The Colorado Lawyer
Vol. 34, No. 5 [Page 33]
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Access to Justice
To Capture the Wild Pickle and Other Adventures in Medicaid Eligibility
by Joel R. Hayes, Jr.
Joel R. Hayes, Jr. is a senior attorney with Colorado Legal Services, Inc., and may be reached at (303) 866-9385; firstname.lastname@example.org.
When it comes to Medicaid eligibility, former lower-wage workers are sometimes treated worse than those who never worked. To understand why, it is helpful to know some basic rules about Social Security benefits: Social Security Retirement ("SSR") and Social Security Disability Insurance ("SSDI") benefits are based on amounts paid into Social Security by a wage earner. SSR recipients qualify for Medicare, as do SSDI recipients after two years of eligibility.1 Medicare does not generally cover prescription drugs (among other things), although it will offer limited coverage starting in 2006.2
In contrast, Supplemental Security Income ("SSI") is a federal welfare benefit (paying up to $579 per month in 2005) for low-income elderly, blind, or disabled citizens,3 and the Old Age Pension ("OAP") is a welfare benefit paying up to $604 per month for low-income elderly (60 or older) Coloradans.4 Federal and state law require Colorado to provide Medicaid to all SSI and most OAP recipients.5 However, Colorado has opted not to provide Medicaid to disabled or elderly people who have incomes over the SSI or OAP limits.6 Thus, persons even one dollar above the SSI or OAP limit are cut off from Medicaid.
Can anything be done for the low-income SSDI or SSR recipient who needs prescription drugs or other treatment not covered by Medicare? The answer may be to "Pickle" them! This article explains how to use what is known as the Pickle Rule (as well as other lesser-known eligibility rules) to obtain Medicaid eligibility for clients.
The Pickle Rule is named after former U.S. Representative James ("Jake") Pickle. In 1976, Pickle objected to an annual Cost of Living Allowance ("COLA") for Social Security benefits because that small increase in income would cost some people their Medicaid eligibility. He was concerned with the sizable population who receives some SSR or SSDI benefits, and because their pension is less than the SSI cap for unearned income, receives some SSI benefits as well. The small increase from a COLA might disallow recipients Medicaid benefits that are worth much more.
As a result of Pickle’s concern, a provision was included in the federal Medicaid statute that excludes COLAs from countable income for purposes of Medicaid eligibility for former SSI recipients.7 Thus, SSI recipients who receive a COLA from an SSDI or SSR benefit that puts them over the income cap for SSI would be able to keep Medicaid benefits when they lose SSI.8 (This generally occurs in January of each year when new COLAs apply.) These cases are called "classic pickles." Because this part of the rule is well known by Medicaid technicians, Colorado Legal Services ("CLS") staff rarely see problems with these cases.
As noted, Colorado’s OAP pays a benefit of up to $604 to low-income people 60 or older. Because it predated SSI, it is considered a mandatory state supplement to SSI.9 Thus, most OAP recipients who are elderly (65 or older) or who are disabled are eligible for Medicaid.10 The Pickle Rule also extends to mandatory state SSI supplements. As a result, anyone who received Medicaid due to OAP eligibility and who loses OAP because of a COLA should not thereby lose Medicaid benefits. Problems with "senior pickles" also are rare in practice.
More challenging is the case of a former SSI recipient who lost SSI when SSDI payments began and who, if all COLAs received since were deducted, would now be eligible for SSI or OAP.11 This occurs often because many SSDI recipients once received SSI, either because SSI must be computed first for retroactive SSDI awards12 or because SSDI does not start until six months after disability occurred.13 (In contrast, SSI can start the month after someone becomes disabled, or as soon thereafter as an application is filed.)14
COLAs are deducted for determining Medicaid eligibility for these former SSI recipients, so they will become eligible for Medicaid when the SSI or OAP income cap is raised to exceed their initial SSDI grant. Generally, an SSDI monthly payment is composed of the initial grant, plus COLAs for each year thereafter. SSI levels are increased annually. OAP levels are changed at state option.
For example, assume a person received SSI for several months in 1998, until her SSDI payments of $580 per month began. She would have lost SSI and Medicaid when the monthly SSDI payments started. With COLAs since then, her SSDI is approximately $700, so she is not SSI-eligible. However, before any of her COLAs, her SSDI was only $580, which is below the current SSI income cap of $599. Thus, if she is otherwise eligible (that is, her impairments continue and she meets the $2,000 resource limit), she would then be eligible under the Pickle Rule.
