With the Affordable Care Act, also known as "Obamacare," implemented under President Barack Obama, here is how these changes to the nation's health care plan will affect families and people with special needs and disabilities.
Ever since the Affordable Care Act—also known as “Obamacare”—was passed, it seems everyone in the country is trying to make sense of its thousand pages of legal jargon. This health care plan has been challenged by public servants on both sides of the political fence and by the courts. ACA—which was enacted on March 23, 2010, then constitutionally challenged and brought in front of the Supreme Court shortly thereafter—was upheld by the Supreme Court in 2011 and will go into full effect January 2014.These reforms are expected to substantially assist some middle- and upper-income families with younger and adult children with developmental disabilities.
People with disabilities will benefit immensely in terms of health care coverage because pre-existing conditions cannot preclude one from coverage. People with disabilities have been excluded from accessing private insurance primarily because of pre-existing conditions.
Many would opt in to “affordable” premiums provided for by the new legislation rather than being on Medicaid because securing health care without a payback at death (which is required for those covered by Medicaid) and significantly better medical care are more advantageous.
More than ever, special needs families will need a financial team to help guide them through investment, legal, and tax decisions.
A Summary of the Affordable Care Act
• Coverage for people with pre-existing conditions: 86,000 Americans with pre-existing conditions have gained coverage through the Pre-Existing Condition Insurance Plan. This temporary program makes health coverage available and more affordable for individuals who are uninsured and have been denied health insurance because of a pre-existing condition.
• Eliminates annual or lifetime caps: ACA prohibits health plans from putting a lifetime dollar limit on most benefits you receive. The law also restricts and phases out the annual dollar limits a health plan can place on most of your benefits—and does away with these limits entirely in 2014.
• Dependent coverage extended to age 26: 3.1 million young adults who were uninsured have gained coverage by being able to stay on their parent’s health plan until the age of 26, giving their families peace of mind.
• Access to free preventive services: More Americans will receive wellness visits, cancer screenings, and other services that will help them get and stay healthy.
• Investing in primary care: The health care law invests in training and supporting thousands of new primary care doctors and nurses by providing bonus payments, scholarships and loan repayment, and new training opportunities.
• Community health centers: Community health centers improve the health of the nation and ensure access to quality primary health care services at more than 8,500 service delivery sites around the country. Since the beginning of 2009, health centers have increased the total number of patients served on an annual basis by 3.1 million and the number is expected to grow further to accommodate more insured Americans.
The prohibition of private health coverage from excluding people with a pre-existing condition is one of the greatest boons for the developmentally disabled to come along in a very long time, says Sheryl Frishman, attorney at Littman Krooks LLP and president of the board of directors of Westchester Arc, the largest agency serving people with developmental disabilities and their families in Westchester.
How the Affordable Care Act Affects People with Autism
The ACA plan contains important provisions for individuals with autism and related conditions and their families. Starting in 2014, individuals on the autism spectrum and families of children on the autism spectrum will have expanded access to affordable insurance options through new Affordable Insurance Exchanges and improvements in Medicaid.
At the same time, new health plans sold in the individual and small group markets, including Exchanges, will cover “essential health benefits” to help make sure that health insurance is comprehensive. Health insurers will also have annual out-of-pocket limits to protect families’ incomes against the high cost of health care services. Congress specified in ACA documentation that one of the EHB categories must be “mental health and substance use disorder services, including behavioral health treatment.” This was added to ensure coverage for individuals on the autism spectrum and for those with other developmental disabilities.
Unfortunately, in its latest guidance to the states, issued just prior to Thanksgiving 2012, the U.S. Department of Health and Human Services issued a proposed rule that could exclude access to behavioral health treatment in up to 21 states. But under the new HHS proposal, coverage of behavioral health treatment would be determined by whether a state had its own autism insurance reform law on the books by Dec. 31, 2011. Specifically, any state-mandated benefits, such as autism insurance reform laws, added after Dec. 31, 2011, cannot be part of the EHB for 2014 and 2015, under the new HHS proposal. Many advocacy groups will continue to put pressure on the Obama Administration and individual states legislatures to carry out the intent of Congress in adding “behavioral health treatment” as required care for people with autism spectrum disorders.
