| Massachusetts Disability & Special Needs Planning frequently asked questions answered by Attorney Stephanie Konarski
How does Social Security define a disability? What is the difference between SSI and SSDI? When should I, or can I, apply for SSDI? How much money will I receive if I qualify for SSDI? I am disabled. Can I apply for, and receive SSDI, even if I have money in the bank? What if I'm not permanently disabled? Can I still receive SSDI? Can I work and earn "any" income while on SSDI? What is a "trial work" period? What is the Supplemental Security Income (SSI) Program? Can I receive Social Security benefits and SSI benefits? How much can I receive in SSI? What are the eligibility requirements that a person must meet to qualify for SSI benefits? Is there an Income or Asset Test for SSI? How are SSI cash benefits affected by work and earnings? What will happen to our adult disabled child after my husband and I pass away? What is a supplemental needs trust? What are the advantages of a supplemental needs trust? Who can create a supplemental needs trust? Must the supplemental trust be irrevocable? What kinds of expenses can a supplemental needs trust pay for? What expenses should a supplemental needs trust not pay for? Will trust income affect SSI eligibility? How can I fund a special needs trust? Can a disabled individual fund his or her own supplemental needs trust? Can others contribute to my child's supplemental needs trust? Why is it important to work with an Attorney who specializes in supplemental needs trusts? What are the alternatives to a supplemental needs trust? My disabled child is about to turn 18, what should I do?
How does Social Security define a disability?To be eligible for benefits, a person must be unable to do any kind of substantial gainful work because of a physical or mental impairment (or a combination of impairments), which is expected either to last at least 12 months, or to end in death.
What is the difference between SSI and SSDI?Social Security Disability Insurance (SSDI), which is based on prior work under Social Security, and Supplemental Security Income (SSI). Under SSI, payments are made on the basis of financial need. Social Security Disability Insurance (SSDI) is financed with Social Security taxes paid by workers, employers, and self-employed persons. To be eligible for a Social Security benefit, the worker must earn sufficient credits based on taxable work to be "insured" for Social Security purposes. Disability benefits are payable to blind or disabled workers, widow(er)s, or adults disabled since childhood, who are otherwise eligible. The amount of the monthly disability benefit is based on the Social Security earnings record of the insured worker. Supplemental Security Income (SSI) is a program financed through general revenues. SSI disability benefits are payable to adults or children who are disabled or blind, have limited income and resources, meet the living arrangement requirements, and are otherwise eligible. The monthly payment varies up to the maximum federal benefit rate, which may be supplemented by the State or decreased by countable income and resources.
When should I, or can I, apply for SSDI?When you believe you qualify or will qualify under the definition. You do not have to wait until you have been disabled 12 months, it must only be expected to last at least 12 months or result in death.
How much money will I receive if I qualify for SSDI?For disability insurance benefits, your monthly benefit is based on how much you've worked and earned over the years. A disabled claimant will receive the same monthly benefit that he or she would receive had he or she retired at full retirement age (65 years old or more depending on age). (Currently the most an individual can receive is $2323 (2009) per month).
I am disabled. Can I apply for, and receive SSDI, even if I have money in the bank?Yes. For a person eligible to receive SSDI benefits, overall wealth does not factor into the monthly benefit amount.
I received a notice from Social Security saying it over paid me. Do I have to return the money? It was their error.No, if you appeal their decision and win the appeal or if the mistake was theirs and it would be a hardship for you to repay the amount, you can apply for and receive a waiver of the overpayment.
What if I'm not permanently disabled? Can I still receive SSDI?It depends upon the nature of your disability. If your disability will not last 12 months, then you are not eligible. If your disability does not prevent you from doing any kind of substantial gainful employment, then you are not eligible.
Can I work and earn "any" income while on SSDI?Substantial gainful employment is defined in 2009 as $980.00 per month if you are disabled or $1,640 if you are blind. If you have nominal earnings that do not exceed that amount, you can earn the money. But if you are able to maintain substantial gainful employment, you are no longer eligible.
