Social Security Lump Sums Create Medicaid Problems

 

    Newsweek reports on a problem associated with Social Security that Social Security policymakers probably aren't aware of. The woman in the story had to fight for years for Social Security disability benefits. Finally, she was approved and paid but immediately lost her Medicaid. For SSI purposes, when she received that lump sum of back benefits, she had six months to spend it but there's no six month grace period for purposes of Medicaid. She became ineligible immediately. 

    There are things you can do to spend this sort of lump sum rapidly that give you lasting improvement in your life while retaining Medicaid or at least minimizing your period of ineligibility. You can pay off debts, repair your home which is probably in disrepair since you've been so poor, you can pay down your mortgage, replace worn out appliances and furniture, purchase new clothes, visit family members you haven't seen in years, etc. Just don't give any of it away! The problem is that most people who receive a large sum of money from Social Security or from some other source, such as an inheritance or personal injury settlement, don't see the problem coming and have no idea how to cope with it when it arrives. Often, they give the money to a relative or friend to hold for them which is much worse that useless.

There's Also The Problem That They May Not Have The Money To Put Away

     From the New York Times:

New state-based accounts that let disabled people work and save money without risking the loss of government aid are slowly catching on. But advocates say millions more people with disabilities could be taking advantage of the accounts.

Forty-one states and Washington, D.C., now offer the accounts, which first became available in 2016. The tax-free accounts, known as ABLE accounts, are named after the Achieving a Better Life Experience Act, the 2014 law that created them. ...

But just a tiny fraction of people eligible for the accounts are using them so far.

More than 40,000 ABLE accounts were open by the end of March, with combined balances of about $225 million, said Michael Morris, executive director of the National Disability Institute, a nonprofit advocacy group. But the institute estimates that as many as eight million people are eligible under current rules, which limit the accounts to people who became disabled before age 26. ...

Part of the challenge in fostering more growth is that ABLE accounts have nuanced rules, and states have limited budgets to promote the accounts, said JJ Hanley, director of the Illinois ABLE program. When people do hear about the accounts, she said, they are often skeptical that opening one truly won’t jeopardize their benefits. ...

     ABLE was always about helping well to do parents put away money to help their disabled offspring without jeopardizing their SSI and Medicaid. Most families just don't have the money to put away and there's little to be done about that.
     My thought all along is that ABLE is OK but that we need reforms to remove some of the harshness in the SSI and Medicaid income and resources rules. That would help far, far more people and is long overdue. ABLE targeted a small amount of relief from these rules at a few relatively well off people while ignoring the large number of people who suffer under antiquated income and resource limits.