In our previous post, we began looking at the importance of proper planning in order to see to the care of family members with special needs. We left off discussing the importance of being aware of asset thresholds associated with eligibility for government benefits programs like Social Security and Medicaid.
An example of the kinds of requirements that must be observed in special needs planning are that family income and resources must earn little or no money and have less than $2,000 available assets to be eligible for Supplemental Security Income. State laws differ, but in 39 states and the District of Columbia, those receiving Supplemental Security Income are automatically eligible for Medicaid. And in those states that don't have automatic eligibility, reception of SSI benefits increases one's chances of qualifying for Medicaid.
Even where the family of a disabled person has the financial means to support that special needs individual, they may end up depleting their assets. And there is no guarantee that they will later be eligible for benefits.
Because of this situation, some families choose to disinherit their special needs child. This ensures that they will qualify for government benefits, but problems can arise with this approach. If another relative, for example, leaves that child money in excess of $2,000, they can be disqualified later on for Supplemental Security Income and potentially Medicare.
Some people choose, instead, to leave assets for a special needs child with a sibling charged with their care, but there is no way to be sure that the sibling will continue to honor that commitment.
Special needs trusts have great advantages over these alternatives to special needs planning. In our next post, we'll look at these advantages.
Source: Business Insider, "Unique Ways To Ease The Financial Burden Of Special Needs Care," Joe Mont, January 11, 2012.