If someone with special needs is a beneficiary of a special needs trust and is also receiving SSI (Supplemental Security Income) benefits then the Trustee of the trust must be very careful to not make any distributions that would jeopardize SSI eligibility.
One of the no-no's for the trustee is paying for "food" or "shelter". If a special needs trust picks up the tab at the restaurant or covers the grocery bill then it may reduce or eliminate the SSI benefits. Although food is allowed under certain circumstances, such as food provided during a "medical confinement".
There could also be SSI eligibility problems if the trustee uses trust funds to pay for shelter costs such as rent, heating fuel, gas, electricity, water, sewerage and garbage collection services. Again, the "medical confinement" exception applies.
But don't confuse "shelter costs" with "home ownership". It's OK for a special needs trust to owna house in which the SSI beneficiary lives.
By the way, the words "food" and "shelter" are usually accompanied by the word, "clothing". But not in the world of SSI eligibility, as of 2005. In other words, gifts of clothing to SSI beneficiaries are no longer a problem because it's not counted as income or in-kind support and maintenance.
Many of my clients get confused between SSI, SSDI, Social Security retirement benefits, etc. And with good reason; the acronym "SS" makes the names of these benefits too similar (clients have the same problem distinguishing between "Medicaid" and "Medicare").
Supplemental Security Income (SSI) is very different from regular Social Security Retirement benefits since you don't have to be a certain age to obtain it. If you are determined to be disabled to the point that you cannot earn enough income to meet your basic needs, regardless of your age, then Social Security Administration (SSA) will send you a cash payment each month which is designed to help you pay for food and shelter.
Another big difference between SSI and regular SS retirement benefits is that SSI has asset limitations that must be met, which are $2,000 for an individual and $3,000 for a couple. Furthermore, your "countable" income will reduce your SSI benefit amount, which means that if you have more countable income than the benefit amount then you cannot get SSI.
SSA recently announced that the maximum monthly SSI benefit amount for 2010 will be $674 for an individual $1,011 for a married couple. These are the same rates as 2009, so no cost-of-living-adjustment next year.
Some states, like Connecticut, add a "state supplement" amount to the federal benefit. The Nutmeg State tacks on $168 for an individual and $275 for a couple.
SSI benefits keep coming until you are no longer disabled. Your case can be reviewed occassionally, and if SSA believes that your condition may improve in the future then they will probably schedule periodic reviews.
You can get more detailed information at SSA's website.
Recipients of Supplemental Security Income (SSI) and Social Security Disability Income (SSDI) can look forward to slightly higher payments in 2009.
The federal SSI monthly payment standard will increase from $637 to $674 for an individual, $956 to $1,011 for a couple. This means that an SSI recipient can receive more income (earned or unearned) before benefits will be terminated.
Social Security Administration (SSA) estimates that the average SSDI payment will increase from $1,006 in 2008 to $1,064 this year.
The threshold for substantial gainful activity (SGA) for SSDI will increase from $940 to $980. If an individual's income is such that thethreshold amount is exceeded then SSDI benefits are typically lost.
Also, in 2009 students who receive SSI will be able to exclude up to $6,600 of annual income if they are regularly attending school. This figure is up from $6,240 last year.
All the details on these cost-of-living adjustments are here.
Any family with an SSI recipient needs to know about special needs trusts. My posts on this topic are here.
For Social Security Disability purposes, to be considered "disabled" a person must have a medical, psychological, or psychiatric impairment and it must be severe enough that it keeps the person from working and earning above a certain amount, for at least one year.
Your medical records must indicate the presence of an impairment, or several impairments, either physical or mental in nature. It also means that the disability must be bad enough to keep you from working. Or, if you can still work, it must prevent you from earning more than $900.00 each month (gross, before taxes). This amount is called the "SGA", which stands for "substantial gainful activity".
Please note that the disability doesn't have to actually last one year...you're fine if your doctor projects that the disability will last at least that long.
Whether you agree with Barak Obama on the issues or not, I have to say that his election victory yesterday was deeply inspiring. I'm proud that our country, which did not allow people of color to sit on certain seats in a bus a mere 70 years ago, managed to elect an African-American to be its President. Last night we made a tremendous statement to the world, and the international reaction to the election is absolutely fascinating.
Well, now that we know who will be leading our country for the next four years, this post offers a simple summary of where our new president stands on a few of the big-ticket items when it comes to Social Security. I will cover Obama's stance on other topics of interest to seniors in future posts.
Privatization. Obama clearly is not in favor of privatizing Social Security. Here is a statement he made in June: “Well let me be clear. Privatizing Social Security was a bad idea when George W. Bush proposed it. It's a bad idea today. It would eventually cut guaranteed benefits by up to 50 percent. It would cost a trillion dollars that we don't have to implement on the front end, permanently elevating our debt. And most of all, it would gamble the retirement plans of millions of Americans on the stock market. That's why I stood up against this plan in the Senate, and that's why I won't stand for it as President.”
Social Security Payroll Tax. Obama seems intent on reforming the Social Security payroll tax. Specifically, he's interested on removing the current cap on payroll taxes, which currently exempts all income above the first $102,000 you earn. Here's Obama in October of 2007: “Social Security is not in crisis; it is a fundamentally sound system, but it does have a problem, long-term. We've got 78 million baby boomers, who are going to be retiring over the next couple of decades. That means more retirees, fewer workers to support those retirees. We are going to have to do something about it. The best idea is to lift the cap on the payroll tax, potentially exempting middle-class folks, but making sure that the wealthy are paying more of their fair share, a little bit more.”
Raising the Retirement Age vs. Cutting Benefits. Obama wants to do neither. His website says: “Obama will protect Social Security benefits for current and future beneficiaries alike. And he does not believe it is necessary or fair to hardworking seniors to raise the retirement age.” On Meet the Press in November 2007, he said “I believe that cutting benefits is not the right answer; and that raising the retirement age is not the best option.”
The U.S. Treasury Department is ready to order a pre-paid debit card for Social Security and Supplemental Security Income (SSI) recipients. Residents of all states will have this option by the end of the summer.
The purpose is to accomodate recipients who do not have a bank account, and switching from paper checks will be less costly, more secure and make monthly benefit payments available to recipients faster.
The full story is in this Wall Street Journal online article.
Here is the singlemost important thing to remember about your Social Security benefits: Social Security should be conceptualized as a general financial foundation for your retirement years, but absolutely not as your sole source of retirement income.
The average Social Security benefit for a retired worker in 2007 is only $1,044 per month and $1,713 per month for a worker and his or her spouse. These numbers are determined by the Social Security Administration (SSA) with the goal of keeping beneficiaries above poverty level, albeit barely!
The rule-of-thumb among financial planners is that you will need approximately 70% of your annual income from your working years to comfortably sustain yourself during your retirement. The problem with Social Security is that the benefits will replace only about 40%, on average, of your pre-retirement income. That leaves a 30% shortfall that you will need to make up with pension income or investments.
So start your retirement planning as early as you can, if you haven't done so already, and make sure that you have a realistic understanding of the role Social Security will play in your retirement income picture. For more detailed information on this topic, visit the SSA online or call them toll-free at 1-800-772-1213 (TTY 1-800-325-0778).
