Let Vincent Buy New Pants! Support the Financial Security Accounts for Individuals with Disabilities Act of 2008

Please excuse this wonky and earnest posting.

If you have a serious disability, Supplemental Security Income (SSI) and Medicaid can be the lifeline you need to receive medical care, housing, and other basic services. If you are caring for a disabled parent, sibling, or child, establishing and protecting your loved one's continued eligibility is essential. This is not straightforward or easy, given arcane rules and regulations in many states. Because our health and social service systems are so screwed up, this causes countless problems.

Consider the situation of my brother-in-law Vincent, who is intellectually disabled. Because he has many health problems, he runs up an impressive healthcare bill courtesy of Medicaid. Medicaid pays for his sheltered workshop and some other services he needs.

He receives a monthly Social Security check as a "disabled adult child" who survived his father, and he receives Food Stamps. He recently moved from our house into a nonprofit group home. In return for providing room, board, and various forms of assistance, the agency charges Vincent every cent of these benefits, minus $50.

For many people in Vincent's situation, that $50 is their entire disposable income. It doesn't go far to pay for the occasional movie, buying a morning coffee, replacing those old blue jeans that are wearing through. This $50 must also cover whatever services and payments are not covered by Medicaid. In some states, this includes dental services, and often includes vocational services and other things disabled persons require. Vincent is more fortunate. He likes to buy the occasional key chain or wallet. He has a surprisingly expensive habit of mutilating his clothes or trying to clean his electric razor by immersing it in water.

You might think he could buy these things by dipping into his savings. Oops. He is not allowed. Illinois's Medicaid asset limit is $2,000.

My wife and I are his guardians. We do various things to help him, avoiding anything that might jeopardize his access to programs he needs. . We do it all by the book, an expensive book. We have impressive legal bills to prove it. We clutter our letter rack with receipts marked "Vincent" for uncovered services, social activities, trinkets, and toys.

More poignant, an estimated 700,000 intellectually disabled men and women are now living with family caregivers over the age of 60. Most of these disabled adults will outlive their caregivers. This prospect terrifies many parents. Instead of encouraging them to carry out a careful long-term plan to provide for their child's future, public policies require families to leave their disabled children officially penniless. We encourage caregivers to waste time and money, shuffling financial papers to preserve public entitlements.

Asset tests do not prevent determined families with means from securing benefits for a disabled relative. When the value of public entitlements is so huge, it could hardly be otherwise. Families will find ways to evade or undermine these requirements.

Yet as often happens with backhanded solutions to bureaucratic problems, unintended consequences abound. Thus, a widow might nominally disinherit her disabled son to maintain his Medicaid eligibility, leaving her home to an able-bodied daughter under the implicit understanding that the proceeds from selling it are to be used to help her brother.

Such an arrangement is unenforceable, and its furtiveness discourages planning. What if the daughter gets divorced and her husband fights for his share of the inheritance? What if she loses her job or borrows from funds intended for her brother?

There is a better way. Senators Casey and Hatch have introduced the Financial Security Accounts for Individuals with Disabilities Act, Senate Bill 2743.

A comparable bill is making its way through the House.

This bill would allow families to establish accounts, similar to an IRA or a college savings account, to assist loved ones living with significant disabilities. There would be tax advantages, similar to those pertaining to an IRA or a college savings account. These accounts would provide families with an accepted, sensible way to set money aside over the decades to support a loved one's continued care.

Bear with me as I provide the incomprehensible money quote:

SEC. 3. TREATMENT OF FINANCIAL SECURITY ACCOUNTS FOR INDIVIDUALS WITH DISABILITIES UNDER CERTAIN FEDERAL PROGRAMS.
(a) Treatment as a Medicaid Excepted Trust- Paragraph (4) of section 1917(d) of the Social Security Act (42 U.S.C. 1396p(d)(4)) is amended by adding at the end the following new subparagraph:
(D) A trust which is a financial security account for an individual with a disability described in section 530A(b)(1) of the Internal Revenue Code of 1986.'.

(b) Account Funds Disregarded for Purposes of Certain Other Means-Tested Federal Programs- Notwithstanding any other provision of Federal law that requires consideration of 1 or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such provision to be provided to or for the benefit of such individual, any amount (including earnings thereon) in any financial security account for an individual with a disability of such individual, and any distribution for qualified disability expenses (as defined in section 530A(b)(2)) shall be disregarded for such purpose with respect to any period during which such individual maintains, makes contributions to, or receives distributions from such financial security account.

Humanity shines through the dry, technical language of this legislation. Its rough translation: We will let families set aside funds to help a disabled loved one without jeopardizing her access to care she needs.

Such basic decency is sadly noticeable in Washington these days. So let's take a short leave from the campaign bloodlust to give Senators Casey and Hatch, along with their House counterparts, some real credit. This bill deserves everyone's support.