The acronyms that are used to describe government programs can be confusing because they are similar. With this in mind, we will provide an explanation of Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) in this post.
When you part with some of your hard-earned money to pay FICA taxes, it can seem as though it is going into a black hole. In reality, when you remit these tax payments, you earn retirement credits that will lead to eligibility for Social Security and Medicare.
In 2021, you get one credit for every $1470 in taxable income that you earn, and the maximum annual accrual is four credits. After you have accumulated 40 credits, you will qualify for these programs when you reach the respective eligibility ages.
For Social Security, the eligibility age for a full benefit depends on your birth year, but it will be somewhere between 66 and 67. Every person that is sufficiently vested can apply for Medicare when they are 65 years of age.
If you become disabled prior to reaching the eligibility age, you can potentially qualify for Social Security Disability Insurance. This benefit has nothing to do with your income or assets, because it is tied to your lifetime contributions into the program.
According to the Social Security Administration, the average monthly SSDI benefit this year is $1128, and the most you could receive is $3140 a month. The exact amount would be based on the amount of taxable income you earned over the years.
Most people get health insurance through their jobs, so this is another consideration if you can no longer work because you are disabled. Individuals that qualify for SSDI are automatically eligible for Medicare coverage, but there is a two-year waiting period.
Supplemental Security Income is potentially available to people with disabilities, but it is a need-based program. Even if you never earned a single retirement credit, you could qualify for SSI.
People who qualify for SSI are automatically enrolled in the Medicaid program, and there is no wait involved.
This benefit will certainly help, but the payouts are very modest. The maximum benefit for an individual recipient is $794, and the average is $577.
Estate Planning for People With Special Needs
SSI is a program that estate planning attorneys are very familiar with because we help people provide inheritances for loved ones with disabilities. Since it is a need-based program, you cannot qualify if you have more than $2000 in countable assets.
A home is not counted, but Medicaid is required to seek reimbursement from the estates of people that were Medicaid beneficiaries during their lives. During this recovery phase, a lien could be placed on the home of a deceased benefit recipient.
It is possible to use a supplemental needs trust to provide for a loved one with a disability that is relying on Supplemental Security Income and Medicaid. The trustee would be able to use the assets to make the beneficiary more comfortable in many ways without impacting the benefits.
If you fund a supplemental needs trust for the benefit of someone else with your resources, it would be a third party trust. Under these circumstances, a successor beneficiary that you name in the trust agreement would inherit the remainder after the first beneficiary’s death.
The assets would be protected from Medicaid estate recovery, so this is a comprehensive strategy that covers all of your bases.
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You should certainly absorb all the information that you can, but at some point, it is time to work with a Cincinnati estate planning lawyer to put a plan in place. If that time is now, we are ready to help you develop a custom crafted plan that is ideal for you and your family.
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