What is a "trial work" period?A trial work period is an opportunity to try and go back to work to see if you can do it without jeopardizing your benefits. A trial work period last for 7 months and must be reported to the Social Security Administration. If you are unable to maintain substantial gainful employment, your benefits will not be terminated because you tried to go back to work.
What is the Supplemental Security Income (SSI) Program?The Supplemental Security Income program is funded by the general revenues of the Federal Treasury and is intended to provide a minimum level of income to persons who are age 65 or older, disabled, or blind and demonstrate economic need. The SSI program is meant to supplement any income an individual might already have to ensure a certain level of income to meet basic living expenses. The dollar amount received in SSI on a monthly basis varies from person to person and is computed each month, taking into account an individual's current financial situation. You can be eligible for SSI even if you have never worked in employment covered under Social Security.
Can I receive Social Security benefits and SSI benefits?You may be able to receive SSI in addition to monthly Social Security benefits, if you Social Security benefit is low enough to qualify.
How much can I receive in SSI?The amount of your SSI benefit depends on where you live. The basic SSI check is the same nationwide. Effective January 2009, the SSI payment for an eligible individual is $674 per month and $1,011 per month for an eligible couple. However, many states add money to the basic check. Generally, the more income you have, the less your SSI benefit will be. If your countable income is over the allowable limit, you cannot receive SSI benefits. Some of your income may not count as income for the SSI program, however. For example, the first $20 per month of your Social Security benefits may be excluded in determining your eligibility to SSI
What are the eligibility requirements that a person must meet to qualify for SSI benefits?For an individual to be eligible for SSI they must be disabled, or blind, or aged and have little or no income and resources.
Is there an Income or Asset Test for SSI?Yes. To be eligible for SSI a person must meet an income as well as resource test. SSI resource limits are set by statue and a person's countable or real personal property, including cash, must not exceed the specified amount to qualify. The current resource limit is $2,000 for an individual and $3,000 for a couple. Income includes earned income (which refers to monthly gross earnings), and unearned income such as Social Security Disability Insurance (SSDI) or any other type of benefit or monetary support a person receives.
How are SSI cash benefits affected by work and earnings?Once eligible, the amount of SSI an individual receives on a monthly basis depends solely on their income and resources. While their SSI check will decrease as earnings increase, an SSI recipient will continue to get a cash benefit until their earnings increase to the point at which their SSI check is reduced to zero. This is referred to as the break-even point.
In addition to earnings, are their other factors that affect the dollar amount of an individual's SSI check on a monthly basis?Yes. SSI is an economic need based program intended to supplement any income or resources an individual already has to ensure that they have a minimum level of income each month. Therefore, the dollar amount of a SSI benefit received in a given month depends on the dollar amount of other income and resources that an individual has for that particular month. In January of each year Congress establishes the Federal Benefit Rate (FBR) which is the maximum dollar amount that an individual or couple can receive in SSI cash benefits on a monthly basis. How much of the FBR a person receives depends on all of the following factors:
What will happen to our adult disabled child after my husband and I pass away?With a properly prepared trust, assets can be set aside and your child can remain eligible for government sponsored benefits such as housing and Medicare so your child's needs will be taken care of even after your death.
What is a supplemental needs trust?Supplemental needs trusts (also known as "special needs" trusts) are drafted so that the funds will not be considered to belong to the beneficiary in determining his or her eligibility for public benefits, such as Medicaid, Supplemental Security Income (SSI), or public housing. These trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds, such as education, recreation, counseling, and medical attention beyond what is required simply to maintain an individual.
