Federal and State law provides a number of programs to help a person with disabilities. Such programs include. Security Income and Medicaid. Supplemental Security Income, or SSI, is a federal program that provides monthly cash payments to people in need. SSI is for individuals who are 65 or older, as well as for blind or disabled people of any age, including children.
However, to qualify for SSI and Medicaid an applicant must own less than $2,000 in assets. The value of your home does not count if you live in it. Usually, the value of your car does not count and the value of certain other resources, such as personal items or a burial plot, may not count either.
In New York, the county or borough where you live is taken into consideration when determining how much to supplement your SSI payments. The state will consider whether you reside in congregate care (group home or adult foster care) when determining how much to supplement your SSI payments. The single payment you get in the beginning of each month includes both the federal SSI payment and your supplement from New York.
However, issues may arise for individuals who have suddenly become disabled after working for several years. Specifically, disabled individuals who have accumulated some savings or assets could face a significant financial burden. Because of their disability, these individuals may now require costly daily medical attention that is generally not covered by insurance after a specific period of time. These individuals would be eligible for a certain level of care provided through SSI or Medicaid if the value of their assets does not surpass the $2000 threshold. As a result these individuals must choose between exhausting their hard earned savings or do without the necessary care.
Even those who were born with a disability or who acquired a disability as a minor are at risk of losing important benefits (i.e. homecare/caregivers) that are vital to that person’s daily survival if they are the recipient of certain inheritances. Indeed, the mere receipt of (or legal right to receive) assets will trigger the legal requirement to disclose their value to government program administrators.
Solution: Special Needs Trust
The Omnibus Budget Reconciliation Act of 1993 entitled a disabled person to establish a “special needs trust” for his or her own benefit, without such trust assets being counted by the government toward the strict threshold of federal and state law.
Special needs trusts provide a variety of functions and can finance a wide range of items for the beneficiary. Essentially, the purpose of funds is to supplement the government benefits that are available. Special Needs Trusts require that:
- The trust beneficiary must be under age 65 at the time the trust is created and funded;
- The beneficiary must be disabled under the Social Security Administration’s definition of disabled;
- The trust must be for the “sole benefit” of the beneficiary;
- The trust must be created by the parent, grandparent, guardian or the court; and
- Upon the death of the beneficiary (or early termination of the trust), the state agency that provided services for the person with disabilities must be paid back from whatever funds are remaining in the trust before it can be distributed to the heirs.
It is important to note that this “payback” provision only applies to the trust assets and does not impose any liability on the beneficiary’s family to pay back the Medicaid benefits. Thus, if the trust is depleted, then there is no payback required.
Additionally, Social Security does not require payback from the trust. This means that a person with disability can benefit from as many Social Security payments as are needed over his or her lifetime without repaying them at a future date.
Although, individuals who are 65 or older cannot establish a traditional special needs trust as aforementioned, there are still a number of planning techniques available to older people with disabilities. The important thing to realize is that it is never too late to plan. It is equally important for disabled individuals approaching 65 to be aware of the options available to them.
If you or a loved one have questions about an aspect of Supplemental Security income, Medicaid, or any aspect of elderly disability planning, contact Tanya Hobson-Williams, P.C. for the representation you deserve and to ensure your future plans are carried out.