SNT Expert Series: Public Benefits Considerations for Parents of Children with Disabilities
This article is a part of True Link’s SNT Expert Series. We have interviewed leaders knowledgeable in disability planning, Elder Law, and trust administration and will be sharing their expertise with you in a series of videos and posts. Note: the opinions and views expressed in these videos do not necessarily reflect those of True Link Financial or True Link Financial Advisors. This article is not intended to provide investment, legal, tax, accounting or medical advice. Before making decisions involving investing, legal, tax, accounting or medical concerns, you should consult appropriate professionals regarding your specific situation.
When you’re the parent of a child with disabilities, public benefits are typically important to your family’s financial well-being. In addition to helping you manage the costs of care during childhood, these programs can also provide financial support after someone turns eighteen. But it can be difficult to determine which programs are available to your child and how they can maintain eligibility. To help you feel a little more informed, here are four things experts want you to be aware of when it comes to public benefits:
1. There’s more to benefits than Social Security and Medicaid
You’re likely already familiar with the benefits options available through the Social Security Administration (SSA) and Medicaid. Children under 18 with a qualifying disability are eligible for Supplemental Security Income (SSI), and those receiving SSI generally qualify for Medicaid – though this may vary by state. But beyond these well-known benefits programs, there may be other resources your child qualifies for – now or in the future.
One example of a program that experts often encourage people with disabilities to take advantage of is an ABLE Account. Elder Law and Special Needs Attorney Thomas Smith works with many of his clients to set up an ABLE Account. “We almost always recommend an ABLE account if and when they get to SSI eligibility [...]. This is a great time to open up an ABLE account, and we set a budget, and we recommend to a family what amount of dollars will go in that ABLE account every month. And now we don't worry about hitting the $2,000 [resource cap for SSI], and we've created a tool where they can save money.”
The ABLE National Resource Center estimates that more than 8 million people are eligible to open an account, but only 126,000 accounts were active as of 2022. This indicates that there are likely many more families who could benefit from this program if they were aware of the ABLE Account benefits.
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2. It is possible for your child to work AND still receive benefits
It is a common misconception that you cannot work if you want to continue receiving SSI or Social Security Disability Insurance (SSDI) benefits, but as Smith shares, there are programs at the state and federal level that actually encourage benefits recipients to work.
“What we're really trying to do is keep a family from saying, “well, you're on SSI, so don't go get a job. That's self-defeating, and we don't want that at all. We want to inform them, help them understand that they can get a job. We might have to pay attention to how much you're making so that we're doing this the right way, but there's almost always a way to work.”
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3. Child support payments can impact benefits eligibility
If the parents of a child with a disability get divorced, there are some specific things you need to consider when drafting your divorce settlement agreement to protect your child’s wellbeing.
Special Needs Attorney Laurie Hanson explains, “If you're getting divorced and you have a child with special needs, you need to make sure that the child support payments are either directed into a first party special needs trust, or will not affect that child's ability to obtain medical assistance or SSI benefits.”
<div style="padding:56.25% 0 0 0;position:relative;"><iframe src="https://player.vimeo.com/video/877670985?badge=0&autopause=0&quality_selector=1&player_id=0&app_id=58479" frameborder="0" allow="autoplay; fullscreen; picture-in-picture" style="position:absolute;top:0;left:0;width:100%;height:100%;" title="How to Direct Child Support Payments in a Divorce for Children with Disabilities"></iframe></div><script src="https://player.vimeo.com/api/player.js"></script>
4. Prepare for a shift in benefits (and responsibilities) at age 18
When a child turns eighteen, they are legally considered an adult in most states. This means that the benefits they are eligible for and the requirements for eligibility can change. Smith works with his clients to assess which programs they may age out of and which new programs they may want to consider.
But even before doing this benefits assessment, Smith makes sure his clients have a decision-making structure in place for this next phase of life. “When you're under 18, the parents have full autonomy and authority, as normal. But when we turn 18, all of a sudden in the eyes of the law, that child is an adult.” Together, they figure out what’s the appropriate role for the parents to play in the child’s life – maybe that’s power of attorney, maybe it’s guardianship and/or conservatorship. Once these decisions are made, a conversation about benefits can take place.
<div style="padding:56.25% 0 0 0;position:relative;"><iframe src="https://player.vimeo.com/video/877669420?badge=0&autopause=0&quality_selector=1&player_id=0&app_id=58479" frameborder="0" allow="autoplay; fullscreen; picture-in-picture" style="position:absolute;top:0;left:0;width:100%;height:100%;" title="Financial Planning for a Child with a Disability before they Turn 18"></iframe></div><script src="https://player.vimeo.com/api/player.js"></script>
5. Plan ahead for Life Insurance payout
Life Insurance policies are a common tool used in the estate planning process to pass along funds to a loved one. But to avoid compromising their benefits eligibility, you need to make sure the funds are being inherited in the appropriate way. Hanson shares, “If one of the parents is to maintain a life insurance policy, you want the beneficiary of that life insurance policy to be a third party supplemental needs trust. That's very important.”
Navigating complex benefits programs is a time when parents may want to work with an expert who has expertise in these programs. An Elder Law attorney, special needs planner, or case manager can help you understand what programs your child qualifies for, how to remain eligible, and how to maximize their public benefits.
Want to watch these videos on Vimeo? Here are the links to the guest expert videos related to this topic:
Using ABLE Accounts for a Child receiving SSI Benefits – Thomas Smith, Elder Law and Special Needs Attorney at Thomas Smith Attorney at Law
Can my Child Work while Receiving SSI Benefits? – Thomas Smith, Elder Law and Special Needs Attorney at Thomas Smith Attorney at Law
How to Direct Child Support Payments in a Divorce for Children with Disabilities – Laurie Hanson, Special Needs Attorney and Partner at Northwoods Law Group
Financial Planning for a Child with a Disability before they Turn 18 – Thomas Smith, Elder Law and Special Needs Attorney at Thomas Smith Attorney at Law