Better yet, if she is 60 years of age or older, she can be pickle-eligible if her original (pre-COLA) SSDI payment was $624 or less, because that is the current OAP income cap. (If she had SSDI of $600 in 1998 when she lost SSI, and remains disabled, she would be eligible for OAP now, but for her COLAs.) Thus, many people become pickle-eligible when they turn 60 based on the higher OAP income standard.15
No one tracks these former SSI/current SSDI recipients for Medicaid eligibility. They are generally not aware of their own potential eligibility. Thus, they can be considered "wild pickles." A sampling in 2002 by CLS’s Denver office found that more than 25 percent of applicants for legal services under 125 percent of the federal poverty income level and who had Medicare (but not Medicaid) appeared to be eligible for Medicaid under the Pickle Rule.16
Other Medicaid Eligibility Rules for
Former SSI Recipients
Similar rules protect former SSI recipients who lose SSI due to: (1) earned income;17 (2) receipt of "Disabled Adult Children" SSDI benefits;18 or (3) receipt of "Disabled Widow(er)" SSDI benefits.19 In addition, women with breast or cervical cancer may qualify for Medicaid if their income is below 185 percent of poverty.20 Finally, recipients may qualify for Medicaid long-term care with income up to three times the SSI payment level, as long as they demonstrate that they need nursing home level care.21 The resource limit for all adult Medicaid recipients in Colorado (except women with breast or cervical cancer) is $2,000 ($3,000 for couples), not including the home and other necessities.22
Medicare Cost-Sharing Programs
Many people ineligible for Medicaid may still qualify for limited Medicaid programs that pay only Medicare-related charges. These programs are: Qualified Medicare Beneficiary ("QMB"), Special Low Income Medicare Beneficiary ("SLMB"), and Qualified Individuals ("QI-1").23 The 2002 sampling by CLS also found that more than 30 percent of the applicants appeared to be eligible for these Medicare cost-sharing programs.
QMB provides payment of Medicare premiums, co-pays, and deductibles for Medicare recipients who have income below 100 percent of poverty (in 2005, $818/month for one recipient or $1,090/month for two) and resources below $4,000 for one or $6,000 for two.24 SLMB pays only Medicare premiums, for Medicare recipients below 120 percent of poverty (in 2005, $977/individual or $1,303/couple).25 QI-1 likewise pays Medicare premiums, but for Medicare recipients up to 135 percent of poverty (in 2005, $1,097/individual, $1,464/couple), enrollment can be capped by the state.26 All three programs allow resources up to $4,000 for one recipient and $6,000 for a couple, and allow SSI earned income incentives.27
Classic pickles, senior pickles, and wild pickles represent just some of the Medicaid-eligible people who need legal help to obtain medical care. Just obtaining QMB to pay for Medicare-related costs could make a critical difference to clients. CLS staff are available to assist bar associations, individual attorneys, or other groups who want to help low-income persons obtain Medicaid under the Pickle Rule or the other potential eligibility rules discussed above.28
1. Retirees must have reached full retirement age. SSDI recipients with end-stage renal disease or amyotrophic lateral sclerosis (ALS), a/k/a Lou Gehrig’s disease, may qualify immediately for Medicare. 42 U.S.C. § 1395c; 42 C.F.R. § 406.
2. Medicare Prescription Drug Improvement and Modernization Act of 2003, Pub.L. No. 108-173. The Act also authorizes the implementation of the Medicare-Approved Drug Discount Card Program, which offers a more immediate drug discount, albeit one of questionable value. For further analysis, see http://www.familiesusa.org and http://
3. SSI has a $20 general disregard, plus exclusions of the first $65 and one-half of the remainder of gross earned income. 20 C.F.R. §§ 416.1124(c)(12) and 416.1112(5) and (7). Thus, a person with unearned income of $599 or higher will be disqualified. Resources may not exceed $2,000, excluding such property as a home, car, and furnishings. 20 C.F.R. §§ 416.1205 and 416.1210.
4. 9 C.C.R. 2503-1 at § 3.360.44. OAP has a $20 general disregard, as well as earned income disregards similar to SSI. 9 C.C.R. 2503-1 at § 3.360.51(A) and (B). This means that unearned income may not exceed $624 for OAP eligibility. However, a 2004 state policy letter takes the position that the $20 disregard no longer applies to new OAP eligibility determinations, but rather only to payment computation, after eligibility is determined. CDHS Letter AIS-04-03-P (May 17, 2004). If true, this would appear to violate 9 C.C.R. 2503-1 at § 3.360.51(B), 20 C.F.R. §§ 416.2025(a) and 416.1124(c)(12), which require OAP to allow the same exclusions from countable income as SSI. See Shartran v. Beye, 903 P.2d 1235, 1239 (Colo.App. 1995).
5. 42 U.S.C. § 1396a(a)(10)(A); CRS § 26-4-201(i). Because the Colorado OAP is considered a supplement to SSI, elderly (65) or disabled OAP recipients also qualify for Medicaid under this rule. CRS § 26-4-201(j). Medicaid is a voluntary program, but once a state opts to participate, it is required to comply with federal requirements. See Hern v. Beye, 57 F.3d 906, 913 (10th Cir. 1995).
6. CRS §§ 26-4-201(i) and -301. This option is known as the "medically needy" option. See Dodge v. State Dept. of Social Services, 657 P.2d 969 (Colo.App. 1982).
