BENEFITS PLANNING

Your family member with a disability has the potential to access a number of Federal and State benefits, particularly once they become an adult and age out of school, which typically happens between 19 and 26, depending on your state of residence. However, the applicant is required to provide certain evidence of eligibility for these benefits. Often, it is best to begin to collect the evidence several years prior to the application. Some of the evidence has to date from before certain birthdays. Some require a particular organization of assets. Some require management of income. I recommend to clients that they prepare for and apply for all benefits for which the family member is eligible, even if the person does not need the benefits immediately, or may at some future point have the capacity to live independent of the benefits. Here is what people with disabilities need to know about the basic eligibility for certain benefits:

•  SUPPLEMENTAL SECURITY INCOME (SSI): This is a cash benefit available to people with disabilities who have low income and few assets. Frequently, a person will not qualify for SSI prior to age 18, because at those younger ages, parental income is “deemed” to be available to the child and therefore most children have too much income to qualify. However, at age 18, the person with a disability may apply as a “household of one” and only her or his income and assets will be considered. If the person with a disability is still living with parents, as most are, the parents will be considered to be providing “in-kind” income to the young adult with a disability. Although the person will still qualify, they will not be eligible to receive the maximum SSI benefit. Applicants can avoid this by paying rent, room-and-board, or fair share contributions to the parents. There are subtle differences among those payment structures, which are beyond the scope of this article. Because SSI is a means-tested benefit, any unearned income the recipient has will reduced her/his maximum SSI payable, dollar for dollar, and any earned income will reduce it by 50 cents on the dollar. SSI represents additional dollars that can pay for the person’s living expenses and support needs.
• MEDICAID: In many states, people with disabilities whom the Social Security Administration has declared eligible for SSI are automatically eligible for Medicaid. In other states, the eligibility criteria are the same, but the person must apply separately. In a few states, such as my home state of Illinois, the criteria for Medicaid are narrower than those for SSI, and the person must apply separately. Typically, a person who is eligible for SSI will also be eligible for Medicaid. Although Medicaid is not the best health insurance; it can be a lifesaver for people who have no other health insurance option. For people that do have other health insurance plans, Medicaid can sometimes be the secondary or tertiary payer. Moreover, Medicaid is crucial for accessing services funded by Medicaid Waivers, discussed below.
• SOCIAL SECURITY DISABILITY INSURANCE (SSDI). People with disabilities who work will accumulate Social Security credits. The younger a person is, the less credits s/he needs to be insured for SSDI. At the far end of this continuum, a person who is not yet 24 years old only needs six credits to be fully insured. For 2022, a worker will earn one credit for every $1,510 in gross income, up to the maximum four credits available per year. So you can see that a young worker with a disability can build up the needed credits with only part-time employment. Older workers will need an increasing number of credits. The full table can be found here: https://www.ssa.gov/benefits/retirement/planner/credits.html Unlike SSI, SSDI is not reduced for unearned income. Earned income only impacts eligibility once it is consistently over the overall threshold that demarcates Substantial Gainful Activity, which is $1,350 in gross earnings for 2022. A person may continue to receive some SSI if her/his SSDI benefit and work income are low enough. SSDI channels more dollars into the person’s income-and-expense equation.
• CHILDHOOD DISABILITY BENEFITS (CDB, AKA DISABLED ADULT CHILD BENEFITS, DAC): If a person’s disability conditions started prior age 22, and the person never earns consistently over the SGA threshold, then the person will become eligible for an auxiliary benefit based on a parent(s)’ work record. This benefit can be up to 50% of the value of the higher-wage-earning parent’s full retirement age benefit. If the young person is already receiving SSDI on her/his own work record, s/he will become eligible for an additional amount of CDB, such that the two combined will be up to 50% of the parent’s FRA benefit. Typically, a person who receives a CDB or DAC will have too much unearned income to continue to qualify for SSI.
• MEDICARE: Once a person has been receiving SSDI or CDB benefits for 24 months, s/he becomes eligible for Medicare. This is the same Medicare that is available to seniors and is a pretty good form of health insurance, particularly when the person’s income is low enough that Medicaid will cover the cost share elements of Medicare. Medicare coverage can reduce considerably out-of-pocket medical expenses, particularly for those who are dual Medicare/Medicaid eligible.
• MEDICAID WAIVERS: In most states, residential, employment and other living supports for adults with disabilities are funded by Medicaid Waivers. This allows agencies to receive Medicaid reimbursement for long-term-care type services provided in the community rather than in a nursing home setting. To access these services, the person receiving them must be eligible for Medicaid even if they are not using Medicaid for healthcare. Medicaid waivers, in the form of the value of the services they fund, can represent anywhere from $29,000 to over $100,000 annual infusion into a special needs plan.