How Affordable Care Act Affects Individuals With Disabilities

A recent decision by the United States Supreme Court upholding Affordable Care Act subsidies has further validated the staying power of the healthcare reform that, since being signed into law in 2010, has survived 50 votes in congress and multiple challenges before the Supreme Court.

The Patient Protection and Affordable Care Act, also known as “Obamacare,” was enacted primarily to make health insurance coverage available to all United States citizens. Some of the key elements of the law – the requirement that health insurance providers cover all applicants regardless of pre-existing conditions, elimination of lifetime caps on coverage and limits to the amount of out-of-pocket expenses paid each year – specifically benefit individuals with disabilities and their families.

Prior to passage of the law, it was very difficult, and in some cases prohibitive, for individuals with disabilities to obtain private health insurance, leaving them instead dependent on public assistance through Medicaid. This poses a unique challenge, however, for disabled individuals who receive assets or have family members who give them assets as a gift or an inheritance, rendering them ineligible for financially tested public programs and unable to obtain private insurance due to their pre-existing conditions.

Fortunately, those disabled beneficiaries have been able to maintain their eligibility by setting up a Special Needs Trust. A Special Needs Trust is a very specific kind of trust that offers the option of keeping someone eligible for public benefit programs. First-Party Special Needs Trusts can be established with funds that belong to the person who is receiving public benefit programs or a Third-Party Special Needs Trust can be established with funds that belong to someone else such as one or more family members.

With the Affordable Care Act now providing the option for private medical insurance, some individuals and families are questioning whether a Special Needs Trust is necessary. In answering this question, there are several things to consider:

  1. Whether a person chooses public or private medical insurance, Special Needs Trusts include the benefit of a supplemental fund that can pay for an entire range of services and goods beyond medical care to improve someone’s quality of life. The supplemental fund, for example, can be used to pay for a home and a vehicle as well as a variety of other items like a vacation, a computer, electronic equipment, educational expenses, and ongoing monthly bills such as phone, cable, and internet services.
  2. Traditional private healthcare insurance does not cover non-medical benefits, such as assisted living, nursing home care, adult day care services or in-home or community-based managed care. A Special Needs Trust can fill these gaps.
  3. Special Needs Trusts also protect a beneficiary’s eligibility for other Means-Tested benefits such as but not limited to Supplemental Security Income, food assistance, and subsidized housing.
  4. It may be in the beneficiary’s best interest to continue with Medicaid, rather than purchasing private insurance. Careful consideration of the overall costs and benefits, including future projections, should be undertaken.

The decision to set up or maintain an existing Special Needs Trust should be carefully considered and based on an individual’s unique circumstances. For assistance or to learn more about Special Needs Trusts and the Affordable Care Act, contact The Centers. Our specialized teams can help you understand the law, the options it affords you and the benefits of establishing or maintaining an existing Special Needs Trust.