Protecting Your SSI and SSDI: Steps to Take to Ensure You Don’t Lose Valuable Government Benefits
Thursday, July 25th, 2013
As parents, one of the most important things that we can do is advocate to ensure that our child receives the services and supports required to reach his or her fullest potential. Securing government benefits for your child is an important part of this process, and these benefits can play an integral part of the financing structure for future housing and independent living goals. Once these benefits are secured, it is equally important to ensure that they remain protected.
In March of this year, M&L Special Needs Planning, LLC, published blogs that discuss two government benefits: Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). If you are unfamiliar with these benefit programs, please visit these blogs for more information: Understanding Supplemental Security Income (SSI) & Medicaid and Understanding Social Security Disability Insurance & Medicare. Today, we are going to discuss how you can take steps to safeguard an individual’s eligibility for these government benefits, now and in the future.
What are the differences between SSI and SSDI, and How Can They be Lost?
Essentially, SSI is a needs-based, means-tested government benefit that is funded by tax dollar revenue. Needs-based and means-tested refer to the fact that in order to qualify for SSI, the government requires that you establish that you have a financial need (i.e. have less than $2000 in assets per individual or $3000 per couple). The individual must meet the SSA’s disability criteria, and it must also be determined that due to the disability the individual cannot work above the Substantial Gainful Activity (SGA) amount. SGA for 2013 is $1040 a month. It is important to understand that determining SGA is a decision made by the SSA, and a complicated one at that. When making this decision, the SSA looks at the income/resources of the individual trying to qualify for SSI, as well as their ability to work. They ask questions such as, “Is it possible for this individual to work or does the disability affect that person’s ability to get a job like a ‘typical’ person?”
In very simple terms, if someone is making more than $1040 a month while they are applying for SSI, the Social Security Administration will deny them because they are making SGA. This is the case even if they have a disability that Social Security recognizes.
There is a maximum monthly amount that an individual can receive under the SSI benefit, although some states add a supplement. This benefit is intended to pay for food and shelter only; if the individual isn’t using SSI to pay for these expenses than he or she may not receive the maximum amount. For 2013, the Federal Benefit Rate is $710 a month.
SSI can be in jeopardy if the individual receiving benefits receives an inheritance, gift, etc. that puts his or her asset level over the aforementioned limits, i.e. $2000/individual, $3000/couple, and/or has earned or unearned income over the eligibility limits. Unearned income limit is $730 a month and earned income limit is $1505 per month. These are 2013 numbers.
SSDI differs from SSI in that SSDI is an entitlement benefit. It is a long term disability program that one (or one’s dependents) can receive if he or she has paid Social Security taxes for the required period of time (which is determined by duration of work and recent work tests). Applicants must also meet the SSA’s disability criteria (same criteria as SSI), and be deemed unable to engage in Substantial Gainful Activity due to that disability, meaning that the individual must not have monthly earnings of more than $1040 a month. This is for 2013.
SSDI payment amounts can vary; the monthly payment is based on the social security earnings of the insured worker on whose social security number the disability claim is filed.
SSDI benefits can be lost if the individual has monthly income above the SGA amount. However, there are work incentives created by the Social Security Administration that enable individuals to make more than SGA – in these cases, the gross monthly amount of SGA is reduced by the work incentive dollars. Here is a simple example: the individual needs special transportation to get to and from the job, therefore the cost of the transportation is deducted from the SGA amount. There are rules as to how the work incentives can be applied, but the main rule is that the incentive can be applied if it is necessary for the individual to go to work.
How do I ensure that I protect my SSI benefit?
When determining eligibility for SSI (based on the resource limit), the SSA will look assets such as cash, bank accounts, and property. The SSA WILL NOT look at the home the person lives in, one motor vehicle, life insurance with no cash value (i.e. term insurance), certain burial funds, special needs trusts, and property used for a job or business. If an individual’s assets increase above the eligibility limits, the SSA will be notified through various avenues, i.e. IRS, etc. This may result in the individual losing some or all of the SSI benefit. If SSA determines that they overpaid benefits to the individual, then the individual must pay it back – typically, the SSA will reduce the benefit check by 10% until the overpayment has been reclaimed.
There are a number of ways that an individual can protect his or her SSI benefit; first of all, it is important to notify friends, family members, etc. that the individual receiving SSI should not be named as a beneficiary or receive an inheritance for wills, life insurance policies, pension or retirement plans. It is important to note, however, that if the individual’s Special Needs Trust is named as a beneficiary in any of the above cases, the beneficiary of this trust can access these funds for any product, service, etc. above and beyond what the government provides.
The second most important step to ensuring that the SSI is protected is to be cautious with the management of the Special Needs Trust. It is important to pay particular attention to the expenses that the trust covers, (for example, if the trust covers expenses such as food and shelter than SSI benefits can be compromised) as well as the purchase of “overly expensive items”. If funds for the trust are used for these expenses/purchases, then the trustee may need to explain or justify the actions of the trust.
Lastly, it is important that friends and family members understand how gifts of money can adversely affect the individual’s eligibility; take time to notify people how to gift in a way that will benefit the individual in the long term, and provide them with options that will not jeopardize the individual’s government benefits.
How Do I Protect my SSDI Benefits?
There is no resource/asset limit for the SSDI benefit, therefore the individual receiving SSDI can be name as a beneficiary for insurance policies, settlements, etc., and can also receive inheritances without risk of losing the benefit. However, if an individual receiving SSDI makes more than the Substantial Gainful Activity (SGA) amount, then he or she can lose SSDI benefits. Otherwise, the SSDI benefit will last for the lifetime of the individual, as long as he or she continues to have a disability.
M&L Special Needs Planning, LLC, can Help you Apply For and Protect Your Government Benefits
For individuals who want to pursue employment but are concerned how work will affect their benefits, whether they are SSI, SSDI or both, M&L is here to help! Maedi Tanham Carney CFP® CWIC is a licensed Certified Work Incentive Coordinator, and is trained to help individual with disabilities understand how earnings from employment will affect their benefits. The bottom line is that individuals with disabilities will make more money working than not working and staying on benefits. We show how this is when we work as benefit counselors.
If you would like to begin the process of applying for SSI or SSDI, please contact us – we can help! This is a complicated process and most applications are denied due to lack of documentation. You do not want your loved one to be denied for any government benefit. It is a hassle and sometimes can take years to fix. We have an excellent track record of helping families apply for benefits, and they become eligible the first time around.
M&L Special Needs Planning, LLC, can also help you protect your government benefits. M&L founder Maedi Tanham Carney CFP® CWIC is a Certified Financial Planner, and has extensive experience helping families arrange their finances to ensure that they maximize and protect the use of personal and public (government) benefits. In addition to having the aforementioned Certified Work Incentive Coordinator (CWIC) certification, Maedi provides work incentives planning and assistance directly to beneficiaries with disabilities to assist them in their employment efforts. CWICs will also conduct outreach efforts to beneficiaries with disabilities (and their families) who are potentially eligible to participate in Federal or State work incentives programs.
The staff of M&L Special Needs Planning, LLC, would like to take a moment to thank all of you who stop by to read our weekly blog; we hope that this week’s post has provided you with valuable information that will allow you to take the necessary steps to securing government benefits for your family member(s) with special needs. Have an excellent Thursday!!!
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