Individuals who are receiving benefits from disability insurance have unique issues and concerns when it comes to Obamacare. The Patient Protection and Affordable Care Act (ACA), known as Obamacare, has had a major impact on America's health insurance industry, affecting who has access to insurance and how they pay for it. While many people will gain from expanded access to insurance and treatment, those currently receiving disability benefits must carefully consider whether their benefits should be included when determining if they qualify for insurance subsidies and other benefits under the ACA.
One of the key features of Obamacare is its requirement that individuals have health insurance. This is often referred to as the "individual mandate." People without group health insurance through their employer can purchase insurance through the Health Insurance Marketplace. Individuals with incomes under 400% of the federal poverty level are eligible for subsidies to significantly reduce the cost of insurance premiums.
If you're receiving disability benefits, you may have to include these as income when determining if you qualify for subsidies or other benefits under Obamacare. Under the ACA, your eligibility for income-based Medicaid and subsidized health insurance is calculated using a household's Modified Adjusted Gross Income (MAGI). How your MAGI is calculated is determined by the IRS and Medicaid regulations. Most people's MAGI will be the same as their adjusted gross income: their total income minus deductions as reported on their tax returns. However, people receiving disability benefits may have MAGIs that differ from this amount.
Social Security Disability Insurance
If you're receiving Social Security Disability Insurance (SSDI), your benefits are included as part of your MAGI. Currently, nontaxable Social Security benefits like SSDI payments count as income for the purpose of determining whether you qualify for subsidies. For many recipients of SSDI, this won't matter too much. Individuals who have received SSDI benefits for 24 months automatically qualify for Medicare. However, if you're not currently insured under Medicare, Medicaid, or other qualifying health insurance, your disability payments must be calculated as part of your income under Obamacare.
Private Disability Insurance
Disability benefits obtained through an employer's disability insurance policy or an individual's own private disability insurance raise different issues. Generally, your own private disability insurance benefits won't count as income. In other words, if you've purchased your own disability insurance, your disability benefits aren't subject to income tax. This is because you've paid the premium with your after-tax dollars. These benefits aren't included as part of your MAGI when determining if you qualify for reduced premiums under Obamacare.
Employer Disability Insurance
If you receive benefits from your employer's disability insurance policy, these benefits are almost always considered income. Most people who have disability insurance through work get it as a tax-free benefit. As a result, the benefits are considered income when received. If both you and your employer paid the premiums for you disability insurance, only the part of the benefits due to your employer's payments count as income.
Obamacare affects people with disabilities in several additional and important ways. Perhaps most fundamentally, starting in 2014, the ACA prevents insurers from denying or excluding coverage for anyone with a pre-existing condition. This means that if you're an uninsured individual with a disability, insurance companies can no longer refuse to provide you coverage or charge you higher rates.
Secondly, Obamacare prohibits lifetime caps on how much insurers will pay if you get sick or injured. After 2014, annual caps on benefits are also prohibited. Additionally, disabled individuals who receive health care coverage under Medicaid will have greater access to home and community-based services.
Under Obamacare, states can choose to expand access to Medicaid. So far, twenty seven states and the District of Columbia have done so. Expanding Medicaid under the ACA will allow more people with disabilities to qualify for Medicaid coverage solely based on their income. This allows the disabled to enroll in coverage quickly, without waiting for a disability determination by the Social Security Administration.
Remember, Obamacare is a large, complex law. The regulations and court decisions surrounding the ACA are still evolving, which means rules and processes involved are subject to change in the future. Consider contacting a disability law attorney if you have concerns about how Obamacare will affect you.
