The U.S. Supreme Court ruling to uphold portions of the Affordable Care Act of 2010 (ACA) will have a profound impact on people with disabilities and those relying on Medicare. But more needs to be known about the affordability of care before determining the law's actual benefit for people with severe disabilities, according to Allsup, a nationwide provider of Social Security Disability Insurance (SSDI) representation and Medicare plan selection services.
"Access to healthcare is essential for the well-being of millions of seniors and people with disabilities," said Tricia Blazier, senior disability life planning manager for Allsup. "While the ACA is not perfect, it generally has had a positive impact for most Medicare beneficiaries. For example, it provides preventive service coverage and shrinks the prescription drug donut hole."
It also has shown promise for people with disabilities because of future provisions set to take effect through 2014. However, Blazier noted, the overall benefit is yet to be determined, with affordability of care being a significant hurdle that still needs to be addressed.
"Even with healthcare reform, many of the initial coverage options have been out of the financial reach of SSDI beneficiaries, for example, the Pre-Existing Condition Insurance Plans (PCIPs)," Blazier said. "The ruling should help resolve some of the uncertainty surrounding healthcare reform, and the broader areas of reform now can move into place. Hopefully, this means improvements to costs and coverage options to support people with permanent disabilities."
Below, Allsup reviews the key provisions on which the Supreme Court ruled and how those decisions will affect Medicare beneficiaries and people with disabilities.
The Individual Mandate
The Supreme Court ruled that the individual mandate requiring people to have coverage is constitutional. Under healthcare reform, all U.S. citizens and legal residents will be required to have qualifying health coverage starting in 2014.
For people with disabilities, this means a number of positive developments. Insurers already are required to provide coverage to children with pre-existing conditions. Starting in 2014, insurers can no longer deny coverage to anyone with pre-existing health conditions and lifetime limits will be eliminated. This is the same year that individuals will be required to have healthcare coverage and state exchanges will be operational.
People with disabilities who are awarded SSDI benefits must wait 24 months after receiving cash SSDI benefits to become Medicare eligible. Allsup has found that one-third of individuals with serious disabilities will lose their health insurance while awaiting Medicare eligibility and are unable to obtain new coverage because of costs and pre-existing conditions.
"Without the individual mandate, the cost of insurance would largely continue to be out of reach for people with disabilities," Blazier said. "We have already seen this with the PCIPs, where enrollment is lower than expected and the actual cost of coverage is nearly double what had been the anticipated cost."
PCIPs, essentially the precursors to the state exchanges required under healthcare reform, are plans that provide insurance to people with pre-existing conditions who can't get coverage elsewhere at the same market rates as healthy consumers. PCIP participation has been lower than expected and, while costs vary widely by state, each participant is expected to pay $28,944 in medical costs in 2012 more than double the expectation, according to a U.S. Department of Health & Human Services February report.
"For people who cannot afford coverage in the private market, the state exchanges which will be required to also cover people with disabilities should provide a bridge, but only if they're truly affordable," Blazier said.
The exchanges will allow individuals to compare qualified plans and provide them with information on whether they are eligible for Medicaid, the Children's Health Insurance Program (CHIP) or other programs to reduce the costs of insurance. For any citizen, especially those with physical and mental disabilities, simplifying how they go about assessing their options and eligibility for complicated programs is an important improvement.
Under the ACA, those without coverage will face a penalty that starts in 2014 of $95 per adult and $47.50 per child, up to $285 for a family or 1 percent of income, whichever is greater, and continues to increase through 2016. After 2016, cost-of-living adjustments will be applied.
Medicaid Expansion Tempered
The ACA had required states to adopt expanded Medicaid eligibility and coverage thresholds in order to remain eligible to participate in the joint federal-state program. Medicaid provides healthcare to people with low incomes and those with disabilities.
However, the Supreme Court ruled that Congress cannot penalize states that choose not to expand Medicaid. As a result, states will not lose their existing Medicaid funds if they don't comply with this expansion, which called for Medicaid in every state to cover people under age 65 with income of 133 percent of the federal poverty line starting in 2014. (The federal poverty line is $23,050 for a family of four in 2012.)
"In states where Medicaid is expanded, the lower thresholds will help many individuals who are not able to work because of a disability and have to make a daily decision between being able to afford to eat or taking medications that are essential for their conditions," Blazier said. "We know that when people have to make these types of trade-offs, it often increases healthcare costs down the road."
What ACA Now Means for People with Disabilities and Medicare Beneficiaries
Provisions of healthcare reform already offering more affordable coverage to Medicare beneficiaries and people with disabilities include:
In addition to the individual mandate and expansion of Medicaid (for those states opting for expansion) that go into effect in 2014, other key provisions that will go into effect shortly include:
However, not all provisions of healthcare reform will benefit all Medicare beneficiaries and people with disabilities. For example, starting in 2013, the threshold for itemized deductions for un-reimbursed medical expenses increases from 7.5 percent of adjusted gross income (AGI) to 10 percent of AGI. However, this is waived for individuals age 65 and older through 2016. Also in 2013, taxpayers will see increased taxes for Medicare. This includes a 0.9 percent increase in the Medicare Part A tax rate to 2.35 percent on earnings over $200,000 for individual taxpayers, and $250,000 for married couples filing jointly, and a new 3.8 percent tax on unearned income for higher-income taxpayers.
Social Security Disability & Medicare Help
Find more resources for people with disabilities and answers to questions about Social Security disability benefits at www.allsup.com, or contact Allsup's Disability Evaluation Center at (800) 678-3276.
Find answers to Medicare questions by contacting the Allsup Medicare Advisor®, which works one-on-one with individuals to help them choose the Medicare plan that best meets their needs, at Medicare.allsup.com or call (866) 521-7655.
Allsup is a nationwide provider of Social Security disability, Medicare and Medicare Secondary Payer compliance services for individuals, employers and insurance carriers. Founded in 1984, Allsup employs more than 800 professionals who deliver specialized services supporting people with disabilities and seniors so they may lead lives that are as financially secure and as healthy as possible. The company is based in Belleville, Ill., near St. Louis. For more information, go to www.Allsup.com or visit Allsup on Facebook at www.facebook.com/Allsupinc.
The information provided is not intended as a substitute for legal or other professional services. Legal or other expert assistance should be sought before making any decision that may affect your situation.