Parents of children with disabilities know that finances can sometimes be stretched to pay for all that is needed for their childs care. For those families and individuals who qualify, government benefits are an important source of help. Many people are unaware of what government benefits can provide and whether or not they qualify to receive them. Eligibility for a child with disabilities who is under 18 is based on the parents income, but thereafter, it is based on the childs own assets and income. The most important programs for people with life-long disabilities are Medicaid and Supplemental Security Income (SSI). Lets take a look at how they work.
Medicaid is a state-administered, federally reimbursed program that pays for needed medical care for eligible people. An applicants medical diagnosis, finances, and age are used in determining eligibility. SSI is a federal program that provides income from the federal government to those who are "aged", "blind", or "disabled." Cash benefits are paid each month, up to the 2001 SSI federal benefit rate of $530. Though this amount is the same nationwide, many states add money to the basic rate.(For children under age 18 who live for at least one month in certain institutions paid for by private insurance, the monthly SSI payment is limited to $30. This is a change to the previous regulation in which the payment limit applied only when Medicaid paid more than half of the cost of the childs care.)
SSI benefits can enable an individual with a disability, or family, in need to pay for living expenses as well as for things that insurance may not cover, such as co-payments and certain equipment. In addition to providing monthly benefit payment, SSI eligibility also entitles an individual to other benefits and services depending on the state in which he or she lives, such as: Medicaid; food stamps, payment of Medicare premiums.
Defining "Disabled" Under SSI
For children to be defined as having a disability, the Social Security Administration (the federal agency in charge of SSI) reviews how his or her disability affects everyday life. The child must meet the following criteria: have a proven physical or mental condition which results in "marked and severe functional limitations" ; the condition must last at least 12 months or be expected to result in death; the child must not be working at a job that the SSA considers to be substantial work. The childs condition must be reviewed periodically by SSA to determine if it is still disabling, and evidence must be provided that the child is being treated for his or her condition. At age 18, the child must be requalified using the rules that apply to adults with disabilities.
Eligibility for both SSI and Medicaid is based on need. A person is not qualified to receive SSI if he or she has "countable resources" in excess of $2,000 or "countable income" in excess of the Federal Benefit Rate. The SSI payments are reduced by the amount of any "countable income" received by the individual. Generally, government benefits are paid to a child with a disability who is a dependent, based on family income. But once a child turns 18, these benefits are awarded based on the childs own assets and income (even if the child is still living at home with his or her parents). Once a child becomes eligible due to disability, SSA will look at the parents income level.
According to the Social Security Administration some assets are considered exemptnot countable such as:
Some of an individuals income is also not counted toward SSI eligibility such as: The first $20 of most income received in a month (from any source); the first $65 a month earned from working and half the amount over $65; food stamps; most food clothing and shelter from non-profit organizations; most home energy assistance. If the individual with a disability works, any wages used to pay for items needed for work related to the disability are not counted as income. (Source: Social Security Administration.)
Since eligibility for government benefits is dependent on these financial restrictions, a person with a disability would be in jeopardy of loosing those benefits if he or she amasses any resources above the limit. This can cause a dilemma for parentsor other relativeswho want to provide the child who has a disability with an inheritance when they die. The inheritance can be used to fund those things that make life enjoyable and bring additional comfort to the person with a disability beyond the basic necessities of life like a CD player, video games, tickets to the movies or for a trip. Fortunately, families can leave an inheritance to a member who has a disability through a Supplemental Needs Trust or Special Needs Trust. A trust is a legal arrangement in which property is held by one party for the benefit of another. A Supplemental Needs Trust or Special Needs Trust is one which is set up for the benefit of a person with special needs. Since the government strictly regulates Special Needs Trusts, certain rules must be carefully observed. Differences exist from state to state as to when Medicaid liens or payback provisions are required on trust assets. You should work with knowledgeable professionals who fully understand these Medicaid requirements in your state. These issues will be examined more closely in future installments.
Knowledge is key
For many people with disabilities, benefits provided by the government are crucial. That is why a good understanding of what these benefit programs entail and what criteria determine eligibility is essential in applying for and getting coverage. However, new regulations have tightened eligibility criteria considerably and have affected many aspects of setting up Special Needs Trusts. They are complex and require a strong knowledge of the current legislation and how it impacts people planning for their child with special needs. In order to preserve eligibility for the benefits that they depend upon when planning for the future of their child with a disability, parents should think about consulting a qualified professional. One way to begin this process is to call Met DESK, MetLifes Division of Estate Planning for Special Kids. MetDESK is committed to helping families through the maze of legal and financial planning for the future of a child or dependent with special needs. To contact a MetDESK Specialist in your local community call 1-877-MetDESK (1-877-638-3375) or visit the MetDESK web site located at www.metlife.com/desk to request a meeting by filling out the on-line appointment maker. As a division of MetLife Financial Services, MetDESK was established to extend MetLifes traditional commitment to public service to families of children with special needs.
Dave Harmon, MBA, MSW, is the Manager of the MetDESK, Division on Estate Planning for Special Kids, Metropolitan Life. Mr. Harmon is also a parent of a child with special needs.
SOCIAL SECURITY a/k/a Old Age, Survivors and Disability Insurance (SSDI)
vs. SSI: Whats the difference?
Often, people can get both Social Security and SSI benefits. SSDI entitlement is not based on economic need and can be paid as retirement benefits, disability benefits, and survivor benefits. Retirement benefits are usually paid to those 62 or older and their families. For an applicant to receive Social Security he or she must be "insured" as defined by the program or in some instances, be a dependent or a survivor of an insured person in order to receive benefits. Being insured requires that one have worked a certain amount of time which is measured in quartersin most cases at least 20 quarters in the 40-quarter period immediately preceding the entitlement to benefits. Fewer restriction apply to those who get a disabling condition before age 31 or due to blindness. In addition to being insured, an adult individual who wants to collect Social Security benefits for a disability must meet the same definition of disability as used in the SSI program for adults.
Children over the age of 18 who have a disability that began prior to age 22 and who meet the definition of disability are eligible for SSDI benefits based on their deceased, disabled, or retired parents Social Security entitlement. The childs entitlement is one-half of the parents primary benefit amount if the parent is alive and three-quarters if deceased. There are no income (from passive sources) or asset limitations for the child.
Another important difference in the two programs is that eligibility for SSDI does not mean automatic eligibility for Medicaid. Rather, after receiving SSDI for two years, the beneficiary is eligible for Medicare.
All Grown UpSSI changes for children over 18
When a child turns 18, he or she is no longer considered dependent--though he or she may still live at home--and SSA no longer looks at the parents income to determine eligibility. Individuals with disabilities who are over 18 who qualify for SSI also gain access to Medical Assistance (MA), which helps pay medical expenses. Individuals can work and receive SSI, though the payment will decrease, and as long as earning do not exceed $28,000 annually, they can keep MA benefits.
In addition, SSI allows that Impairment-related work expenses (IRWE) (the costs of things a person needs because of his or her disability in order to work) not be counted toward the persons income and not affect the SSI check. SSI also has a program called PASS (Plan for Achieving Self-Sufficiency) that allows an individual with a disability to set aside income in order to fund education, training or equipment for a job. Certain US residency requirements apply as do restrictions on payments to individuals living in certain housing situations.
Medicare VS. Medicaid
Confusion sometimes arises between the two government healthcare programs Medicare and Medicaid. Here is a brief comparison which illustrates the important differences.