Elder Law Attorneys Helping You Plan For The Future

Take note of changes in laws affecting older adults and people with disabilities

This article addresses three recent unrelated but important changes in the law or in the operation of programs affecting older adults and people with disabilities. First, there will soon be millions of Americans who will lose their Medicaid coverage due to the federal government lifting its requirement that states keep people on Medicaid during the public health emergency. Second, Congress passed a new tax law affecting retirees with retirement accounts. Third, Congress made an important change to the law governing tax-advantaged savings plans for individuals with disabilities.

The pandemic has affected all aspects of our lives. To recognize and address some of the upheaval, policymakers put into place a number of measures throughout this period. On January 31, 2020, Congress passed a law declaring a nationwide “Public Health Emergency.” This authorized the U.S. Department of Health and Services to require states to continue health care coverage for people on Medicaid even if they no longer meet the eligibility criteria. While the Public Health Emergency is set to end on May 11, 2023, this mandated “continuous enrollment” in Medicaid will end March 31, 2023. By some estimates, as many as 20 million people across the U.S. will lose their Medicaid coverage starting as soon as April 1, 2023, though states can’t cut off a person’s benefits immediately, even if they’re found to be ineligible. The federal government itself estimates that almost 7 million eligible people will lose benefits due to the heavy paperwork burden on states once eligibility reviews restart.

This includes people who receive long-term care Medicaid in a nursing home or Medicaid-covered skilled nursing care at home. To qualify for Medicaid long-term care services in Texas, there are financial requirements, including a cap on countable assets. Without the normal renewal process, where the state Medicaid agency reviews the recipient’s eligibility status every year, it’s possible that during the continuous enrollment period a person has become ineligible because they’ve allowed their assets to exceed the cap. It is crucial that family members or others assisting Medicaid recipients pay attention to and act on notices received by the Texas Health and Human Services Commission, as Texas returns to its normal process.

At the end of 2022, Congress passed what is referred to as SECURE 2.0, adding to the sweeping changes to federal tax law in 2019. (See https://www.wrightabshire.com/wp-content/uploads/sites/1603997/2020/10/What-is-the-SECURE-Act-of-2019.pdf.) SECURE 2.0 includes changes regarding required minimum distributions (RMDs) from retirement accounts. It has long been required to begin taking distributions from tax-advantaged plans such as IRAs upon reaching a certain age. The SECURE Act of 2019 increased the age at which RMDs must begin, from 70½ to 72. SECURE 2.0 raised the age again, to 73 for people turning 73 in 2023, and to 75 beginning in 2033. Another taxpayer-friendly change is that the penalty for failing to take a full RMD was reduced from a 50% tax to 25%, or 10% if it is corrected within two years.

The Achieving a Better Life Experience Act of 2014 (ABLE), modeled after 529 college savings plans, permits individuals with disabilities to have a tax-advantaged savings or investment account without jeopardizing their Medicaid or Supplemental Security Income benefits. Currently, to be eligible in Texas, the individual must be a resident aged 18 or older whose disability occurred prior to the age of 26. At the end of 2022, Congress changed this age requirement to 46, opening up this opportunity for more people. It will not take effect until 2026. Also, the annual contribution limit has increased to $17,000 in 2023. See also https://www.wrightabshire.com/wp-content/uploads/sites/1603997/2021/02/Texas-ABLE-accounts-are-for-individuals-with-disabilities.pdf.

You may visit our website at www.wrightabshire.com. Nothing contained in this publication should be considered as the rendering of legal advice to any person’s specific case but should be considered general information.