ABLE Accounts and Working People with Disabilities

Means-Tested Medicare Support and ABLE Accounts for the Working Beneficiary

This section covers two means-tested programs that help to limit out-of-pocket expenses for Medicare Part B and Part D services.

Medicare Savings Programs (MSPs): Limiting Out-of-Pocket Part B Expenses for Beneficiaries Who Work and Have an ABLE Account

Each of four MSPs pay for Part A and/or B premiums, with one also paying for Part B deductibles and copayments. Eligibility is based on an individual’s income and resources (resource limits cannot be below a federally authorized amount, with some states setting higher resource limits and some states opting not to have resource limits). MSPs are administered through each state’s Medicaid program. See,  https://www.medicaid.gov/federal-policy-guidance/downloads/cib031821.pdf*  for information on income limits for the four MSPs: the Qualified Medicare Beneficiaries (QMB) program, the Selected Low-income Medicare Beneficiaries (SLMB) program, the Qualified Individuals-1 (QI-1) program and the Qualified Disabled Working Individual (QDWI) program. Some states do not have the QDWI program. See Medicare Savings Programs, https://www.medicare.gov/your-medicare-costs/get-help-paying-costs/medicare-savings-programs.

*Note: Medicare.gov has added the $20 general exclusion to the income figures, however, did not provide other disregards such as the earned income exclusion.

Since MSPs are considered a Medicaid benefit, ABLE account savings, up to the ABLE plan balance limit, must be excluded when making eligibility determinations.

At a time when a person is still moving toward financial independence through employment, MSP eligibility guarantees payment of monthly Part B premiums, now set at $174.70 (if first became Part B eligible in 2024). With the MSP paying monthly premiums (plus copayments and deductibles if countable income is low enough to qualify for the QMB program), this can also free up money for additional contributions to the ABLE account.

With less than half of gross earnings counted in determining MSP eligibility, a person can maintain earnings and retain eligibility for an MSP in many cases.

For 2020, three key MSPs allow countable income for an individual up to: $1,084 for Qualified Medicare Beneficiary (QMB) program; $1,296 for the Specified Low-Income Medicare Beneficiary (SLMB) program; and $1,456 for the Qualified Individual-1 (QI-1) program. Given the SSI exclusions that must be used to determine countable earnings ($20 general exclusion + $65 = $85 plus an additional 50 percent excluded), the individual can have significant gross earnings and still be eligible for the MSP. This fact, plus the actual benefits of the MSP, create a surplus cash flow that, in many cases, can be used to pay for work-related expenses and/or to contribute to the ABLE account. https://www.medicare.gov/Pubs/pdf/10126-Getting-Help-With-Your-Medicare-Costs.pdf

Medicare Part D’s Extra Help Program: Limiting Out-of-Pocket Expenses for Beneficiaries Who Work and Have ABLE Accounts:

When a person enrolls in the Part D prescription drug program, they may face significant out-of-pocket expenses related to monthly premiums, prescription copayments and a non-coverage amount known as the “donut hole.”  Out-of-pocket expenses related to Part D coverage average about $5,000 annually if the beneficiary gets no form of “Extra Help.” Most of those costs can be eliminated if the beneficiary qualifies for Part D’s Extra Help Program, also known as the Low-Income Subsidy Program.

Ways to qualify for Part D Extra Help:

A Medicare beneficiary will qualify for either Partial or Full Extra Help by meeting one of two sets of income and asset tests. Alternatively, a Medicare beneficiary will automatically qualify for Extra Help if they:

• Are “dually eligible” for Medicare and Medicaid; or
• Get help from Medicaid paying for Medicare Part B premiums through one of three Medicare Savings Programs, QMB, SLMB, or QI-1; or
• Get both Medicare and SSI benefits. See POMS HI 03001.005, https://secure.ssa.gov/apps10/poms.nsf/lnx/0603001005; and What to do if you no longer automatically qualify for Extra Help with Medicare prescription drug costs (revised May 2020), https://www.ssa.gov/medicare/part-d-extra-help.

There are four key Medicare Savings Plans that can reduce the cost of Medicare for people who have disabilities. The 4 plan names are Qualified Medicare Beneficiary (QMB) program; Specified Low-Income Medicare Beneficiary (SLMB) program; and the Qualified Individual-1 (QI-1) program. A person’s income is reduced within a calculation formula. The formula allows for “SSI exclusions” that must be used to determine countable earnings ($20 general exclusion (included above) + $65 = $85 plus an additional 50 percent excluded), the individual can have significant gross earnings and still be eligible for the MSP. This fact, plus the actual benefits of the MSP, create a surplus cash flow that, in many cases, can be used to pay for work-related expenses and/or to contribute to the ABLE account. This resource provides a link to each state: https://www.medicare.gov/basics/costs/help/medicare-savings-programs.

A person who works, who has a disability and who lives in a state that offers Medicaid Buy In will likely find that the Medicaid Buy In Program allows for greater income and benefits that reduce costs for health insurance coverage over savings available with the Medicare Savings Program options.

A note of caution: Many MSP applicants and beneficiaries have had to educate MSP and Medicaid Buy In (MBI) decision makers about the requirement to use the SSI rules when determining countable earned income. Similarly, they may also have to educate decision makers about the requirement that ABLE account assets, up to the ABLE plan’s balance limit, must be excluded because decision makers must use SSI rules, related to ABLE accounts, in determining asset eligibility for an MSP or MBI.

Many readers will realize that the typical 1619(b) or Medicaid Buy-In beneficiary will have annual earnings much less than some of the figures referenced above. However, in an effort to move toward full financial independence, people face an across the board $2,000 countable resource limit for 1619(b), as it is considered a non-cash form of SSI; and face higher, but still modest resource limits in the MBI programs in most states. No SSI recipients, and very few MBI beneficiaries, are permitted to self-fund retirement accounts as excluded assets. For these beneficiaries, the ABLE account is a way to save toward future independence while working and while in, or for, retirement.

↵ Restart