, he will remain eligible for SSI and, with it, automatic Medicaid in his state.

                                           (3)      So, the Green family will benefit in three ways: reduced tax liability, retention of SSI or a higher SSI payment level, and Medicaid eligibility (to pay for a range of items described earlier).

                                d.       Example # 2: Candida Perez is married to Juan who recently became disabled in a car accident. Juan is not eligible for SSDI benefits because he did not have a sufficient work history. He applied for SSI (his state would pay the 2003 federal benefit rate of $552 with no state supplement). He was denied SSI because of his wife's income.

In Juan's situation, the SSI break-even amount for Candida's monthly gross earnings (the amount at which the deemed income would reduce his potential SSI check to $0) would be $1,755 per month. Candida earns just more than that amount, $1,785 gross per month and may be up for a promotion next year.

What can Candida do? After consulting her flex plan administrator, she starts a flexible spending account. In it, she has $300 per month deducted from her monthly paycheck: $150 for her share of health insurance, $100 for parking, and $50 to cover a range of co-payments and uninsured medical expenses. How has the flex plan helped Candida and Juan?

                                           (1)      By reducing the family's taxable income by $300 per month ($3,600 per year), there will be a tax savings.

                                           (2)      By reducing Candida's monthly gross income from $1,785 to $1,485, Juan goes from not being eligible for SSI to eligibility for a $135 monthly check.

                                           (3)      Juan is also now eligible for automatic Medicaid in his state. Medicaid will pay for prescription co-pays (his state covers that optional service), a power wheelchair he desperately needs, and any other services not covered by the private insurance plan.

                                           (4)      Because he is now an SSI recipient, Juan will also be eligible for any needs-based assistance from his state VR agency without regard to the income of his spouse. The VR agency will pay for a number of expenses to allow Juan to pursue a vocational goal: tuition and other college expenses; a ramp to allow Juan to get into and out of his home; and vehicle modifications if he can come up with the money to purchase a van.

          B.       Creative Structuring or Restructuring of a Child Support or Alimony Agreement to Obtain or Retain SSI and Medicaid#7

                     1.       The purpose of this strategy is twofold:

                                a.       To have disability-related and other needs met through the child support or alimony obligation without decreasing the SSI amount that would otherwise be due.

                                b.       Through obtaining or retaining eligibility for SSI, we ensure eligibility for Medicaid (in most states) providing a funding source for various medical expenses, including AT.

                     2.       The underlying strategy is to avoid the direct payment of cash to or for the benefit of the SSI beneficiary.

                                a.       Any cash or in-kind contribution covering food, clothing or shelter will have the affect of reducing, or even eliminating SSI payments.

                                b.       By directing that payments from a parent or spouse be paid directly for items other than food, clothing or shelter, we ensure that those payments will not be counted as income to the SSI applicant or recipient.

                                c.        Example: Let us return to the case involving Darlene Green and her son, Jason Green, who has cerebral palsy. Let us also assume that Ms. Green is working 80 percent time and earning $32,000 per year or $2,667 per month. As we noted above, at this rate of income (and with two other minor children) Jason's SSI check will be $109 (assuming his state pays the 2003 federal benefit rate of $552 per month). Without going through all the budgeting, the SSI program will consider (or “deem”) $463 of Ms. Green's monthly wages as available to Jason. After $20 of that amount is disregarded, Jason's countable income is $443 and his SSI check will be $109 ($552 - 443).

                                           (1)      Assume that Jason's parents are about to get divorced and that Jason's father is prepared to pay $450 per month as child support for Jason. The SSI program will count one third of that amount ($150) which, combined with the income deemed to Jason from Ms. Green ($443) will give Jason countable monthly income of $593 per month, i.e., more than the SSI base rate of $552. The affect of this will be to make Jason ineligible for an SSI check and the automatic Medicaid that goes with it.

Is there an alternative approach that would keep Jason eligible for SSI and Medicaid?

                                           (2)      The attorney representing Ms. Green learns that she has car payments of $200 per month and car insurance payments of $100 per month for a compact car. Jason is only able to travel in that car when two adults lift him into the front seat and put his folded manual wheelchair into the trunk. There is not way for Jason to travel in the car if he is using his power wheelchair.

                                           (3)      The attorney proposes and Mr. Green accepts an alternative to the $450 per month cash payment for child support. The father will, instead, send checks directly to vendors/creditors as follows:

                                                     (a)      $400 per month to a bank which will loan money for Ms. Green to purchase a van that is specially modified for Jason to use in his wheelchair;

                                                     (b)      $50 to the car insurance company toward the cost of insurance that will now be $150 per month.

                                           (4)      Upon the implementation of this alternative child support settlement, a number of things will happen:

                                                     (a)      The family will be able to purchase a modified van that can now be used to transport Jason in his power wheelchair without the need for assistance from another adult.

                                                     (b)      Ms. Green will actually come out $200 ahead in the family budget as she will no longer be responsible for any vehicle loan payment and Jason's father will pay for the increase in insurance.

                                                     (c)      Jason will retain SSI at the same amount per month.

                                                     (d)      Jason will retain Medicaid, a source of payment for many items.

V.       Identifying Charities That Are Potentially Available to Fund AT

This should be viewed as the most fluid of all the strategies discussed in this outline, as charities can change their mission, change their AT funding criteria, or even decide to fund AT for the first time without any need for approval from any legislative or policy-making body. AT advocates should become familiar with national, statewide, and local charities. The internet can be a valuable resource for finding a wide range of charitable organizations.

Due to limitations of time, the author was not able to complete this section of the handout, but invites readers to send in any national charities they are aware of that can be used to fund AT.

1 For a comprehensive discussion of this subject see Medicaid and Persons with\ Disabilities: Special Medicaid Eligibility Provisions for Persons with Disabilities. This\ training outline is available through the National AT Advocacy Project.

2 The 11 states, known as section 209(b) states, which use their own eligibility\ criteria which differs from SSI eligibility criteria include: Connecticut, Hawaii, Illinois,\ Indiana, Minnesota, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma, and\ Virginia. See 42 U.S.C. § 1396a(f); Social Security Program Operations Manual\ System (POMS) SI 0175.020.

3 We assume that Jason lives in a state the pays the 2003 SSI Federal Benefit\ Rate of $552 with no state supplement. We also assume that Jason resides in one of\ the 39 states (or the District of Columbia) which provides automatic Medicaid eligibility\ to SSI recipients.

4 Based on the author's incomplete research, it would appear the resource limits\ are nationwide, with some state to state variance in the income test. This is somewhat\ difficult to determine as not every state's website has been updated to include current\ figures.

5 The Texas program allows up to $50,000 in the case of “catastrophic injuries\ resulting in a total and permanent disability” for such things as making a home\ accessible, job training, and vocational rehabilitation.

6 The source of this list is a publication available on the website of P&A\ Administrative Services (no connection to Protection and Advocacy agencies), the\ administrator of the flex plan for Neighborhood Legal Services, the author's employer. See www.padmin.com/forms/Valuable_Benefit.html.

7 For a very extensive discussion of these issues see SSI and the Family Law\ Attorney (Aug. 1999), a part of our original Funding of AT booklet series. Hard copies\ are available from the National AT Advocacy Project or can be obtained on our website:  www.nls.org/ssifmaty.htm.

 

Return to Table of Contents | NLS Home Page | Feedback | Search the NLS Website