Fair Hearing Gets Man Out of Medicaid "Pickle"

August 19, 2010

Author:  Dustin Delp 1

Congratulations to John Castellano of the Mercy Advocacy Program 2.  He won an important fair hearing decision which established Medicaid eligibility under “Pickle” criteria for a recipient of retroactive Supplemental Security Income (SSI) and Social Security Disability (SSD) benefits.  The individual was prospectively eligible for SSD only.  “Pickle eligible” individuals are SSD recipients who would otherwise be subject to a Medicaid spenddown but for the application of a special budgeting methodology known as the “Pickle” rule, this allows them to become fully eligible for Medicaid.

The fair hearing decision, In the Matter of DT (FH #5097355R), which is available in the Fair Hearing Bank of the Online Resource Center 3, concerned a 31-year-old man who filed a claim for both SSI and SSD benefits.  The SSI was paid out first.  After his SSD benefits were calculated, he was no longer eligible for ongoing SSI benefits.  His last SSI check was paid in April 2003.  His first SSD check was issued in May 2003, but covered the month of April.  To be deemed “Pickle eligible", in order to receive full Medicaid coverage, the Appellant had to be in receipt of or eligible for SSI and SSD concurrently.  The Agency initially denied his request contending that he was not in receipt of SSI and SSD concurrently.

At the hearing, the ALJ found that the Appellant was indeed “Pickle eligible” because his May SSD check also covered the month of April, 2003.  Since the Appellant received SSI in April, he was in receipt of both SSI and SSD concurrently and therefore “Pickle eligible” as of April 2003.  The ALJ ordered the Agency to recalculate his Medicaid benefits without a spenddown requirement and to retroactively reimburse the Appellant for all the spenddowns he had incorrectly paid from April 2003, (the last month of his concurrent SSI/SSD eligibility), through May 2008.

Castellano relied on POMS, section SI 01715.015(b)(2) and the Lynch v. Rank 4 decision.  This Federal Circuit Court opinion allowed the test for “Pickle eligibility” to be expanded to those individuals no longer in receipt of SSI.  In most states, Medicaid programs consist of two programs: one for the “categorically needy” and another for the “medically needy.”  The categorically needy are those that are eligible or receiving SSI or other cash assistance.  All states that elect to participate in Medicaid programs must cover the categorically needy.  The medically needy, are individuals whose income is too high to be eligible for SSI, yet  not high enough to cover the high cost of medical care.  The medically needy are usually required to contribute to the cost of their medical assistance and some states even choose not to cover the medically needy.  The Pickle Amendment addresses the unfair situation of individuals who lose their SSI eligibility (and thus Medicaid) because of a small increase in their income that barely exceeds the maximum allowable income-level. 

The Pickle Amendment to the Social Security Act,  named after Texas Congressman J.J. (Jake) Pickle, extends Medicaid eligibility this medically needy category.  Before Lynch, the “solely” test was used to determine Pickle status.  If a person lost their SSI benefits “solely” because they received a SSD cost-of-living adjustment (COLA), the Pickle Amendment protected that person’s Medicaid eligibility.  The Court in Lynch expanded that protection to those who (1) were simultaneously receiving SSI and SSD in some month after April 1977,  who are (2) currently eligible for SSD, who are (3) currently ineligible for SSI, and (4) whose income qualifies them for SSI after deducting all COLA received since the last month the individual was eligible for both SSI and SSD.  This is called the “but for” test because the individual who would be eligible for SSI (and therefore full Medicaid coverage) but for COLA increases to the recipient’s SSD, is protected from being denied Medicaid coverage.

When using the “but for” test in screening for Pickle Eligibility the Social Security Disability income must first be determined.  Next, the last month in which the person received both SSI and SSD simultaneously must be established.  Using that month and year, the corresponding “reduction factor number” for calculating Social Security Income is multiplied by the recipient’s total income. 5  If the resulting number is less than the income-level limits for SSI eligibility, then the recipient is deemed “Pickle Eligible.”

Castellano’s impressive Fair Hearing decision provides a reminder that “Pickle eligible” individuals may be able to receive full Medicaid coverage prospectively and also retroactive compensation for spenddowns and Medicare premiums paid erroneously if it is determined that the recipient was previously eligible for SSD benefits and SSI simultaneously.

Footnotes

1.  Dustin Delp coordinates the Fair Hearing Bank of the Online Resource Center.  He is a legal intern at the Albany office of the Empire Justice Center and a rising second year law student at Albany Law School.
2.  Mercy Advocacy Program is part of Mercy Haven, Inc. in Islip Terrace, NY.
3.  There is a link to the Online Resource Center on both the Empire Justice Center (www.empirejustice.org) and the Western New York Law Center (www.wnylc.net) web pages.
4.  747 F.2d 528 (1984).  See also 85 ADM-35.
5.  The “reduction factor numbers” are based on the statutory language which excludes income attributable to cost-of-living increases in SSD benefits.  The “reduction factor numbers” can be found in the following article:  Gordon, Bonnyman Jr., Screening for Medicaid Eligibility Under the Pickle Amendment, Sargent Shriver National Center on Poverty Law, available at http://www.povertylaw.org//advocacy/publications/pickle-screening.html.