Young adults with special needs often become eligible for Social Security benefits at age 18 and most parents anticipate this birthday with some trepidation. Among the educational, social, and legal changes that accompany this transition to adulthood are new or different eligibility requirements for Social Security benefits and Medi-Cal programs.
If you feel confused about those programs, you’re in great company. The U.S. Supreme Court declared the Social Security regulations “almost unintelligible to the uninitiated” and described the Medi-Cal statute as “an aggravated assault on the English language, resistant to attempts to understand it.”
Fortunately, applying for Social Security doesn’t require you to dig so deeply into those regulations as the Supreme Court, and after reading the Dos and Don’ts that follow, you’ll no longer be among the uninitiated.
1 | DO Learn Which Type of Benefits Your Young Adult is Eligible to Receive
At age 18, a parent’s income is no longer deemed to the child, as the parent no longer has a legal obligation of support. Most young adults with disabilities then become eligible for Supplemental Security Income (“SSI”), which is currently up to $914 per month. This is accompanied by automatic Medi-Cal eligibility in most states, although in others, one must complete a separate application.
If a young adult has a deceased, retired, or disabled parent, however, he or she may instead receive Disabled Adult Child (“DAC”) benefits, according to that parent’s earning history – 50% of a disabled or retired parent’s benefit or 75% of a deceased parent’s benefit.
2 | DON’T Panic About the Application Process and DON’T Worry About Applying Early.
The Social Security application requests basic information about your child’s disability diagnosis, income, and assets. You won’t likely need the help of an attorney at this stage. Parents may be asked about their own income, assets, and expenses, but don’t be alarmed! After age 18, your income and assets won’t affect your child’s eligibility.
Parents often know that benefits begin at 18 and apply early to ensure benefits begin as soon as possible. This is a tempting but inefficient choice.
Instead, on the 18th birthday, request an appointment to apply for benefits using this link. As long as you submit the information requested and keep the required phone appointment (this is crucial!), benefits will be backdated to the day you submitted the original information – again, the 18th birthday.
Instead of applying early, gather the needed information listed on this page to demonstrate why your child needs SSI. The process from application to approval will take 3-6 months, after which your child will receive a lump sum for benefits dating back to the date of your original request for an application appointment.
3 | DO Plan to Charge Your Child for His or Her Fair Share of Living Expenses
SSI and Medi-Cal are “means-tested” benefits. Eligibility is granted only to those lacking the “means” to provide basic living expenses and medical care for themselves. Gifts of these basic living expenses – i.e., allowing your adult child to live with you without paying his or her “fair share” of living expenses – will result in a one-third reduction in SSI benefits.
Your family’s total expenses for rent or mortgage, utilities, and groceries will be divided by the number of adults in the household to determine the disabled adult’s “fair share.” You, as the “representative payee” managing your adult child’s Social Security benefits, will need to transfer this amount monthly from your child’s account to pay these expenses.
Assisting with rent expenses for independent living will need to be done in conjunction with an ABLE account and/or special needs trust (“SNT”) to avoid this reduction. We highly advise seeking legal advice in this situation, and we would be glad to assist in making sure you have the right financial accounts set up for your child.
4 | DON’T Be Surprised by Some Bumps in the Road
Sometimes you’ll receive scary letters in the mail or the tone of a Social Security agent while on the phone may seem to imply wrongdoing on your part. Don’t worry.
It’s common for bumps in the road to occur with the report of income and assets submitted monthly to Social Security. Any savings must be done through an ABLE account and should be funded by gifts along with the individual’s earnings – never from SSI. Again, SSI is only for “basic living expenses” as defined above, along with small purchases such as clothing and personal items.
Even when handled appropriately through an ABLE account or SNT, properly answering questions as requested on government forms may trigger an inquiry. You can usually handle these matters yourself, but our office can assist you as needed to clear up any questions and direct agents to the regulations governing your activities and financial choices.
5 | DO Ensure Your Estate Plan Is Updated to Maintain Your Child’s Benefit Eligibility
Without proper planning, receiving an inheritance from well-meaning loved ones will disrupt or even disqualify an individual from receiving Social Security and Medicaid benefits. Because of this, it’s essential to have the right planning tools set up for your adult child with special needs well in advance.
But failing to create a comprehensive estate plan won’t just affect the future of your child with special needs. Without proper planning, any other children or relatives you wish to benefit at your death could find themselves with no inheritance at all, even after your child with special needs passes away.
Thankfully, a key focus of our practice is on preserving family assets while maximizing and maintaining eligibility for these benefits. With our help, you can ensure that your child continually receives the benefits they need without being wholly dependent on them or exhausting all of your family’s assets.
Still Worried about Your Child’s Benefits or Future? – We Can Help
If you have lingering questions, contact our office to set up a special needs planning session today. We can help you build a comprehensive special needs plan that will work within your budget and overtime – at the pace you choose – so that you, your child, and future caregivers can avoid feeling overwhelmed at any stage of your child’s journey.
With a well-crafted special needs plan, your child and his or her caregivers will receive guidance and support throughout your child’s life, and any remaining assets will be distributed to the beneficiaries of your choice.
We will be honored to help you prepare to face the future together.
This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
