Families in Denver, Colorado Springs, and across the Front Range often face a terrifying “Medicaid Cliff” when a disabled adult child transitions from Supplemental Security Income (SSI) to Disabled Adult Child (DAC) benefits. Because DAC payments are often higher than SSI income limits, many parents worry that their child’s Health First Colorado (Medicaid) coverage will be terminated.
Fortunately, a specific federal provision known as the Section 1634(c) DAC Disregard protects these vital healthcare benefits for eligible Colorado residents. Here is everything you need to know about navigating this complex transition and keeping your child’s medical coverage secure.
What is a “1634 State”?
To understand the disregard, you must first understand how Medicaid and SSI interact in Colorado. Section 1634 of the Social Security Act allows states to enter into an agreement with the Social Security Administration (SSA). Under this agreement, the SSA conducts Medicaid eligibility determinations for SSI recipients on the state’s behalf.
Because Colorado is a “1634 state,” individuals who are determined eligible for SSI by the SSA are automatically categorized as “1634 SSI Mandatory”. This means Colorado has agreed to make its Medicaid eligibility criteria for these populations identical to the SSI program, making them automatically eligible for Health First Colorado without needing to submit a separate Medicaid application.
The Danger: Transitioning from SSI to DAC Benefits
When a parent retires, becomes disabled, or passes away, their adult child may qualify for Disabled Adult Child (DAC) benefits based on the parent’s work record. Because the DAC cash benefit is often significantly higher than the maximum monthly SSI payment, the adult child’s income will likely exceed the strict SSI financial limits.
Generally, losing SSI payments due to excess income can result in the immediate loss of Medicaid coverage. For adults with severe disabilities who rely on Medicaid waivers for daily care, supported housing, or personal care attendants, losing Health First Colorado is not an option.
The Solution: The Section 1634(c) DAC Disregard
To protect vulnerable individuals from losing their healthcare due to receiving a higher Social Security benefit, Congress enacted special Medicaid continuation provisions.
Section 1634(c) of the Social Security Act requires states to treat childhood disability beneficiaries who lose their SSI eligibility due to their new DAC benefits as if they were still SSI recipients for Medicaid purposes. Under Colorado Department of Health Care Policy and Financing (HCPF) rules, when a Disabled Adult Child applies for Medicaid, all of the DAC payments that originally caused them to lose their SSI eligibility are entirely disregarded. This payment disregard is applied to the client’s eligibility for their entire lifespan.
Eligibility Criteria for the 1634 DAC Disregard
To continue receiving Health First Colorado under the Section 1634(c) exception, the beneficiary must meet four strict criteria:
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Age: Must be at least 18 years of age.
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Onset of Disability: Must have a blindness or a disability that began before the age of 22.
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Prior SSI Receipt: Must have previously received Supplemental Security Income (SSI) based on that blindness or disability.
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Reason for SSI Loss: Must have lost SSI eligibility specifically due to the receipt of (or an increase in) Social Security benefits on a parent’s record following the parent’s retirement, death, or disability.
Action Plan: What to Do If Health First Colorado is Terminated
Unfortunately, county computer systems in Colorado sometimes fail to apply the “DAC Disregard” automatically, leading to wrongful termination notices being sent to families. If your disabled adult child receives a notice that their Health First Colorado coverage is ending, you should take the following steps immediately:
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Locate the Benefit Award Letter: The individual should have received a letter from the Social Security Administration verifying that they may continue to be eligible for Medicaid coverage under the Section 1634 DAC eligibility group.
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Contact the SSA for Proof: If you did not receive or no longer have this letter, contact the Social Security Administration at 1-800-772-1213 to request a Benefit Award letter verifying their status as a Disabled Adult Child who received SSI in the past.
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Provide Proof to the County: Submit this letter to your local county human services office. Inform the caseworker that the applicant qualifies for Medicaid under Section 1634 of the Social Security Act so they can manually override the system and apply the disregard.
What If You Don’t Qualify for the Disregard?
It is important to note that if a disabled adult child receives income from another outside source (like a job or a direct inheritance) or if they exceed the strict SSI resource limits, they may become ineligible for Medicaid coverage under the 1634 disregard.
If your child loses Medicaid for these reasons, they still have options. The Health First Colorado Buy-In Program for Working Adults with Disabilities allows adults with a qualifying disability to “buy into” Medicaid. If their income after disregards is below 450% of the Federal Poverty Level, they can maintain their regular Health First Colorado benefits—and their waivers—by paying a monthly premium based on their income.
Get Help From a Colorado Disability Lawyer
The intersection of Social Security DAC benefits and Colorado Medicaid is incredibly complex. If you are struggling to prove your child’s disability onset date or need guidance on securing DAC benefits without jeopardizing their healthcare, contact the experienced legal team at Viner Disability Law in Denver today for a free case evaluation.