THE BANK RESOURCE SHUFFLE

PROTECT YOURSELF FROM LOSING BENEFITS BECAUSE OF HAVING TOO MUCH CASH IN THE BANK

BY ROB WRUBEL, CFP®

Individuals receiving Federal benefits from SSI cannot have more than $2,000 total in countable resources (including any bank accounts) or they face losing benefits. It is easy to exceed that limit.

For example, individuals receiving Supplemental Security Income (SSI), receive funds each month into a bank account in their names or into a representative payee account. SSI allows a person to gain access to Medicaid, which can pay for housing, food, medical expenses, and access to community benefits.

The federal SSI amount in 2022 is $841 for an individual, and some states add to that.

You can see the problem. Within three months, if the money is not spent, a person will have $2,523 in that bank account and will be over the resource limit. The problem compounds if the individual works. It is true that most people need some of the income to live, but if not watched carefully, the account or accounts can grow to a total value of over $2,000 and the benefits will be lost.

Whatever you do, I suggest automating your process. Put something in place that automatically sweeps funds from the bank account each month for fixed expenses. This way funds won't pile up, if you forget to pay a bill or are ill or out of town.

Each of these strategies has unique planning, tax, estate planning and investment risks, so make sure you work with your legal and financial advisory team to take the steps that work best for your situation, and conform to state and federal laws.

Smart, informed planning can preserve benefits, fund accounts for future needs and maintain a high quality of life for your family member with Special Needs. •

ABOUT THE AUTHOR:

Rob Wrubel is a CFP who has a daughter with Down syndrome. He is recognized as a leading expert on financial planning for families with special needs members. Wrubel has written two books about financial planning and special needs families — Financial Freedom for Special Needs Families: 9 Building Blocks to Reduce Stress, Preserve Benefits, Create a Fulfilling Future and Protect Your Family: Life Insurance Basics For Special Needs Planning — and he has been published recently by Law360.com and The Good Men Project. Wrubel holds the Certified Financial Planning (CFP®) designation, the Accredited Investment Fiduciary® (AIF®) designation from Fi360, and the Accredited Estate Planner (AEP®) designation from the National Estate Planning Council.

MAINTAINING A HIGH QUALITY OF LIFE FOR YOUR FAMILY MEMBER WITH SPECIAL NEEDS : PRESERVING BENEFITS

Here are several strategies to consider which will help you keep the bank account(s) below the $2,000 threshold and preserve benefits.

1. SPEND THE MONEY

The easiest way to get funds out of the bank is to spend it. The funds must be spent to benefit the person with the disability. This seems obvious but I feel the need to mention it. Examples of reasonable expenses are: rent, food, utilities, cell phones, internet access, assistive devices and services, etc. Allowed expenditures will often use all or most of the money. It is important to keep accurate records of these expenditures, whether they are paid by check, charge, PayPal, or other means.

2. MOVE MONEY TO AN ABLE ACCOUNT

Move money to an ABLE account. Set up an ABLE account and send transfers from the bank to the ABLE each month. An ABLE can be funded with up to $16,000 (in 2022) for a nonworking person.

3. WORK WITH A POOLED-INCOME TRUST

A pooled trust is usually operated by a nonprofit serving families with special needs members. They hire professional management and provide a trustee to oversee funds. These can be quick to put in place and fund.

4. CONSULT AN ATTORNEY

Speak with a qualified attorney to see if setting up a trust is an option. If you have an existing trust, from something like an injury settlement, that could be an option as well.