A total of 37 states and the District of Columbia have laws related to autism and insurance coverage. At least 31 states specifically require insurers to provide coverage for the treatment of autism. Alabama requires insurers to offer autism coverage in certain situations. Vermont amended its law to cover treatment for early childhood developmental disorders, which includes autism spectrum disorders. Other states may require limited coverage for autism under mental health coverage or other laws. Both Connecticut and New York have signed into law respective health insurance mandates prior to Dec. 31, 2011, therefore making these states eligible for “behavioral health treatment” including Applied Behavioral Analysis for autism spectrum disorders under the ACA.
How the Affordable Care Act Affects Special Needs Trusts
The fact that a person can obtain private health insurance, many attorneys and financial advisers agree, should not impact the decision concerning a supplemental needs trust otherwise known as a special needs trust. Many of the adult services available for people with developmental disabilities are accessed through eligibility for public benefits.
Health care is only one of them. Other services include housing, vocational training, day programs, etc. and are paid by means-tested public benefits. A family member looking to provide for a loved one with a disability should always consider using an SNT first, as it offers the most protection. If one does not choose to use an SNT, assets should be kept out of the name of the person with disabilities. Families must communicate effectively about their intentions to anyone thinking of providing for a loved one with a disability, especially grandparents.
Parents should save more for their child with a disability regardless of their decision to use a trust or not. There is a huge misconception that since the person with a disability should not have assets in his or her name that families should not save and should rely solely on public benefits. The point of an SNT is to allow the person with the disability to be on means-tested government benefits but still get “extras” that family members want their loved ones to have.
When you save for a child without a disability, you are typically saving to get that child through college or graduate school, maybe a wedding. For a child with a disability, a parent needs to plan to fund for a lifetime. Although parents may not be able to increase the rate of setting aside long-term funds for their developmentally disabled child, they can make sure they get the right professional advice. “I encourage families to save for the child with a disability, to use an SNT, and also consider life insurance as a way to create wealth to provide for the lifetime of supplemental needs of the child,” Frishman says. “The best [social] services in the world are not going to cover what we would want for our children in terms of quality of life.”
Consequences of The Affordable Care Act
The Affordable Care Act is a gigantic piece of legislation that has many positive attributes, though there are also unintended consequences that will most likely occur. While the amount of dollars invested in a special needs trust may shift to private health insurance for some, it is still important to consider all your options when planning for the future. Preparing for the future may take upfront resources, but we believe it will be well worth it in the end.
Managing capital for a person with special needs often requires more conservative investment strategy given the potential cash flow needs for medical expenses and the possible unknowns (such as Medicaid payback), according to Michael Sanders, president of White Plains-based Clark Dodge Asset Management. “The ACA helps bring some clarity to this potential cash flow and thereby creates freedom to invest for longer term objectives,” Sanders says. “A good understanding of life expectancy, which in many cases is atypical, can mean all the difference to maximizing a family’s assets.”
Jacqueline Prue, vice president at Clark Dodge & Co., has 25 years of private client experience working at several major investment firms. Her experience as a sibling to a brother with special needs has inspired and informed her dedication to supporting and assisting special needs families.
Lisa B. Rudley, vice president of private client services for Clark Dodge Asset Management, is responsible for business development for the special needs division and has more than 15 years of financial investment services expertise. She lives in Briarcliff Manor with her husband and three children, one of whom is diagnosed with an autism spectrum disorder. Rudley is president of the Ossining Special Education Parents Teachers Organization and is the co-founder of the National Autism Association NY Metro Westchester sub-chapter support group.
Part One of a Two Part Series. Read Part Two Here.
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