How the Affordable Care Act Affects Special Needs Planning

How the Affordable Care Act Affects Special Needs Planning

The Patient Protection and Affordable Care Act, also known as the Affordable Care Act or “Obamacare”, was designed with the objective of increasing insurance coverage for all American citizens, including those with disabilities. The health care law includes a mandate to insurance companies that they cover all applicants and offer the same premium rates for applicants, regardless of pre-existing conditions.

This is a dramatic reform for families with special needs children. Why? Because prior to the passage of the Affordable Care Act, the only viable health insurance option for their loved one with a special need was Medicaid. The cost of private insurance was simply too exorbitant for most middle class families or unattainable due to the ability of insurance companies to deny an applicant based upon a pre-existing condition (i.e., disability).

In light of the changes under the new health care law, parents and guardians of people with special needs have two major issues to address:

(a) Will their child still need Medicaid or Supplemental Security Income (SSI)?

(b) Will their child need a special needs trust?

Someone taking care of a loved one with a special need should review all of the information available on these issues and carefully make a decision on how to proceed. Do not assume that getting a private insurance policy will automatically be better, if you are currently receiving coverage from Medicaid. Compare and contrast what Medicaid provides versus private insurance.

For example, private insurance will still not cover the costs of long-term care and other services or the equipment necessary for someone with special needs. Therefore, if your loved one requires particular equipment, it may make more sense to remain with Medicaid or SSI. On the other hand, many doctors do not accept Medicaid. So, with insurance coverage, you might be able to access more doctors who could help your loved one, according to an article written by Julie Mills. Importantly, this can provide parents with access to more doctors who “specialize” in certain areas who may not be available thru Medicaid.

Regarding a special needs trust, you should definitely consider utilizing this type of trust with either private insurance or Medicaid/SSI coverage. Why? Because many people with special needs rely on services that enable them to be involved in their community and improve their quality of life. Unfortunately, these types of services don’t qualify as “medical care” so they don’t get covered by private health insurance plans. For example, in-home services such as a personal aid or assistance with daily chores (e.g., shopping, laundry, preparing meals, dressing, etc.). Private insurance policies usually do not cover these services. This is where a special needs trust would be tremendously beneficial since the funds from that trust can be used for virtually anything so it could help fill the gaps in coverage, whether that coverage is from Medicaid/SSI or a private insurance policy that’s now available to you because of the Affordable Care Act.

For more information about the special needs planning options available to you after the passage of the Affordable Care Act, take a moment to sit down and talk to an experienced estate planning attorney.