7. 42 U.S.C. § 1396a (note); 10 C.C.R. 2505-10 at § 8.110.21. Given the difficulty in finding, much less understanding, this federal statutory provision, this article refers to the state regulation. See also Centers for Medicaid and Medicare Services ("CMS") Publication, "Groups Deemed to be Receiving SSI for Medicaid Purposes" (June 12, 2002), available at http://www.CMS.gov, and SSA POM SI 01715.015. (POMs are program operations manual sections for Social Security Administration ("SSA") workers and are available at http://www.ssa.gov.)
8. The relevant Colorado regulation states: "Medical assistance must be provided to a person who was receiving financial assistance under SSI or a mandatory state supplementary payment and who lost such assistance because of the . . . (COLA) paid in July 1977 or after." 10 C.C.R. 2505-10 at § 8.110.21, available at the Colorado Dept. of Health Care Policy and Financing website: http://www.chcpf.state.co.us.
9. CRS § 24-4-201(j); 10 C.C.R. 2505-10 at § 8.110.21.
10. OAP recipients 60-64 years of age who are not disabled receive a more limited state medical benefit. CRS § 26-2-117; 10 C.C.R. 2505-10 at §§ 8.940 et seq.
11. The state of Colorado grants Medicaid where: "The person lost OAP and/or SSI due to the receipt of Social Security benefits . . . and would be eligible for OAP and/or SSI except for the . . . (COLA’s) received since . . . [the loss of SSI]." See 10 C.C.R. 2505-10 at § 8.110.21(c). Although this section and 42 U.S.C. § 1396a (note) require that the recipient be eligible for and receive SSI and SSDI in the same month, the person need not literally receive both SSI and Social Security checks in the same month. There is a one-month lag in OASDI payments, which are not sent until the month after entitlement, while SSI payments are paid in the month of entitlement. See 42 C.F.R. § 435.135; 51 Fed. Reg. 12326 (April 10, 1986); Bonneyman, "Medicaid Eligibility in a Time Warp," 22 Clearinghouse Rev. 120 (June 1988).
12. 20 C.F.R. § 404.408b; SSA POMS S1 02006.005.
13. 20 C.F.R. § 404.315(a)(4).
14. 20 C.F.R. §§ 416.200 and 416.501.
15. The "wild pickle" analysis assumes that no other changes, other than COLAs, have been made to the SSR or SSDI payments. (Although rare, SSA does occasionally amend benefit amounts because of errors or where someone continues to work enough after retirement to increase payment amounts.) This analysis also requires the original SSDI monthly payment amount. If that amount is unknown, but the year that SSI was terminated is known, counsel may want to use the "pickle reduction factor" advocated by Gordon Bonneyman, the pioneer in this area. His formula approximates total COLAs based on reported date of SSDI eligibility, allowing an estimate of eligibility. It also assumes no changes other than COLAs. Additionally, it does not consider OAP eligibility, and must be updated annually. See Bonneyman, supra, note 11 (chart), along with the updated chart published annually at http://www.povertylaw.org.
16. Informal review of casework for Colorado Legal Services ("CLS") by James Dean and the author in 2002. The data were compiled by Rachel Mordecai, Notre Dame Law School, Legal Intern (summer 2002). Some clients did not follow through with CLS staff, so only potential eligibility could be determined.
17. Social Security Act § 1619(b), 42 U.S.C. §§ 1382h(b)(1), 1396a(a)(10)(A)(i)(II), and 1396d(q); 10 C.C.R. 2505-10 at § 8.110.16.
18. 10 C.C.R. 2505-10 at § 8.110.28.
19. This protection only lasts until the recipient qualifies for Medicare Part A benefits. 10 C.C.R. 2505-10 at § 8.110.291. The regulation actually says the claimant must be "at least 50 but not 65 years old by January 1, 1991," but the state has assured CLS that the state does not interpret it literally. 10 C.C.R. 2505-10 at § 8.110.291(C).
20. CRS § 26-4-301(q); 10 C.C.R. 2505-10 at § 8.715.
21. 10 C.C.R. 2505-10 at § 8.110.30.
22. Id. at § 8.110.51.
23. Id. As noted, supra, note 16, some clients did not follow through, in part because these benefits were limited to Medicare cost-sharing, so eligibility is estimated.
24. 10 C.C.R. 2505-10 at § 8.111.
25. Id. at § 8.122.
26. Id. at § 8.123.
27. The QMB regulations note the resource limits and allow for earned income exclusions. 10 C.C.R. 2505-10 at § 8.111. The SLMB rules mention neither. 10 C.C.R. 2505-10 at § 8.122. The QI-1 rules note the resource limits only. Presumably, the inconsistencies are unintended. Be aware that many CLS clients who apply for pickle Medicaid instead are given QMB or SLMB, and often fail to understand the difference.
28. E.g., the author, a specialist in this area, may be reached at the CLS office: (303) 866-9385 or email@example.com.
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