Two Different Disability Benefits Have Very Different Results
Two different Social Security benefits for disabled participants, Social Security Disability (SSD) and Supplemental Security Income (SSI), have very different income and asset requirements and lead to very different planning results. The irony is that many, perhaps most, of the participants in these programs, when asked, do not know which program is the reason for their checks.
The Social Security Administration does not indicate on the check the reason for the payment.
Social Security Disability is the disability program that generally pays benefits based on work history. SSI pays based on very low income. It is possible to be on both programs, as a so-called dual eligible if your income from Social Security Disability is so low that you fall below the guideline for SSI.
As between SSD and SSI, it may generally be preferable to be on SSD since it is not restricted by the severe requirements of SSI. See more below.
Finally, there are additional ways you might qualify for Social Security benefits if you are disabled. For instance, you might collect Social Security while disabled if your disability began before age 22, referred to as a developmental disability, and you are claiming on the work history of another person, typically your parent, who is retired, disabled, or deceased. Also, if you are a disabled widow or widower claiming on the work history of your deceased spouse.
Here are some of the important distinctions between Social Security Disability and Supplemental Security Income to be aware of.
With Social Security Disability, you may have unlimited assets and income, provided that the income is not the result of work. This ability is incredibly important if you might, for instance, inherit money or have investment income. You are not restricted. The reason you cannot have a regular work schedule is that this would indicate you are not disabled.
With Supplemental Security Income (SSI), in addition to the requirement that you are unable to work, assets and income are strictly limited. The effect is that, if you are receiving an inheritance or investment income, for instance, unlike with SSD, you are very strictly limited. Total countable assets (basically liquid assets) for an individual are not to exceed $2,000. Couples may have a total of $3,000. Payment under SSI is also very low. The maximum payment in Pennsylvania combining both federal and a state supplement for an eligible person living independently is $721 per month in 2014. www.socialsecurity.gov.
The primary benefit under SSI is that SSI recipients also qualify for Medicaid for their health insurance. This was especially important prior to the Affordable Care Act (Obamacare), since, with preexisting conditions and without Medicaid it was often almost impossible to get health insurance.
Regarding the extent of disability, the same disability standards that apply to SSD also apply to SSI.
For planning purposes, the most significant difference between SSI and SSD is that parents, grandparents and other parties who might want to benefit an individual who is receiving or could receive SSI must be extremely careful that the funds that they leave to them or gift to them do not result in the SSI recipient losing benefits especially Medicaid. Also, according to experts like injury attorneys, SSI recipients and their parents and guardians who are receiving or holding the proceeds from a personal injury settlement may need to be extremely careful. Work with an experienced social security disability lawyer who can help you seek the maximum compensation for your injuries. For auto accident claims, work with a car accident injury lawyer who can help you get the compensation you deserve. You may also consider seeking professional advice from a new port richey personal injury lawyer.
For planning, families often look to so called Supplemental Needs Trusts or Special Needs Trusts to protect their family member. These trusts, if drafted and managed properly, can allow an SSI recipient to keep benefits and have a fund for extra or supplemental needs.
A common law testamentary supplemental needs trust needs to include precise language that the Trustee for the disabled person acts in his or her absolute discretion, is to consider all available benefits including government benefits available to the beneficiary, and that the trust is intended to supplement and not to supplant public benefits.
Payback Trusts also known as (d)(4)(A) Trusts can be established with the funds of the SSI recipient but are extremely complicated, require payback to the government if funds remain in trust, and should never be attempted without professional assistance. Other options include a pooled trust or a third party supplemental needs trust established during the lifetime of the party providing the funds.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.