9 Things You Need to Know to Maximize Your Child’s Benefits
Social Security, Medicaid, and Medicare benefits are critical pieces of the financial base that will provide your child with a disability the supports and services that s/he needs to live a qualify life. These benefits also have eligibility rules that can be confusing. So, here are nine basic things that parents should know about benefits for their child with a disability.
#1: Eighteen is a magic age.
It’s not only because your child can vote—although that is very important and they should absolutely exercise that right. For youth under 18, a portion of the parents’ assets and income are “deemed” to the child. This is why it is often difficult for children under 18 to qualify for benefits. But at 18, your child is considered to be an adult by the Social Security Administration. This means that they are a “household of one,” and one which her/his OWN income and assets count when Social Security considers financial eligibility.
#2: Work capacity is the key to qualifying for benefits as an adult.
Children are considered to have a disability if their development lags that of their typical peers by a certain amount. Adults, however, are only considered disabled for Social Security purposes IF they can show that their disability and related conditions preclude them form performing “Substantial Gainful Activity” or “SGA”. SGA, in turn, is defined as the capacity to earn more than $1,220 (gross) per month (in 2020). For a person’s disability application to succeed, the person needs to draw direct lines between deficits, caused by her/ his disability and the work competencies that would be required to earn over the SGA figure.
Related: Does Your Child Qualify for Supplemental Security Income? Dispelling Misconceptions [1]
#3: Your application process will go smoother in person.
Social Security encourages the use of its online portal. However, consider doing the initial intake interview in person. There are two benefits of this. First, if the Social Security worker can meet and talk to your adult child face to face, they may get a clearer sense of the degree of disability. Second, you and your child are able to clarify points in real time. If you assist your adult child to answer intake questions, remember to answer as if you were your child. If your child is not living with a spouse or children of her/his own, then the correct answer to the question: “How many people live in your household?” is “One,” even if your adult child lives with you.
#4: SSI and SSDI are NOT the same.
When your 18-year-old files for disability benefits, they will file one application. Social Security will then determine a) whether your child meets the adult definition of “having a disability” and b) whether they are eligible for Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) or both. SSI is a means-tested benefit, which means one must fall within strict income and asset limitations to remain eligible. SSDI, on the other hand, is a benefit that the person or her/his parents have earned through building work credits. There are no asset limitations, and there are less income limitations on people who receive SSDI.
Related: Social Security Benefits: Understanding How To Work? [2]
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#5: Your child can earn Social Security credits by working and paying FICA taxes.
Every $1,410 in gross wages your child earns will generate one credit. If your child can earn six credits before the age of 24, they are already fully insured for disability benefits—SSDI-on her/his own work record. If your child does not meet the 6-before-24 deadline, they can continue to earn work and qualify for own-record SSDI with the credits and corresponding ages described here: https://www.ssa.gov/ pubs/EN-05-10072.pdf [4]. SSDI has less strict financial limitations than SSI; moreover, qualifying for SSDI starts a 24-month clock ticking towards automatic eligibility for Medicaid.
#6: If your over-18 child lives with you and doesn’t contribute, SSI benefits will be reduced.
SSI is essentially welfare, and benefits are meant to cover a roof overhead and food on the table. If your adult child lives with you and does NOT pay anything to do so, Social Security considers that you are providing “In-kind Support and Maintenance” or “ISM”.
The maximum SSI benefit that a person with SSI can receive if s/he has ISM is only 2/3 of the full benefit. It is, therefore, beneficial to the family to charge an adult child with a disability a monthly amount to live at home. Once the money is paid over to the parents, it is totally up to the parents of how to use it.
#7: Your child absolutely can work and still qualify for and retain her/his disability benefits.
Social Security would very much prefer that people with disabilities work than not. To further this goal, the administration has an entire suite of Work Incentives that allow people with disabilities to test out and develop their capacities to work without endangering their benefits and to surpass the original earnings’ limitations, while still keeping needed benefits as long as possible.
#8: Medicaid is often the most crucial benefit.
Through Medicaid waivers, Medicaid funds most support services for adults with disabilities, including various types of employment supports, daytime activities, and personal care supports in the family home or the person’s own home or something like a group home. In most states, people with disabilities, who qualify for SSI, will also qualify for Medicaid. People who qualified for SSI in the past, but now earn too much to do so, can continue their Medicaid under special extension programs. People who always earned too much to qualify for SSI are often able to access Medicaid through cost-share or “spend-down” programs or Medicaid buy-in programs.
#9: People whose disability started before age 22 may be eligible for benefits on parental work records.
When a parent claims Social Security retirement or disability benefits, not only her/his spouse (or ex-spouse) are able, but also their minor children and “disabled adult children” [sic] are able to claim auxiliary benefits. The benefits end when typical children reach their age 18, but they continue indefinitely for adult children with disabilities that started before their age 22.
Social Security, Medicaid and Medicare may account for the majority of the income that your child with a disability needs to live a full life, particularly after you are gone. I, and other special needs planners like me, make it a lynchpin of our services to help your child qualify and maintain the maximum benefits to which they are entitled.
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Alexandra Baig left the corporate financial world to build her own financial planning practice focusing on the particular needs and complexities of people with disabilities and their families. She has an MBA from the University of Michigan and her CERTIFIED FINANCIAL PLANNER™ designation. She is well-versed in the government benefits available to people with special needs and the rules governing them. Her goal is to help people with disabilities and their families make the most of public and private money to life the life they chose.
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This post originally appeared on our January/February 2020 Magazine [18]