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Will SSDI Beneficiaries Lose Medicaid Coverage in 2012?

Under current federal law, disabled Americans who receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits are eligible for Medicare coverage after two years of entitlement to disability benefits.

Medicare is a federally-funded program that provides healthcare assistance for the elderly and those who are disabled, and in most cases, requires the recipient to contribute a monthly payment towards its cost. However, many Social Security Disability recipients are also eligible for Medicaid coverage. Medicaid is a state-funded program designed to provide medical coverage for low-income residents. Medicaid recipients must meet certain income restrictions to maintain their eligibility.

A bill passed by the House last month, and by the Senate earlier this month, however, would change the way Medicaid eligibility is determined, and could result in many Social Security Disability recipients becoming ineligible for coverage. The bill, H.R. 2576, came about in response to a provision in last year’s health law that excluded nontaxable income from being counted when determining eligibility for certain healthcare-related programs. Social Security benefits (of any kind) aren’t usually subject to taxes. Thus, some people receiving Social Security Disability, retirement, or survivors benefit payments could still be eligible for free Medicaid coverage despite receiving a substantial monthly income.

The U.S. Congressional Budget Office estimates that between 500,000 and 1 million people would be immediately affected by the change. They also state that the bill will reduce Medicaid spending by $7.9 billion over the period of 2012-2016, and an additional $32.9 billion from 2012-2021. H.R. 2576 would also affect the eligibility of some who aren’t eligible for Medicaid, but whose current income level would allow them to purchase the health insurance subsidies that will be established through the new Patient Protection and Affordable Care Act.

Proponents of the bill say that the cost savings make it worth it, and that the current method of excluding Social Security benefits from being counted is unfair to other working class families. However, those against H.R. 2576 argue that it will result in millions of the Americans who become ineligible for Medicare being forced to go without health insurance. Some even insinuate ulterior motives by the bill’s supporters, saying that some House members want to use the cost-savings as a means to cover the costs of another unrelated but controversial bill related to government withholdings and contractor payments.

If enacted, this bill will clearly have an impact on many Americans who rely on Social Security Disability benefits and Medicaid.