What are the advantages of a supplemental needs trust?The primary advantage a supplemental needs trust offers over a direct gift or inheritance is that, if arranged properly, the assets in the trust do not actually belong to the beneficiary. In this way, the trust can provide benefits to an individual but not cause the individual who has a disability to be disqualified from government programs. If a disabled beneficiary is left an outright gift, either by will or through the intestate laws, he or she would lose eligibility for SSI and Medicaid until the funds are spend down to the allowable limit. A supplemental needs trust holds title to property for the benefit of a child or adult who has a disability. The supplemental needs trust can be used to provide for the needs of a person with a disability and to supplement benefits received from various governmental assistance programs. A trust can hold cash, stocks, personal property, and real property. It can own and/or be the beneficiary of life insurance. Supplemental needs trusts also can be used to protect personal injury settlements or judgments from jeopardizing government benefit eligibility. Most importantly, they can help parents coordinate their estate plans and provide peace of mind that their child will be provided for.
Who can create a supplemental needs trust?A supplemental needs trust can be set up by anyone for the benefit of a disabled individual. Very often supplemental needs trusts are created by a parent or other family member for a disabled child (even though the child may be an adult by the time the trust is created or funded). But the disabled individual can often create the trust himself or herself, depending on the program for which he or she seeks benefits.
Must the supplemental trust be irrevocable?Yes, if it is created and funded by the person seeking public benefits himself or herself. No, if it is created and funded by someone else for the benefit of the person receiving or seeking public benefits.
What kinds of expenses can a supplemental needs trust pay for?Each public benefits program has restrictions that must be complied with in order not to jeopardize the beneficiary's continued eligibility for public benefits. A supplemental needs trust may provide for medical and dental expense, eye glasses, annual independent check-ups, transportation, equipment, training programs, education, maintenance, insurance, rehabilitation and dietary needs. The trust may also allow the trustee to give the beneficiary money for various forms of entertainment, electronic equipment, trips and vacations, computer equipment, companion services and home health aide and other items to enhance self esteem.
What expenses should a supplemental needs trust not pay for?Special needs trusts are designed to supplement, not replace, the kind of basic support provided by government programs like Medicaid and Supplemental Security Income (SSI). Special needs trusts pay for comforts and luxuries -- "special needs" -- that could not be paid for by public assistance funds. This means that if money from the trust is used for food or shelter costs on a regular basis or distributed directly to the beneficiary, such payments will count as income to the beneficiary. This can affect eligibility for government benefits like Medicaid and SSI. One of the trustee's most important jobs is to use discretion in making distributions from the trust so as not to jeopardize the beneficiary's eligibility for these government benefits. For example, if the beneficiary receives SSI, there are some basic expenses that should not be paid through a supplemental needs trust without consultation with a special needs attorney including, cash given directly to the beneficiary for any purpose, food or groceries, restaurant meals, rent or mortgage payments, property taxes, homeowners or condo association dues, homeowners insurance if the insurance is a mortgage requirement , utilities such as electricity, gas, and water, and utilities hookup or connection charges. However, many of these payments will only cause a one-third reduction in SSI benefits. The trustee may determine that the benefit of the trust making these payments far outweighs the loss of income.
Will trust income affect SSI eligibility?Under current Federal law, any inheritance of more than $2,000 disqualifies individuals with disabilities from most federal needs based assistance, including Supplemental Security Income (SSI) and Medicaid. Benefits from state public assistance programs may also be affected. Income paid from a supplemental needs trust to a beneficiary will reduce SSI benefits by one dollar for every dollar paid to him or her directly. In addition, payments by the trust to the beneficiary for food or housing are considered "in kind" income and, again, the SSI benefit will be cut by one dollar for every dollar of value of such "in kind" income. Some attorneys draft the trusts to limit the trustee's discretion to make such payments. Others do not limit the trustee's discretion, but instead counsel the trustee on how the trust funds may be spent, permitting more flexibility for unforeseen events or changes in circumstances in the future. The difference has to do with philosophy, the situation of the client, and the amount of money in the trust.
