Some things just naturally go together, like peanut butter and jelly, peas and carrots, and Elder Law and Special Needs Planning. Okay, maybe the last example is not so obvious, but there is definitely a natural relationship between Elder Law and Special Needs Planning. Both practice areas tend to share common issues, professionals, government benefit programs, and most importantly – clients.
While it’s true that the clientele often overlaps, one important distinction between the two practice areas is that Special Needs Planning clients are usually not as easy to identify as Elder Law clients. The population of individuals with special needs is extremely diverse and contains people from all age groups, whereas Elder Law clients are typically comprised of seniors and their families.
Much like the aging population, the number of people in the United States with special needs has grown significantly in recent decades as a result of medical advances. Most Elder Law attorneys are already well aware of this fact because many of their clients either have special needs themselves, or have expressed their concerns about a family member with special needs.
The government has responded to the growing special needs community through legislation and benefits programs. One of the most important federal statutes related to the special needs community is the Americans with Disabilities Act (ADA). Enacted in 1990, the ADA was passed to more fully protect approximately 43 million Americans with one or more physical or mental disabilities. The statute provides a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities. Additionally, it has helped the general public become aware of many issues faced by the special needs community.
There are several government programs designed to benefit individuals with special needs, including Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Medicaid, and Medicare.
Supplemental Security Income – The SSI program is a Federal income supplement program funded by general tax revenues. SSI pays benefits to disabled adults and children who have limited income and resources. SSI benefits are also payable to people 65 and older without disabilities who meet the financial limits. The maximum federal SSI payment amounts increase with the cost-of-living increases that apply to Social Security benefits. The most recent increase was 3.6 percent and went into effect in January 2012.
Social Security Disability Insurance – The SSDI program, which is managed by the Social Security Administration, is designed to provide income supplements to people who are physically restricted in their ability to be employed because of a qualified disability. SSDI benefits are paid to qualified individuals with disabilities and their families. To qualify, an individual must have worked in jobs covered by Social Security, and have a medical condition that meets Social Security’s definition of disability. Benefits usually continue until the recipient is able to work again on a regular basis.
Medicaid and Medicare – Medicaid is a health care program for people with limited resources and low incomes. In many states, Medicaid comes automatically with SSI eligibility, and in other states you must sign up for it. Some children can get Medicaid coverage even if they do not qualify for SSI. Medicare is a federal health insurance program for people age 65 or older and for people who have been getting Social Security disability benefits for at least two years.
These benefit programs are imperative for many individuals with special needs, because the cost of care is extremely expensive. Parents and relatives of Special Needs Planning clients are often afraid that if they leave a bequest, or provide private funds for the care of a loved one with special needs, then that loved one will lose his or her government benefits. There are several options that will help ease these concerns, including Special Needs Trusts, Third-Party Supplemental Needs Trusts, and Pooled Trusts.
Special Needs Trusts – The Special Needs Trust, which is also referred to as a “Disability Trust,” or a “Payback Trust,” is available only to individuals who are under the age of 65 and disabled. This kind of trust must be funded with the assets of the individual who is disabled and must be created for his or her benefit by the court, a parent, grandparent, or legal guardian of the individual. This type of trust must include a “payback” provision that repays the state Medicaid agency upon the death of the beneficiary for the cost of Medicaid benefits received by the beneficiary. Additionally, a Special Needs Trust must be for the sole benefit of the person with disabilities during his lifetime.
Third-Party Supplemental Needs Trusts – This type of trust is designed to supplement (not supplant) Medicaid benefits. A party other than the SSI/Medicaid beneficiary must create the trust, it must not receive any assets belonging to the beneficiary, and it must be restricted to the beneficiary. There is no Medicaid payback in a properly drafted Third-Party Supplemental Needs Trust because the funds in it are not countable as assets available to the beneficiary receiving SSI and/or Medicaid. This type of trust is usually funded with the assets of a relative of the disabled beneficiary, and should be distinguished from a Special Needs Trust as discussed above.
Pooled Trusts – This type of trust pools the resources of many beneficiaries into a single Trust for investment purposes, and is managed by a nonprofit association. Pooled Trusts, which provide a separate account for each beneficiary, are only available to individuals who are disabled and under the age of 65. The Trust account may be created by a third party, a court, or by the disabled beneficiary himself. Upon the death of the disabled beneficiary, the balance remaining in his or her separate account is either retained in the Trust for the nonprofit association or paid back to the state Medicaid agency to reimburse the cost of medical assistance to the beneficiary during his or her life. Pooled Trusts are available to residents in every state.
Special Needs Planning is an exciting and interesting area of law. The recent increase in the population of individuals with disabilities has created, and will continue to create, a great demand for qualified professionals to help resolve complex legal issues. In order to effectively assist the special needs community, it is essential for Elder Law attorneys to understand and appreciate Special Needs Planning.
For more information about Special Needs Planning, visit the following links:
- Academy of Special Needs Planners
- Benefits for Children with Disabilities FAQ
- Centers for Medicare & Medicaid Services
- Disability benefits overview
- National Academy of Elder Law Attorneys
- Pooled Trust Directory by State
- Special Needs Answers
- Special Needs Attorney Directory by State
Disclaimer: The information contained in this blog is not intended as legal advice and should not be relied upon to answer any specific questions concerning your own circumstances or for purposes of legal planning. For specific legal advice, please contact an Elder Law attorney.