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By John M. Bigler This month I would like to discuss Social Security Disability (SSD) and Supplemental Security Income (SSI) benefits for disabled people. Although this topic does not typically affect seniors, it can have a major impact on elder law planning, especially if there's a disabled child in the family.
As a rule, transfers to a child receiving SSD benefits won't cause any problems for that child. SSD is an entitlement program based on the payment of Social Security taxes over the years, and so even if that individual were to win the lottery, it would not affect their monthly SSD or the Medicare coverage that commences after two years of receiving disability benefits.
On the other hand, SSI is a poverty program and the effect of a transfer on an individual receiving SSI benefits will be substantial. Although an individual receiving SSD can have an unlimited amount of resources and other income, an individual receiving SSI is entitled to only $2,000in resources plus a $1,500.00 burial fund. They're also entitled to $651 of monthly income. Obviously, then, a transfer of a significant amount of assets from a parent hoping to be eligible for Medicaid will typically mean termination of SSI benefits for a child. If the child turns around and transfers the assets out of the child's own name, that transfer will cause a period of ineligibility of as much as three years for SSI benefits.
In addition, those receiving SSI benefits automatically receive Medicaid benefits. Assets being transferred to the child will cause a termination of Medicaid benefits as well. However, unlike with SSI, a retransfer by the child will not cause any period of ineligibility for community Medicaid and so it will simply be a matter of the child's applying at the local Department of Social Services for Medicaid and reestablishing eligibility.
Obviously, having a child receiving SSD benefits is an excellent safety valve against future catastrophic medical illness and could greatly reduce the need for making prior transfers. However, having a child with SSI benefits can also be useful. Although it may not eliminate precautionary transfers, it's nice to know that if a traumatic, unexpected need for nursing home care arose, there would be the option to transfer assets to the child. Although the monthly SSI benefit would be discontinued for at least three years, that amount weighed against the monthly cost of a nursing home, on average $10,000 a month, would clearly make the transfer an appealing option.
In order to be eligible for either SSD or SSI benefits, it's necessary to prove an inability to engage in substantial gainful activity for at least one year or have a condition that is expected to result in death. The initial application typically results in a denial but that should not be a source of discouragement. The next step is an administrative hearing before an administrative law judge. On Long Island, we're fortunate to have some particularly good judges who are very fair and who give the alleged disabled person every benefit of the doubt. Unfortunately, it can take well over a year before getting to a hearing, during which time no benefits are available. However, because the office not only tends to be sympathetic to the claimant but is administratively well run, once the hearing is held, a decision is issued relatively quickly. Benefits will then be paid retroactively to a point five months after the alleged disability.
Being disabled presents many difficulties, not only for the individual but for their families as well. For once, there's been recognition by Congress that the disabled and those caring for them should be entitled to some benefit, and a transfer to a disabled child does present a valuable planning tool if properly understood.
Reprinted with permission of the Suffolk Times © 2004 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
Medicaid regulations provide that a transfer to a disabled child does not result in a period of ineligibility to the transferor when applying for institutional Medicaid benefits. Proof of disability is the receipt of Social Security Disability benefits or SSI benefits. If a child is receiving one of these two benefits, then the child acts as a safety valve for an older person, who can transfer assets to that child at the last minute and still preserve those assets. The problem is the effect that the transfer has on the child, and that's the subject of this column.