How Do You Choose a Trustee?Choosing a trustee is one of the most important and difficult issues in supplemental needs trusts. The trustee must have the necessary expertise to manage the trust, including making proper investments, paying bills, keeping accounts, and preparing tax returns. A professional trustee will have these skills, but may be unfamiliar with the beneficiary and his unique needs. For those who may be uncomfortable with the idea of an outsider managing a loved one's affairs, it is possible to simultaneously appoint both a professional trustee and a family member as co-trustees. It's also possible to hire a trust "protector," who has the power to review accounts and to hire and fire trustees, and a trust "advisor," who instructs the trustee on the beneficiary's needs. However, if the trust fund is small, a professional trustee may not be willing to serve. Make sure that whomever you choose is financially savvy, well-organized, and, most important, ethical.
How can I fund a special needs trust?A parent with a child with special needs should consider buying life insurance to help fund the special needs trust set up for the child's support. What may look like a substantial sum to leave in trust today may run out after several years of paying for care that the parent had previously provided. The more resources available, the better the support that can be provided to the child. And if both parents are alive, the cost of "second-to-die" insurance -- payable only when the second of the two parents passes away -- can be surprisingly low.
Can a disabled individual fund his or her own supplemental needs trust?In many cases, funds belonging to, or about to be received by, a disabled individual can be used to create a supplemental needs trust for that individual. The rules, however, are much more restrictive and sometimes require a court order to create this trust. Further, the rules may only permit an individual to create his or her own supplemental needs trust if under age 65. We call this kind of supplemental needs trust, when funded with the disabled individual's own money, a "Self-Settled Supplemental Needs Trust". The other kind, referring to a supplemental needs trust created by a parent or grandparent, is sometimes called a "Third Party Supplemental Needs Trust". However, once created, both kinds of supplemental needs trusts operate by the same rules, with one important exception: the self-settled supplemental needs trust requires, to the extent of any funds remaining on the death of the disabled beneficiary, payback to the state up to the amount of Medicaid benefits paid out. There is currently no payback for SSI payments and no payback requirements for third party supplemental needs trust.
Can others contribute to my child's supplemental needs trust?One key benefit of creating a trust now is that your extended family and friends can make gifts to the trust or include the trust in their estate planning. You can also consider whether making the trust the beneficiary of a life insurance policy makes sense now, while you are healthy and insurance rates are low. In these cases, the supplemental needs trust should be irrevocable rather than revocable.
Why is it important to work with an Attorney who specializes in supplemental needs trusts?It is important that supplemental needs trusts not be unnecessarily inflexible and generic. Although an attorney with some knowledge of trusts can protect almost any trust from invalidating the child's public benefits, an attorney without special needs experience may not customize the trust to the particular child's needs, and the child may not receive the benefits that the parent provided when they were alive. Another mistake attorneys without special needs experience make time and time again is putting a "pay-back" provision into the trust rather than allowing the remainder of the trust to go to others' upon the special needs child's death. While these "pay-back" provisions are necessary in certain types of supplemental needs trusts, an attorney who knows the difference can save your family hundreds of thousands of dollars, or more.
What are the alternatives to a supplemental needs trust?You can choose to disinherit the disabled child, and leave the funds to your other children with the understanding that they will provide for their disabled brother or sister. Sometimes this plan works effectively. However, the siblings are not under any legal obligation to use the money for this purpose. Also, it is difficult to predict the future. This money could be subject to your children's creditors, divorce, business failures, lawsuits. The money that you had intended to provide for your disabled child may not be used as you had wished. Sometimes siblings feel more secure knowing that there is an established plan defining their responsibilities.
My disabled child is about to turn 18, what should I do?Once a child reaches the age of 18, he or she has the right to make decisions about health care and where to live, even if the child is not competent to do so. You will need to obtain court-ordered guardianship of a developmentally disabled child after the child reaches the age of 18. Guardianship and/or Conservatorship can authorize you to make placement, financial and medical treatment decisions. |
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