CMP Financial Planning

Social Security and Disability Planning


If you have a special needs child who has a permanent disability, it is likely that social security benefits will be an important component of their special needs plan. Although in most cases Social Security benefit payments will need to be supplemented to pay for your adult child’s living expenses, particularly if they are living independently, Social Security is nonetheless an important funding source to consider in your special needs planning.

SSI and SSDI Defined

Your child with a disability will likely be eligible at some point in their life for one of two programs under Social Security: Supplemental Security Income (often referred to as SSI) and Social Security Disability Insurance (often referred to as SSDI). Both programs both provide monthly income to those who qualify. Both have similarly defined eligibility criteria: a person needs to have a permanent physical or mental disability that is marked by severe functional limitations. SSI, however is a means tested program, while SSDI is based on social security earnings (in most cases the parent’s earnings). SSI considers the income and assets of the person with special needs and their family in determining benefits up until the individual’s 17th birthday. When the person with a disability turns 18, only their income and assets are considered in the benefit calculation.   On the other hand, SSDI benefits apply regardless if the individual is under or over 18 as long as they have an established disability that began before age 22 and one or both of his or her parents are receiving Social Security retirement or disability benefits.

In 2017, the maximum monthly SSI payment is $735 per month. For SSDI, qualifying persons can receive 50% to 75% of the parent’s social security benefit, which depending on the parent’s work earnings can translate to a monthly income of up to $1,343 to $2,015 per month. Benefits paid under SSDI are typically higher than SSI.

The Impact of Work on Social Security Benefits

SSI and SSDI benefits are impacted by the person’s with a disability work earnings in very different ways. Under SSI benefits are reduced by 50% for each dollar of work earnings (after excluding the first $65) up to a maximum amount of $735. This means that the qualifying person under SSI could earn up to $1,400 per month (assuming no other income) and still receive some benefit.   Under SSDI, the qualifying person’s benefit is not impacted at all if their work earnings are under the “substantial gainful activity (SGA) limit”.   (In 2017 the activity limit for non-blind individuals is $1,170 per month.)   If their earnings exceed the limit, the person no longer qualifies for the SSDI benefit with some exceptions. The person can continue receiving SSDI benefits and exceed the monthly SGA limit under a 9 month trial period. Importantly, if an individual earns above the SGA amount prior to being eligible for SSDI then they will be not be able to qualify for the program throughout their lifetime.

Social Security, Medicaid and Medicare

Individuals who are eligible for SSI benefits, automatically qualify for Medicaid benefits in Ohio. SSI and Medicaid have an asset limit of $2,000 that impacts benefits. If the individual with a disability’s assets exceeds that amount then they are ineligible for benefits. The Ohio Administrative Code 5160:1-3-05.1 thru 5160: 1-3-05.014 outlines what assets are excluded in the asset calculation. For the most part, liquid assets such as cash are considered in the eligibility calculation. On the other hand, Individuals receiving SSDI benefits for a period of two years can qualify for Medicare benefits. Individuals who had been receiving Medicaid coverage through SSI can still qualify for Medicaid benefits after they qualify for SSDI. In many cases, Medicare coverage offers a better array of health care providers to choose from.

Social Security and Countable Income

Besides work earnings, SSI has a myriad of rules and exclusions to determine what is considered “countable income” that is applied toward the benefit calculation. Medical care and food stamps, for example, are excluded from the SSI income benefit calculation. Housing, if provided for free by a parent or friend, is included in the calculation. Bills paid by someone else for items other than food is not considered countable income.   Gifts, disbursements from trusts, or benefits received from other sources, all count toward the income limit. As you can see from these examples, the SSI benefit calculation is extremely complex. If you think your individual with special needs might quality for SSI or SSDI – most such persons 18 or over will – contact the Social Security office near you to set up an appointment to begin the benefit application process.   You may also want to consider working with a benefit resource specialist to help step you through the application and eligibility determination process.

For most persons with disability Social Security benefits will be an important source of income throughout their lifetime and therefore should be considered in their disability planning. How Social Security eligibility and benefits are determined is a complicated process, and understanding how that process works will enable you to maximize those benefits and enhance the quality of life for the person with disabilities.

By Barry Jamieson

References

  1. Disability Secrets (see disabiltysecrets.com) 2017. “Income Limits and SSI Disability Eligibility.”
  2. Special Needs Alliance, The Voice Newsletter, January 2011, Vol. 5. Issue 2. “Comparing Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
  3. Special Needs Alliance, The Voice Newsletter, June 2011, Vol. 5. Issue 10. “Planning for Adult Children with Disabilities.”
  4. Social Security Administration, 2017. “Benefits for Children with Disabilities.”
  5. Social Security Administration, 2017. “A Guide to Supplemental Security Income (SSI) for Groups and Organizations.
  6. VCU Work Incentive Planning and Assistance National Training Center, 2008. “How Resources Affect SSI Eligibility.”

 

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