The Affordable Care Act and Asset Limits: What’s Left Undone

Editor’s Note: This blog post is the third and final installment in a series by Julianna Lord, Emerson National Hunger Fellow, looking at how the ACA has removed barriers and streamlined access to public assistance programs. Julianna’s previous posts are linked at the bottom of the page.

A bill is on the table in Missouri that would allow elderly and disabled residents to maintain a modest level of savings without sacrificing their health coverage. HB 1223 would increase the state’s Medicaid asset limits from $1,000 to $5,000 for individuals and from $5,000 to $10,000 for married couples. These asset limits have been in place since 1968 and have not been adjusted for inflation in the past 46 years.

So why are Missouri lawmakers pushing to change these asset limits now, especially as the state continues to resist expanding Medicaid? According to the Southeast Missourian, the issue of low asset limits has hit close to home for Senator Dan Brown (R- Rolla), whose 84-year-old father is currently spending down his savings to cover his medical expenses but has yet to fall within the $1000 limit that would enable him to apply for Medicaid. "I wish he could have a greater asset limit when it gets to that point," Brown said. "I personally would love to see it raised." Nearly 8200 disabled and elderly Missourians, including Brown’s father, would become newly eligible for Medicaid under the new limits.

The Affordable Care Act (ACA) has already had a major impact on connecting more low-income families with essential care. In addition to expanding Medicaid to childless adults and significantly increasing the program’s income limits, the ACA eliminated asset limits for all children and adults. Prior to the ACA, 27 states imposed Medicaid asset limits on parents and even children, which varied significantly across states and could be as low as $1000. The removal of these asset limits not only lifted barriers for families to obtain financial security, but also facilitated the streamlining of public assistance programs. However, the Missouri bill provides an example of some of the work left undone. The ACA left asset limits for the elderly and disabled untouched, and in Missouri and elsewhere, these restrictions continue to impose financial insecurity on already vulnerable populations.

These remaining limits are not only often quite low, but also vary widely. This is partly due to the myriad pathways that connect elderly and disabled individuals to Medicaid, creating a confusing, and often inequitable, maze of rules. For example, only 35 states and DC offer the Medically Needy Program to people whose medical expenses are high but whose income is higher than the state’s SSI or poverty-level standards. Within those 35 states and DC, asset limits range from a low of $1,600 for individuals and $2,400 for couples in Connecticut to a high of $13,800 for individuals and $20,100 for couples in New York. In other words, a Medically Needy participant in Connecticut can barely keep a month’s rent in the bank, while across the border in New York, a similarly situated recipient can maintain a modest emergency fund.

Today, over 17 million elderly and disabled people must comply with arbitrary and often unreasonably low asset limits to remain eligible for Medicaid, leaving them unprepared to cope with a sudden expense. This is particularly unfortunate for the elderly and disabled who are already some of the most financially vulnerable Americans; according to the National Disability Institute, 81 percent of people with disabilities did not have an emergency fund to cover three months of expenses, compared to 54 percent of non-disabled people. Past research shows that asset limits also deter public assistance recipients from having bank accounts. Forty-one percent of people with disabilities report using high-cost alternative financial services, such as a pawn shops or payday loans, which can create additional barriers to sustained economic security.

While the ACA represented significant progress for asset limit reform, many Americans continue to face low and outdated restrictions that exacerbate their financial vulnerability. While state efforts like Missouri’s should be applauded, creating a more equitable system will require a broader federal reform. Establishing a reasonable floor for Medicaid’s remaining asset limits and indexing them to inflation would be a promising first step.