What are these government benefits I have been writing about protecting with proper estate planning? Government benefits will play an important role for most families caring for a person with a disability. While costs can vary greatly depending on the disability, few families have the resources to provide the resources necessary for lifetime care of someone with a disability. There are quite a number of details and the following is meant to act as an overview of what’s available and to be protected.
The primary sources of government benefits we refer to are SSDI, SSI, Medicaid and Medicare. The definition of disability for SSDI and SSI are the same, but the programs do have their differences. Disability is defined as the inability to do any substantial gainful activity by reason of any medically determinable physical or medical impairment which can be expected to result in death of which has lasted or can be expected to last for a continuous period of not less than 12 months.
SSDI is available to workers who become disabled prior to age 65 and have satisfied the Social Security earning requirement. It is available to children of retired, disabled or deceased Social Security participants if the child has a disability that occurred prior to the age of 22. The benefit is based on the parents work history and is ½ of the parent’s benefit if they are retired or disabled and ¾ if the parent is deceased. In 2018, a non-blind person can earn up to $1,180 per month before they reach the substantial gainful activity threshold. This number increases to $1,970 a month for a blind person.
SSI is a needs based program that pays a cash benefit to those who are elderly, blind or disabled and lack sufficient resources to provide for themselves. In the event of a minor child with a disability, the parents income is counted as a resource for the child until they reach the age of 18. The maximum monthly benefit is currently $771 for an eligible individual. This can be reduced by any income received by the disabled person. Income in this case is defined as anything that can be used to meet your needs for food and shelter, including cash or in-kind income (food/shelter or something used to get food/shelter).
Medicare is basically government health insurance. Most individuals qualifying for SSDI will generally be eligible for Medicare. Some expenses are not covered under this program, most notably nursing home expenses. Medicare is broken up into multiple parts (i.e. part A, B, C, D) and each covers different expenses.
Medicaid is a federally sponsored program, administered by each state and the rules can differ significantly from state to state. Medicaid is usually available to those who qualify for SSI and some others with limited resources. There are income and asset tests in order to qualify. Unlike Medicare, Medicaid DOES pay for nursing home expenses. This is the primary funding for those with disabilities living in residential facilities. The asset limit for a single individual trying to qualify for Medicaid is $2,000. There is also a look back provision for those thinking they will simply re-title or gift assets when meeting the resource test.
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