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Even If Your Child Doesn’t Receive SSI Or Medicaid, You May Still Need To Set Up A Special Needs Trust

special needs trustSocial Security Disability Insurance (SSDI) is a federal program that typically provides cash stipends to people who have paid into the Social Security system and who can’t work due to disability.  (In some cases, it is possible to receive SSDI even if you haven’t worked.) In most cases, when someone has been eligible for SSDI benefits for two years, the individual also receives Medicare, even if he or she is under age 65.

From a special needs planning perspective, SSDI benefits are fairly easy to deal with because the program does not have an asset limit or a restriction on unearned income, like interest or dividends.  This means that a millionaire who meets the program’s requirements can receive SSDI benefits alongside a completely impoverished person. It also means that from a purely financial perspective, a person with resources doesn’t need to shelter her assets in a special needs trust in order to qualify for SSDI benefits as she would have to do if she were receiving means-tested government benefits like Supplemental Security Income (SSI) or Medicaid.

But this does not mean that SSDI beneficiaries should not have special needs trusts. In fact, there are many benefits to having a special needs trust that go far beyond the ability to maintain eligibility for SSI or Medicaid. For instance, a person with a mental illness may be unable to manage money. A special needs trust would allow that person’s funds to be invested and spent appropriately by a qualified trustee.  In another case, a person with special needs may be able to handle her personal finances but she might live in an environment where she is susceptible to mistreatment by others. In this situation, a special needs trust would provide an appropriate buffer between the beneficiary and the people who would otherwise take advantage of her.

When it comes to special needs planning, you never want to take anything for granted.  Just because an SSDI beneficiary might not need Medicaid and SSI now, it doesn’t mean she won’t qualify for, or require, services from those programs in the future. For instance, an SSDI beneficiary may rely on private health insurance and Medicare, but if she loses her insurance and Medicare doesn’t cover certain medications, it might be incredibly important for that beneficiary to receive Medicaid, which could make a special needs trust essential.

Finally, there is one particular type of special needs trust, called a first-party special needs trust, that is specifically designed to hold the beneficiary’s own assets. In most of the examples above, this is the type of special needs trust that would be required. Unfortunately, only a parent, grandparent, guardian or court can establish a first-party special needs trust for the beneficiary, even if she is completely competent to create a trust on her own. Therefore, if the parent or grandparent of a person who receives SSDI has the capability, it is probably a good idea for him to create the trust for his child or grandchild, on the off-chance that it will have to be used later, instead of relying on an expensive and time-consuming court process.

There are lots of reasons to have a special needs trust beyond merely qualifying for government benefits.  If you or a loved one receives SSDI and doesn’t have a special needs trust, our attorneys can help you determine the best estate planning option to meet your needs. Contact DJ Jeyaram at DJ@Jeylaw.com or 678.325.3872.

What To Do When Your Special Needs Child Completes High School

ClassroomPictPart I: The Path To Employment

As our children begin to enter into early adolescence, many of us begin to realize that many – if not all – of the services and programs that our child relies on for care will soon disappear and be replaced by radically different benefits.

Most of these new benefits abruptly come into play once our children leave the public education system. This may happen at any time between the ages of 18 and 23, depending on the state you live in and your child’s particular needs.

One of the most important aspects of this transition is securing employment services for our children. According to the National Collaborative on Workforce and Disability, one-quarter of all adults with disabilities work at either a full- or part-time job.

Some of the remaining three-quarters are unable to work at all due to their disability; but a large number of disabled adults who aren’t employed don’t have a job because they lack the skills necessary for gainful employment. Several federal laws address this situation with the goal of providing vocational education to a wider segment of the population with disabilities.

The Individuals with Disabilities Education Act (IDEA) mandates that special education plans begin transition planning when a child turns 14. At this point, a written transition plan must be incorporated into a child’s Individual Education Plan (IEP), outlining the steps a school will take to help a child with special needs acquire skills necessary for an eventual move into the workforce.

By the time the child turns 16, the special education team must steer the child towards development programs keyed towards the child’s individual vocational preferences. The law also mandates periodic measurement of the child’s progress to ensure that he receives attention from the proper vocational advocates.

Once your child reaches 18 and receives either Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) payments, the Social Security Administration (SSA) offers several programs to encourage your child to work. The best-known program, Ticket to Work, is a somewhat complicated program designed to offer beneficiaries a way to begin a career without having to worry about losing their SSI or SSDI benefits.

SSI beneficiaries, on the other hand, must conform to very strict income and asset limits. Often, beneficiaries who could hold a job do not pursue one because they are worried that they will lose their SSI benefits once they earn too much. While this is certainly a concern, the benefits of employment may outweigh the loss of SSI. Furthermore, the government provides specific incentives for SSI beneficiaries to work. For instance, if a person with disabilities is under 22 and at school or in a vocational training program, $1,780 of his monthly income does not count against his SSI benefit, up to a yearly limit of $7,180.

The Social Security Administration also offers the PASS (Plan for Achieving Self Support) program for SSI beneficiaries who would like to work. Under this program, a beneficiary presents the SSA with a detailed plan for obtaining a specific type of employment. Once the SSA approves the plan, a beneficiary sets aside income and assets towards achieving her goal without having those funds count against her benefit. Funds can be used for things like childcare, transportation, books and supplies, and additional education and training.

Many programs are available for people with special needs to seek employment if they would like to do so. Unfortunately, the rules for most of these programs are complicated and the SSA is often not very good at explaining them.

Beginning to plan well before your child completes high school – with the assistance of local vocational agencies and qualified special needs planners – is your best chance for successfully navigating the maze of educational opportunities for your child.