Social Security: Two Programs for People with Disabilities
One of the most stressful times of my life was navigating the tangled web of Social Security and Supplemental Security Income for my disabled twin boys.
Now, as a financial advisor specializing in disability and special needs planning, I want to share my experiences to help others through the confusing maze of forms and government administrators.
Let’s get started with some clarification.
The Social Security Administration (SSA) of the U.S. federal government has two distinct programs for people with disabilities. One is Social Security Disability Income (SSDI) and the other is Supplemental Security Income (SSI).
Some people simply refer to Social Security (SS) benefits without clarifying the specific program (SSDI or SSI).
With four similar acronyms on the table - SSA, SS, SSDI, and SSI - things can get confusing quickly!
In this post, I’m going to focus on Supplemental Security Income (SSI).
What is Supplemental Security Income (SSI)?
Supplemental Security Income (SSI) is a cash benefit program for individuals with disabilities. SSI has a maximum monthly benefit of $794 in 2021 (it adjusts for inflation each year). Both income and assets (assets are called “resources” by Social Security) determine eligibility and benefit level.
For a minor child with a disability, a parent’s assets are "deemed" available to a child. Generally, there is a $2,000 asset limit, but there are both “countable” and “non-countable” resources. Anything in use for daily living, including your house, one car, even your sofa, etc., is non-countable. Thus, careful planning with asset location is important and can impact eligibility.
Medicaid & Other Planning Considerations
The cash benefit of SSI is not even the most beneficial part of SSI. It’s the fact that receiving any SSI benefits automatically qualifies you for Medicaid (subject to some additional eligibility testing).
The importance of eligibility for Medicaid cannot be overstated. Your child will get access to government-funded health insurance that provides services that you can't even get with private health coverage. SSI is a gateway to Medicaid programs that can affect the quality of life for you and your loved one.
If your income is variable, you may qualify for SSI in some months but not in other months. Qualifying for SSI in most, but not all, months still provides access continuous access to Medicaid.
Each state has a special Medicaid “waiver” programs, but the waiting lists are generally long. They are called waiver programs because they waive some of the income and assets tests of regular Medicaid and SSI.
Why does age 18 matter for SSI?
When a person with a disability turns 18, SSI eligibility is based on his or her income and assets (and not on a parent’s income and resources). Again, the amount of the benefit is sometimes secondary to qualifying or Medicaid.
Special Needs Trusts
Putting resources inside a special needs trust can also help maintain SSI eligibility and the linked Medicaid health insurance for a lifetime.
There are two types of special needs trusts—a first-party and third-party special needs trust. The difference between the two is how they are funded. Special needs trusts are a critical piece of planning for your child, and it deserves a future blog post of its own.
But for now I’ll state this: if prepared correctly, assets held in trust do not count towards the $2,000 income threshold, still allowing a person to qualify for SSI and Medicaid.
My Advice to You
When applying for SSI and Medicaid, you must be persistent. It's the government you are dealing with, and your branch of the Social Security Administration may be understaffed or inefficient.
If you're not getting a response by phone or written communications, visit your local Social Security office. When I was working on benefits applications for my twin boys and struggled to get an answer, I finally visited in person with one of my disabled sons and got results!
Another tip: don't forget to get the name and the direct number of the person working on your case; otherwise, you may get stuck in a permanent nightmare with hold music.
Parents and guardians of special needs children have one quality in common – we will do anything for our children. And that often means struggling with bureaucracy. We want the best care for our children, and we will continue to advocate and champion them.
If you need help in any of the areas discussed in this blog, or to create a financial plan that takes into account the current and future needs of your special needs child, please don’t hesitate to reach out. I've been there, and I want to help.
About the Author
Neil Mahoney, CFP®
is a fee-only CERTIFIED FINANCIAL PLANNER™ professional who loves to help special needs families and people with disabilities make the most out of the money they have so they can live the best life possible.
