As a Stratford special needs lawyer, I often receive questions about whether a disabled individual can continue to receive public benefits after receiving an inheritance. The answer is that it really depends on the type of benefit that is being collected, the age of the beneficiary, and what other planning options are available.
Social Security Disability Insurance (SSDI)
SSDI is a government benefit that helps those with disabilities. Individuals are eligible to receive SSDI if they are unable to have substantial and gainful employment due to disability and if they have paid into Social Security for a specific amount of time depending on their age (or, if the individual is under 22, a parent has paid into social security for a number of years and is disabled, receiving Social Security payments, or deceased). If the individual can earn money through substantial gainful employment, then he or she may not be able to receive the SSDI benefit. However, the individual is still allowed to receive income from other sources and will not be disqualified from receiving the SSDI benefit if an inheritance is left to the person collecting benefits. SSDI has no asset limitations, unlike many other benefit programs.
Supplemental Security Income (SSI)
While SSI is often confused with SSDI, as they both provide benefits to individuals with special needs, they are in fact two very different programs. SSI does not require an individual to have paid into the system for qualifying periods of time. An individual can qualify for SSI if they are aged, blind or disabled. SSI has very strict asset requirements placed on SSI recipients, and assets above the threshold will disqualify the individual from receiving benefits. The asset limit for a beneficiary is $2,000, excluding a house that they own and an automobile. An inheritance would be an increase in assets and can stop benefits for a significant period of time. Stratford special needs attorneys advise that any inheritance left to a person with special needs should be done through a Special Needs Trust, allowing the funds to be used on the individual’s behalf without jeopardizing their public benefits.
Medicaid is a federal health insurance program designed to help those with little to no income, including people with disabilities by providing health insurance and long term care benefits. This is a need-based program with very strict financial limits placed on the beneficiaries of the programs. Not only must the beneficiaries meet income limits that can vary by program, they also must meet an asset limit, which is scrutinized over a look-back period of five years. Once an individual receives benefits, there are periods of redetermination where additional income or assets received must be disclosed. In some cases, assets left to a beneficiary may have to be spent to reimburse the federal and state agencies that manage the programs. Stratford special needs lawyers urge anyone that anticipates receiving an inheritance while on Medicaid to talk to a lawyer about setting up a trust to ensure that any government benefits stay intact.
If you have any questions regarding special needs trusts and government benefits, please call us at (203) 877-7511 to set up a consultation.