Special Needs Planning and the Importance of Understanding Benefits
Many people who seek advice regarding a plan for a loved one with a disability believe that it centers around a trust. Unfortunately, a proper plan is not usually that simple. A comprehensive plan will also usually incorporate long-term residential options, surrogate-decision making authority, and a discussion regarding how any long-term plan will be funded. Such funding will usually incorporate private assets left to the loved one in a special needs trust, but will also incorporate available income streams, such as the myriad of Social Security or federal employee benefits, and Medicaid waivers. Although this is in no way a complete list of topics that need to be addressed when creating a plan, these are often the most prevalent. The attorney you choose to assist with your plan should, as a result, should be prepared to discuss these items with you.
In essence, a large number of plans center around the public benefits that are available to provide for basic support and medical needs. There are two basic benefit categories: benefits based off of financial need and those that are not. Understanding the benefits, a loved one is or will receive is a huge factor in whether a trust is necessary. For instance, a person who has capacity, but is disabled pursuant to the Social Security guidelines, and is receiving benefits that are not based on financial need does not need a special needs trust to continue such benefits, although there may be additional reasons to hold an inheritance in trust.
The following are the most common benefits that are not based on financial need:
- Social Security Disability or Retirement
The Social Security system is complex, and a person with a disability may be receiving disability of retirement benefits off their own work record, or the work record of another. The system is designed to provide dependent and survivor benefits to a select group of people, such as a surviving spouse or child that was disabled prior to age 22 and is unmarried.
- Dependent Benefits under Federal Retirement Systems
Military Survivor Benefits (SBP) may be available to a dependent child if the military member elected coverage. Depending on the election, the dependent child may receive up to 55% of the base amount at the time of the retiree’s death. If the retired military member elected spouse and child coverage, the child will only receive benefits after the death of both the retired military member and the surviving spouse. If the retiree had more than one dependent child, this benefit is divided between all eligible children. A dependent child will also retain TRICARE enrollment.
Civil Service Survivor Benefits are also available for dependent child. The child may receive the benefit even if a widow(er) is also receiving a survivor benefit. Children receiving a civil service survivor annuity are also eligible for federal employee group health benefits if the federal employee had family coverage at the date of his or her death.
Medicare is a federal health insurance program. In general, persons receiving Social Security Disability Income are entitled to Part A Medicare benefits after 24 months of qualified disability, but such period is shortened when an individual has a certain diagnosis, such as ALS or end-stage renal failure. Medicare Part A covers inpatient hospital services, home health, and hospice benefits. It also pays for a very limited amount of Skilled Nursing care, but not custodial care. A Medicare beneficiary may enroll for Medicare Part B benefits, which covers physicians’ charges, but must pay a monthly premium. Medicare generally does not pay the entire cost of these services, but instead requires deductibles and co-pays. Additionally, a Medicaid recipient may receive Medicare Part D, for a monthly premium, which provides Medicare beneficiaries with limited assistance to pay for prescription drugs. Medicare provides alternatives to the traditional coverage under Parts A, B and D though Medicare Advantage Plans.
The following are the most common benefits that are based on financial need:
- Supplemental Security Income
Supplemental Security Income is designed to provide minimal income to an individual for food and shelter-related expenses. Eligibility is not based off of an individual’s work record, but instead, need. To be eligible, the individual be must be (i) age 65 or older, blind, or disabled, (ii) a U.S. citizen (with limited exceptions), and (iii) not a resident of a public institution. In addition to asset limitations, there is an income offset that is imposed on earned and unearned income.
There are three major programs under the Medicaid system, all of which have different financial criteria: CHIPS, Medicaid Expansion, and ABD Medicaid. Age, Blind, and Disabled Medicaid is both income and asset tested, but provides a robust benefit to persons with disabilities beyond just traditional health insurance. Specifically, under the waiver programs, Medicaid provides various community-based care services, such as home health aides and personal care assistants. Various programs also provide residential services though group homes and assisted living facilities. There are also Medicare cost-sharing programs, called Medicare Savings Programs, designed to offset costs under the Medicare Program.
- House Choice Vouched Program (Section 8)
Section 8 is a federal subsidy to assist with monthly housing costs, and is an income-based benefit. Under Section 8, the household pays a portion of monthly housing costs, usually 30% of the household’s monthly adjusted income. Subsidies are administered by a Public Housing Agency (“PHA”) under a contract with the U.S. Department of Housing and Urban Development (“HUD”).
While this is merely a brief overview of benefits, there is a web of nuances associated with each. It is important to consult with attorneys who are well versed in understanding the benefits your loved one currently or will receive and the impact their financial situation may have on such benefits.
Hook Law Center: Hey, Neo! With all these fun weather we’re having, our furry friends might be exposed to more foreign materials while outside. Anything bad we should keep an eye out for? What should we do if they eat something that may be toxic?
Neo: There are a lot of “myths” regarding what pets can and can’t have, in addition to home remedies for when we’re exposed to toxic substances. The friendly folks at the ASPCA have a great article all about busting these myths. Take a look by clicking here!