C                      They allow the account owner to lock-in future tuition rates at current prices.

 

The funds in a 529 plan are a countable resource to the individual who owns the account (e.g. a parent or grandparent). Normally, the owner is the person who established the account. In most instances, the individual who establishes a QTP retains the ability to withdraw any or all of the funds in the account for his or her own benefit.  The designated beneficiary of the account is the individual (i.e. a student or future student) who is to receive the benefit of the funds in the account. The designated beneficiary can be changed to a member of the beneficiary's family.

 

While the son or daughter is a child (under 18), the 529 plan is a resource of the parent. A portion of the parent(s) resources are deemed to the child, thus the 529 plan can effect the child's eligibility for SSI.  If a grandparent owns the account, it is not a deemed resource for the child's eligibility for SSI.  The parents' resources no longer effect the son's or daughter's eligibility for SSI at 18 years of age.

 

Withdrawals or distributions to the account owner are not income but a conversion of a resource. The distribution is a countable resource to the account owner. Any distribution the designated beneficiary receives from a 529 plan is a gift. Distributions, which meet Social Security's definition of a gift and are used for educational expenses of the designated beneficiary, are excluded as income in the month of the SSI eligible student receives the money.  If the student holds on to the money, it remains an excluded resource for up to 9 months following the month it was received.

 

The gift can be used for educational expenses, which include: tuition and fees; books; laboratory fees; student activity fees; transportation; stationary supplies; technology fees; and impairment-related expenses necessary to attend school or perform schoolwork (e.g. special prosthetic devices necessary to operate school machines or equipment).  Any portion of the gift the student uses for food and/or shelter is unearned income.  Any part of the gift the student saves for future needs (i.e. emergency funds) becomes a resource.

 

Source: POMS SI 01140.150 Qualified Tuition Programs (QTPs)

------------------------------------------------------------------------------------------------ 

Question 2

 

My client lost her Medicaid, when her SSI stopped.   She still receives SSDI and has Medicare. I took her to the state economic support office (they administer Medicaid) to see if she could qualify for any other type of Medicaid.  The worker said she might qualify for Medicaid under the Pickle category.  I don't know what this means.  Can you help me.

 

Unfortunately, through a subsequent phone call, I learned the person's SSI was suspended when she left employment and cash-out her company-sponsored retirement.  The following month she was over the resource limit for SSI and Medicaid. So the Pickle amendment does not apply to her.  If she can bring her resources below $2,000 within twelve months, the suspension of her SSI can be removed, thus her Medicaid eligibility will be reinstated.

 

So what is the "Pickle Amendment"?

 

There are over 70 categories of Medicaid eligibility.  The "Pickle Amendment" is one of those categories. [It is named after the Congressman who introduced the amendment.]  It applies to a person who was a concurrent beneficiary until a cost-of-living increase (COLA) to the title II benefit wipes out eligibility for SSI.   For instance, the person was receiving $693 of title II and was eligible for $1 of SSI, then the next COLA adjusts the title II payment above the SSI Federal Benefit Rate (FBR) plus $20 (this year $694).  So the person's unearned income (title II) exceeds the limit for SSI eligibility and the SSI-related Medicaid eligibility ends.   Under the Pickle category, the state Medicaid office would disregard all COLA adjustments to the title II benefit after SSI eligibility is stopped and compares this adjusted amount to the current FBR.  If the adjusted amount is below the current FBR, the person remains eligible for Medicaid (provided resources are below $2,000).

 

In other instances, when the FBR rate is adjusted and this new amount exceeds the title II benefit amount when SSI was originally lost, the person may be eligible for Medicaid under the Pickle category.  This application is important in states with Social Security administered state supplements.  Until recently, many concurrent beneficiaries were receiving only a portion of the SSI state supplemental payment and a title II benefit.  The SSI state supplemental payment provided access to Medicaid.  Due to state budget problems, the state supplemental payment was reduced, and some people no longer qualified for SSI.   Future adjustments to the FBR may bring the title II benefit amount (at the time SSI ended) below a new FBR, at which time the person may re-qualify for Medicaid under the Pickle category.

 

The Pickle category does not apply to a concurrent beneficiary who works and through additional contributions to the Social Security trust fund, the title II benefit is increased beyond the FBR plus $20, so SSI ends because the unearned income is too high.