Medicaid, SSI, SN Trust, Oh My!

I will be the first to admit that I have a limited understanding of special needs trusts. I know this is something that we should have set up for Kayla already. We know we need to do this, we know it's important. We've done a little research and attended workshops. I still find it all very overwhelming and somewhat confusing.


The basics of what I understand are that special needs trusts are for individuals with disabilities to help ensure their needs are met. Most people with disabilities rely on some form of government assistance for health, care, housing, food (Medicaid/SSI).

The other basic fact that I've heard, but don't fully understand, is that 'you' (ie person w/disability) can't have more than $2000 in countable assets (even including having a vehicle that was given to them) at any one time. Well they can, but then the amount of benefits they are receiving will be reduced, or they can be disqualified altogether. I'm not sure how the $2000 works - if it's checked at the end of every month or what.

I understand that there has to be rules, regulations and guidelines to receiving benefits/assistance; I understand there should be a real need to use these services ... but to be limited to $2000? Really? That frustrates me. I'm frustrated for Kayla, and a bit pissed off about it too, to be honest.

We want our kids to be as independent as they can be, yet they are being held back by this $2000 limitation. What if Kayla gets a job making enough that she can have more than $2000, but not enough to really live off of without those benefits? It feels like it's set in place to not allow growth and independence.

This affects people with disabilities from getting married, because once they are married their assets are combined and then they lose some, or all, of their benefits.

We teach our kids about the value of a dollar and the importance of saving ... but now I'm supposed to tell Kayla to be careful of how much she saves so she doesn't go over that $2000 mark? Can you imagine not being allowed to save more than $2000?

We can't even leave anything to Kayla in her name, we have to make sure grandparents don't do so either. It has to be left in the name of the special needs trust. Can you imagine having children and being able to name one child as a beneficiary on different accounts but your other child can only be named as a beneficiary on the special needs trust? Kayla can't be listed as a beneficiary on any of Joe's military paperwork. Talk about exclusion.

One of the workshops I went to explained that special needs trusts generally cannot be used for food, clothing, or shelter (or that is when you'll start seeing a reduction in benefits/assistance). "The purpose of this trust is to enhance the beneficiary's enjoyment of life. Typical benefits include lessons, memberships, vacations, and traveling companions." You know what I took away from that? Special needs trusts are basically set up for 'fun money.' I'm sure that's not the intent, but it can't be used for food, clothing, or shelter ... so that's my interpretation.

There are a lot of ins and outs of setting up a special needs trust which is why you need to go to a lawyer who specializes in that; to make sure everything is set up correctly.

In 2009 the Achieving a Better Life Experience Act (ABLE Act) was introduced in the Senate and House of Representatives.

The ABLE Act is to allow individuals with disabilities and families to create tax advantaged savings accounts to meet their long-term ongoing support needs related to education, health care, employment, transportation and housing. S.493 and H.R.1205 would allow an account to be established by or on behalf of an individual with a disability. The income earned on amounts contributed to an ABLE Account is tax exempt. The assets held in an ABLE Account would not be counted for purposes of determining an individual's eligibility to qualify for Social Security, Medicaid or other public benefits.   

A couple of bullet statements from the What is the ABLE Act and What Can it Do For You? 

Assets held in ABLE Accounts are specifically excluded from the income and assets tests used to determine eligibility.  This includes the current SSI eligibility requirements that prohibit beneficiaries from having over $2000 in assets at any one time.

Individuals with disabilities are discourages from participating in meaningful work, because for the most part, can't save earnings above their asset limits.

Families are discouraged from providing financial support because it may cause individual with disability to be disqualified from Medicaid/SSI.

Individuals with disabilities who don't have a special needs trust must spend those assets they acquire, such as small inheritance, or wages, in order to remain qualified for Medicaid/SSI.

The links on there have a lot of great information on what this can mean for people with disabilities and their families.

I feel there is a tremendous need for something like the ABLE Act to allow our loved ones with disabilities more opportunities to save money (just like any of us) and live more independently... to be afforded the same opportunities that everyone else has.

I hope by the time Kayla reaches adulthood something like this is in place. Contact your state representatives and encourage them to support the ABLE Act. 

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