February 2015

Income for People with Special Needs

Posted on February 26, 2015 by Jim Koewler — No Comments ↓

Everyone needs income to support themselves and their needs. People with special needs may not be able to generate enough income through work or may not be able to work at all. For someone who cannot work to support themselves (and who is not yet eligible for Social Security retirement benefits,) the source(s) of income might have certain restrictions.

Let’s start with the no-restrictions income. If anyone (special needs or not) has enough invested money to generate enough income to support their needs and their lifestyle, no other sources of income are needed. (Yes, this means rich people.) These people do not need to worry (not at this time, anyway) about special needs law and protection of their income. They’ve got investment risk but not a special needs law problem

People who aren’t quite so rich may need to draw down their invested assets to keep up with their necessary expenditures. These people need to project whether how long their assets will last. People like this (who need to use some of their assets to support themselves) may want to consult an attorney who practices in special needs to see if government program (or maybe charitable programs) can help their assets last.

People who have enough of a work history (during which they paid into the Social Security system) should be eligible for Social Security Disability Income (SSDI.) These are people who may have suffered a debilitating accident or may have some sort of disease that affects people in middle age, such as MS or ALS. (Remember, to get SSDI, you have to have significant work history and not yet have reached retirement age.) Their SSDI does not have restrictions (except for people who become ineligible for SSDI by working despite their disability and, as a result, making more than a minimal income.) SSDI payment may or may not be enough to support the disabled person’s needs. If not, then the government and/or charitable benefits available to special needs people may become necessary.

People who do not have enough of a work history may need Supplemental Security Income (SSI.) SSI is not available to people who have assets above $2,000. That’s not much. People who have assets over $2,000 can spend some of their assets or can put the “extra” money into an account that the SSI rules don’t count as the person’s assets. A Special Needs Trust or an ABLE account (discussed in my blog post of February 5, 2015) might be appropriate, for example. In addition, other sources of income or of housing support, could reduce the person’s SSI each month.

A special needs person must have either many valuable assets or an income stream (or some combination) to sustain themselves. Advice from a special needs attorney can help sort out and get the maximum benefits of the person’s assets and income stream.

Special Legal Needs of People with Special Needs

Posted on February 19, 2015 by Jim Koewler — No Comments ↓

People with special needs (sometimes called disabilities) have legal needs (and related legal opportunities) that others do not have. One of the opportunities is the ABLE account (discussed in my blog post of February 5, 2015.) While the ABLE account is useful, if used in moderation, for easy money management without affecting government benefits, there are a number of other legal issues facing people with special needs.

Many of the legal issues facing people with special needs concern financial eligibility for government benefits. (Special Needs law is like Elder law in that way.) There are strategies for protecting the special needs person’s money while still maximizing government benefits. There are different strategies to allow family members to provide for the special needs person without impacting government benefits. These strategies form the backbone of the legal services for people with special needs.

In addition, to the strategies mentioned above regarding how to own assets that belong to or can benefit a person with special needs, legal issues can arise concerning income sources, housing, food, education, caregivers, management of assets and personal care. Frequently, these issues are tied together.

For example, a person with special needs may receive Supplemental Security Income, the Social Security program for people who haven’t worked long enough (and will never be able to work long enough) to qualify for Social Security Disability Income. Housing made available to the SSI recipient above the minimal level allowed can lead to a reduction in SSI benefits, however. Similarly, the value of the special needs persons’ assets may be too high for a parent to get the necessary bonding to act as guardian. In addition, legal needs may be different for someone who became disabled as an adult than they are for someone else who has been disabled since childhood or even since birth.

Special Needs Law isn’t like checkers. The “pieces” don’t all move the same way. Future installments will discuss some of these issues in more detail.

Happiness in long term care is (mostly) up to the resident

Posted on February 12, 2015 by Jim Koewler — No Comments ↓

As I wrote in my post two weeks ago (January 29, 2015,) my Grandma thrived in her nursing home despite our initial struggles with the decision on where she should live after her broken hip (discussed in my blog post of January 22, 2015.) Similarly, my Aunt Gert chose to live in her nursing home over her own house (blog post of January 16, 2015.)

My family’s good fortune with nursing homes resulted from the mindset of my Grandma and my Great Aunt more than from anything else. Grandma and Aunt Gert entered their respective nursing homes with open minds. As a result, both thrived.

Fortunately, Aunt Gert and Grandma didn’t torture themselves about the life that was behind them. They accepted (well, actually, plunged into) their new homes. They made new friends. They got involved in new activities. They acted like they had just moved into a new apartment in a new neighborhood (just with less to unpack.)

We all probably know seniors who have made the lifestyle transition into long term care well. If they receive in-home care, they accept the caregivers (family, friends, or professionals) willingly or even eagerly. Seniors who make successful moves into assisted living or nursing homes, have the “new place to live – new people to meet” attitude that Grandma and Aunt Gert had.

Unfortunately, there are many seniors who let their long term care make them unhappy. Has anyone found the secret to helping others adopt a different mindset?

ABLE Act accounts are great – In Moderation

Posted on February 5, 2015 by Jim Koewler — No Comments ↓

The “Achieving a Better Life Experience” Act (ABLE Act) was signed into law in December 2014. The ABLE Act allows the creation of accounts for people who became disabled before the age of 26. These accounts will help them (or their families or guardians) manage some of the money for their needs in an easy way.

A person disabled before the age of 26 may have an ABLE account. The person can have only one such account. Anyone can deposit money into the account, though. Total deposits cannot exceed $14,000 per year (like the gift tax exclusion,) and this cap is likely to go up every few years. The account will not be taxed (except in certain circumstances.) Perhaps most importantly, the account will not prevent the disabled person’s eligibility for Social Security benefits or Medicaid benefits.

Money from the account can be used for education, and/or medical prevention and wellness services. (Expenditures from a special needs trust for such services effectively reduce government benefits, but these expenditures from an ABLE account should not impact government benefits.) In addition, the ABLE account can pay for transportation, assistive technologies, personal support services, financial management and administration, oversight, monitoring, funeral and burial expenses, and (my personal favorite) legal fees.

HERE’S THE CATCH: The contents of the account when the disabled person dies must be paid to Medicaid as a payback for services Medicaid has provided during the disabled person’s lifetime.

To minimize the sting of the payback rule, DON’T OVERFUND THE ABLE ACCOUNT.

If the disabled person has his or her own money that is preventing the availability of Social Security (that would be Supplemental Security Income) or Medicaid, then some of the disabled person’s money can be placed in an ABLE account to get them closer to financial eligibility. The disabled person’s money is subject to a payback requirement anyway, so moving some money into an ABLE account doesn’t change the payback requirement. But, moving the money into the account can help make government benefits available, a huge benefit to the disabled person.

Also, if the disabled person has a Special Needs Trust or an account inside a pooled trust that was set up from his or her own money, don’t rush to empty the trust into the ABLE account. Some expenditures will probably be easier from the ABLE account, but other expenditures may be easier from a trust. This ABLE account is so new that no one should “put all their eggs” into this one basket. Let the practical use of these accounts shake out a bit before relying too much on them. (My mixed metaphors of eggs and shaking has me craving an omelet.)

Deposits into the ABLE account of (other than the disabled person) should be done in moderation. Remember, money that has never belonged to the disabled person isn’t subject to a payback requirement.

The ABLE account can be a convenient way to manage money. Just don’t overuse it.

Also, the ABLE act allows states to decide for themselves whether to allow these accounts for their residents. I don’t yet know whether Ohio (where I practice) has decided. Until your state decides to accept ABLE accounts, none of today’s discussion might matter to you.