As a refresher, traditional Medicare comes in four parts. Part A for hospital benefits (free). Part B pays for your doctors; the monthly premium costs $164, subtracted from their SSDI, DAC, or RIB check. Part C is commonly referred to as Medicare Advantage Plans (they replace parts A and B) but adds vision and dental. Part D is prescription drug coverage.
What are Special Needs Plans?
These are more commonly known as Medicare Advantage plans or coordinated care plans (CCP) for individuals who are:
- Institutionalized (I-SNP)
- Dual Eligible for Medicare & Medicaid (D-SNP)
- Have chronic health conditions (C-SNP)
With D-SNP, Medicare is primary, and Medicaid is always the payor of last resort. Traditional Medicaid was a fee-for-service program that tended to be very expensive for the states.
There is now a trend for states to negotiate a premium compensation rate for “Special Needs Plans” for Medicare & Medicaid Services combined.
This change will profoundly impact the quality of care available to individuals with dual eligibility. To put this in perspective, in Florida, for example, only 8% of doctors were taking Medicaid fee-for-service. However, 96% of physicians in Florida would accept Medicare reimbursement.
In addition to further complicating matters, claimants covered by two insurance programs by two different health insurance companies need clarification.
As Medicare SNP plans, we created the federal government to administer Medicare benefits; the idea was to determine how much it would cost for those plan providers to cover Medicaid services. These plans provide maximum coordination for care and support services because the same medical team can cover services provided by Medicare and Medicaid.
Once a client qualifies for Medicare, plus one of the Medicare savings program benefits administered by state Medicaid, the person can apply directly to an MA private health insurance company with dual eligible special needs plans. Via the 2010 MIPPA ACT, SSA now can automatically enroll dual-eligible clients in Medicare savings programs – POMS HI 00815.024 SSA role in Medicare saving programs (MSP) applications.
As a result, some states now allow private insurance companies’ Medicare Advantage programs to qualify a potential D–SNP client in a Medicaid MSP as an authorized state Medicaid agency for Medicaid enrollment purposes.
D-SNP advantage to Special Needs Trust beneficiaries
Before D–SNP, at the time of death of a Special Needs Trust beneficiary, we had to repay Medicaid for the fee-for-service costs under all states for all time. This results in significantly large liens after the death of the trust beneficiary. Medicaid cost in a FIDE state is now limited to repaying an additional premium to the FIDE insurer of around $200 per month over their lifetime. Without the accrual of a significant medical lien, the state no longer provides medical care.
Eliminating the Medicaid asset test
The current MSP 2023 eligibility test for a single person is that their monthly income must be $1660 or less; it’s higher in Alaska and Hawaii, and resources can be at most $10,590. If the individual is married, their monthly income can be up to $2239 or less; it’s also higher in Alaska and Hawaii, and resources cannot be more than $16,630.
States eliminating asset test
- California 2024
- New York repealed in 2008
- Arizona has eliminated the asset test for the ABD
- Nine states increased the asset test for ABD individuals
- Illinois and Washington State also have eliminated their asset test for MSP plants
Income Tests still apply.
However, suppose a client chooses to purchase a structure settlement annuity and cannot work that annuity payment stream counts as unearned income. In that case, it will disqualify them from government benefit eligibility unless the payment stream is irrevocably assigned to a Special Needs Trust.
The settlement planning community must recognize that the combination of a structured settlement annuity flowing through a Special Needs Trust will have substantial savings associated with medical coverage as the lien accrual will be a fraction of what it would be without the D-SNP providers.