Medicaid, jointly funded by the federal government and individual states, is arguably the most important public benefit available to individuals with disabilities. While eligibility guidelines, services and payment rates vary widely, the federal government requires that all state Medicaid programs pay for physician visits, prescriptions, hospitalization, lab work, x-rays and nursing home care. In addition, all states must provide periodic health screenings and treatment to Medicaid-covered children under the age of six.

Although Medicaid is available only to those having limited income and assets, once an individual with disabilities reaches the age of 18, family assets are no longer considered in determining the eligibility of a child for Medicaid, making it an important consideration in all special needs estate planning.

Any Mississippi resident who receives any payment of Supplemental Security Income (SSI) benefits is automatically eligible for Medicaid services. The income limit is $698 for an individual and the resource (assets) limit is $2,000. Assets and income of the other family members can be “deemed” to a child under age 18 and thereby disqualify children of many families.

In addition, Mississippi (like most states) has established Medicaid “waiver” programs with less stringent income/asset requirements. The most common of these are intended to support the needs of individuals with severe disabilities who are eligible for long-term, institutionalized care, but whose families prefer that they remain in a community setting. Typical services include home aides, day habilitation, family respite and therapeutic services. Mississippi has obtained federal waivers to use Medicaid funds to offer services in “home and community-based” programs designed to help recipients avoid institutionalization. These include: (1) Elderly and Disabled Waiver, which provides respite, adult day care, meals, homemaker and other services for older persons with deficits in at least 3 of the activities of daily living; (2) Physically Handicapped (Independent Living) Waiver, which provides personal care attendant services to physically disabled persons; (3) Intellectually/Developmentally Disabled (ID/DD) Waiver, which provides “day-habilitation”, respite care, attendant care, and speech/physical/occupational therapies to persons who would, without such services, require the level of care in an Intermediate Care Facility for the Mentally Retarded; (4) Assisted Living Waiver, which provides homemaker, attendant care, medication supervision, social and recreational therapies, transportation and other services to residents of certain personal care homes and other congregate living facilities who would otherwise require placement in a nursing facility; and (5) Traumatic Brain Injury/Spinal Cord Injury Waiver, which provides services to persons with traumatic brain or spinal cord injuries necessary to help them avoid institutionalization. There are other eligibility criteria, services and population limitations on these groups. The monthly income limit for these groups is generally the nursing home income limit ($2,094 in 2012) for an individual. The countable resource (assets) limit is $4,000 for the disabled person and $113,640 for the non-disabled spouse.

One of the most important features of a “special needs trust” is that, if the trust is properly drafted and administered, the assets and money in the trust will not be considered resources of the disabled beneficiary, thereby protecting his or her eligibility for SSI and/or Medicaid benefits.

Waiver waiting lists are notoriously long, and it can take years for an individual to obtain services. Parents should, therefore, place their child on appropriate waiver lists as early as possible.

The current tone of the budget discussions taking place at all levels of government poses a serious threat to Medicaid in general. It appears inevitable that services will be trimmed and that waiver lists will continue to grow. This is ironic, since community-based care is more economical than the institutional living which is its alternative.

This troubling situation underlines the importance of early family planning for the financial security of loved ones with disabilities. Establishing a third party special needs trust (SNT) to which family and friends can contribute funds without endangering a child’s eligibility for government programs is a means of supplementing bare-necessity services that are likely to be even more modest in the future.