Special People Need Special Consideration

You may have someone in your life that is struggling with a disability. You want to be helpful and even generous. They could use your financial help, right?

WAIT! If your someone is receiving Medicaid or other government benefits, helping them out may do more harm than good. Helping them out financially, may cut their benefits to an extent that they will be out more money than you give them.

Here is an example:

I have a friend whose son was receiving Medicaid and SSI as he was disabled. The son’s father died and Social Security issued a check for death benefits to the son. Even though it was Social Security on both sides of the equation, the Social Security death benefits would disqualify the son for Medicaid and SSI benefits. Luckily, my friend knew enough to call an attorney. She had to scramble around and get the money put into a Trust, but at least she was able to do that and her son wasn’t knocked off SSI and Medicaid until his regular bills and expenses ate up the death benefit.

What is a Special Needs Trust?

A Special Needs Trust (SNT) is a trust that is set up so that money that a disabled person gets can be saved and spent on items that will better that person’s life.

Medicaid and Supplemental Security Income (SSI) are monies made available to disabled people who have little to no assets. In fact, recipients must have less than $2,000 non-exempt assets in order to qualify. Qualifying is not just a once and done thing either. The person receiving benefits must qualify every month. That means, in the case of my friend, if the Death Benefit was placed into the bank account of my friend’s son, Social Security would have said he had too many assets to qualify that month for both SSI and Medicaid. Then the $10,000 he received would have gone to pay the son’s medical expenses, ordinarily covered by Medicaid, and regular living expenses, paid for out of the son’s SSI check, until the $10,000 became less than $2,000. You can see how this is not a situation that would have benefited anyone other than Social Security.

With a Special Needs Trust, the money is placed into a trust that is not considered to be an asset of the disabled person; however, the money is used for that person’s benefit. There are a bunch of rules about what you can and can’t spend the money on, but the general premise is that it pays for things that Medicaid doesn’t pay for: like a car, modifications to a home for the benefit of the disabled person, or even a vacation.

The point is, any money given to the disabled person, if put into a Special Needs Trust, really does end up making their life better.