Medicaid’s Asset Limit Punishes the People It’s Supposed to Help – Inside Sources

My son Jonathan needed a new bed, so I bought him a Sleep Number. His room needed a chair, so I bought a La-Z-Boy.

I didn’t make these purchases because Jonathan needed the finest furniture. I made them because Medicaid’s rules gave me no choice: spend down his savings on anything, no matter how extravagant, or risk losing the coverage he depends on to survive.

Jonathan is autistic, bipolar and has a seizure disorder. He is nonverbal and requires help eating, dressing and bathing. He doesn’t understand danger; without constant supervision, he could place his hand on a hot stove or walk into traffic.

After his mother’s death, he began receiving Social Security survivor benefits — benefits that pushed him over Medicaid’s asset limit and put his coverage at perpetual risk.

So I bought furniture he’ll never appreciate because it was the only way to protect him.

It’s an absurd policy — forcing people to buy things they don’t need to keep the help they do.

Jonathan’s situation is common. In most states, people with disabilities and older adults can lose Medicaid eligibility if they save $2,000. Couples can lose benefits at $3,000. Those limits are pegged to Supplemental Security Income asset caps last updated in 1989. Adjusted for inflation, they’d exceed $5,500 today.

The rule doesn’t just fail the people it was designed to help. It punishes them.

Gabriella Garbero was born with spinal muscular atrophy and relies on 12 hours of daily home nursing care — $100,000 annually, paid for by Medicaid. In 2023, after years of work, she passed the bar exam and opened her law firm.

Her dream was short-lived. “I really had to limit what I was doing,” she told NPR. “I haven’t taken on any new cases because I’m really afraid.” 

A 2024 survey of people with spinal muscular atrophy found 43 percent work only part-time to stay under the asset threshold. One respondent turned down her employer’s 401(k) match, fearing it would cost her benefits.

For Gabriella, the limit cost her something else — a marriage. She and her partner have been engaged for three years, but marrying would mean Medicaid counting their combined assets against a single, higher limit — thus losing her coverage.

“We might be engaged for 10 or 20 years and never get married,” she said. 

Their situation was the subject of the 2024 Hulu documentary “Patrice: The Movie,” which follows a couple choosing a commitment ceremony over marriage for the same reason. For many disabled Americans, love and healthcare are rivals because the government makes them so.

This isn’t a rational safety net. It’s a poverty trap, one that the left, right and center increasingly recognize as broken.

The Brookings Institution warns that asset tests discourage saving. The libertarian Niskanen Center says they function “as a poverty trap rather than a financial foothold.” The Urban Institute has found that even modest savings cushion families against missed housing payments, meaning a policy that incentivizes zero savings makes lives measurably more precarious.

Karen Williams learned that the hard way. Disabled and living on Social Security, she’d bought a modest life insurance policy to cover her burial. She had no idea its $1,900 cash value counted as an asset — until Social Security cut off her benefits and demanded $20,385 back. She suffered two heart attacks under the stress.

Here’s the uncomfortable truth: These limits fall heaviest on the poor because people with real resources have legal workarounds.

An ABLE account shelters up to $100,000 without affecting eligibility. A special needs trust, available to those who can afford lawyers, can shelter far more. Yet a 2023 survey found only 7 percent of disabled people even know ABLE accounts exist — awareness is lowest among those with the least income and the most tenuous ties to service organizations.

So what is the asset limit actually accomplishing? Not stopping the wealthy who have workarounds. Just burying everyone else in paperwork, discouraging work, and standing between couples and the families they want to build.

It’s time to reform these limits or abolish them, since the people they’re meant to stop already have legal means around them.

At a minimum, Congress should index the cap to inflation, restore it to its 1974 value of $10,750, and stop demanding exhaustive annual re-verification from people who have already proven their eligibility.

For years, I lost sleep not knowing what would happen to Jonathan after I’m gone.

I sleep easier now because I had the means to set up an ABLE account and a special needs trust for him.

What about the other 98 percent of families who don’t have that means? What will become of them?

It’s time we take this burden off them.