Providing for Persons with Disabilities The Dale Law Firm Providing for Persons with Disabilities Making Distributions from a Special Needs Trust (925) 280-0172 www.achievingindependence.com

Supplemental Security Income SSI Eligibility Title XVI of the Social Security Act specifies who is eligible to receive SSI benefits, the amount of cash payments, and the conditions under which payments can be made. A person who applies for SSI and meets the conditions in the law is eligible for benefits.

SSI Eligibility Requirements Supplemental Security Income SSI Eligibility Requirements Age 65 or older, blind, or disabled; Reside in the United States; An alien lawfully admitted for permanent residence in the U.S., or an alien permanently residing in the U.S. under color of law; Income and resources within specified limits; and File an application

Supplemental Security Income What is Income Income is any cash an individual receives from any source Income includes anything an individual receives in kind that can be used to meet basic needs of food, clothing, or shelter.

In-Kind Income In-kind income is not cash, but is actually food, clothing, or shelter, or something that can be used to get one of these.

Methods of Distribution A Trustee should never give the beneficiary money to purchase exempt assets. Cash distributions are always considered countable income. SSI rules say that if you give the beneficiary anything that he or she has a legal right to convert to cash (e.g., a second home), it will be counted. Reimbursements to the beneficiary for purchases he or she has made are counted as income even if the purchases are for exempt assets.

Purchase of Services Services are not counted as income against the beneficiary's SSI benefits, because they are not easily convertible to cash Auto repair Local and long-distance telephone service Education and travel, including accompaniment Recreation and entertainment Gardening Medical care and social services.

Paying the Beneficiary’s Bills Bills the trustee pays for the beneficiary are not income if the beneficiary receives no asset as a result of paying the bill, If the beneficiary receives any asset as a result of paying a bill, the value received is counted under in-kind income rules.

Methods of Distributing In-kind Income "In-kind income" exists when you give the beneficiary something other than money. The value of any noncash item (other than food, shelter, or clothing) is not counted as income if the item will become an exempt asset and is retained into the following month.

Methods of Distributing In-kind Income Example: Purchase of a television set. If you give the beneficiary cash to purchase a television set, the beneficiary’s SSI will be reduced dollar for dollar after the first $20.

Methods of Distributing In-kind Income If you purchase a television set directly and give the television set to the beneficiary, then the beneficiary’s benefits are unaffected if the beneficiary’s household goods are worth less than $2,000.

Methods of Distributing In-kind Income Give the beneficiary the right to obtain the goods and services (e.g., a non-refundable gift certificate to the appliance store). When you give the beneficiary any right to receive services or goods it should be non-transferable and non-refundable to avoid any argument that it could be converted to cash.

Assets Owned by the Trust Consider purchasing items or service in the name of the trust if ownership by the beneficiary would cause a loss of benefits. If the beneficiary does not have control of the item, it is probably not an asset or resource to the beneficiary.

Assets Owned by the Trust Example - SSI allows the purchase of van by the beneficiary For disabled persons with mobility limitations, a van that is inoperative can cause severe restrictions. But a second van is a countable resource

Assets Owned by the Trust The Special Needs Trust could purchase a second van in the name of the trust. The beneficiary can have the beneficial use of the van without interfering with eligibility for benefits.

In-Kind Support and Maintenance The receipt, or right to receive, food, shelter, or clothing is known as "In-Kind Support and Maintenance," or ISM for short. The beneficiary's SSI benefits will be reduced if he/she receives ISM.

In-Kind Support and Maintenance SSI benefits are specifically intended to pay for a person's food, clothing and shelter. If that person receives those goods or services from another source then less SSI income is needed.

In-Kind Support and Maintenance If Social Security determines that ISM is given to a SSI beneficiary, his or her benefits will be reduced, but not dollar-for-dollar When a beneficiary is given food, shelter, or clothing, his/her SSI will be reduced by either $227.67 or the actual value of what is provided.

Presumed Maximum Value Under the PMV rule, ISM is valued at the lesser of its actual value or at its "presumed" value of one-third of the federal benefit portion, plus the $20 general income exclusion. In 2007, the PMV amounts to a set $227.67 (federal portion divided by 3 plus $20). If the actual value is less than the “presumed” value, the actual value must be proved to social security.

Presumed Maximum Value The fixed dollar reduction applies to any single month in which ISM is received, regardless of the actual value of the total food, clothing or shelter received in that month. If you pay the beneficiary's rent directly, his/her SSI benefits will only be reduced by $227.67, even if the rent payment was $2,000.

Presumed Maximum Value If the actual value of the ISM that the beneficiary receives is below $227.67, Social Security will adjust the reduction downward from $227.67 to reflect the actual value of the ISM the beneficiary actually received.

Avoiding Elimination of SSI Since SSI is a supplemental income program, the greater the beneficiary's other income (such as from Social Security Disability), the less SSI the beneficiary will receive. If the beneficiary receives only a little SSI each month, then the reduction in SSI benefits due to the receipt of ISM may be fatal to the beneficiary's SSI and consequently, the Medi-Cal benefits.

Avoiding Elimination of SSI For example, If the beneficiary only receives $100 per month in SSI, the imposition of a $227.67 PMV reduction will eliminate the entire SSI and consequently, the Medi-Cal benefit.

Providing for Persons with Disabilities The Dale Law Firm Providing for Persons with Disabilities Dealing with Social Security (925) 280-0172 www.achievingindependence.com

What Must be Reported to SSA A change in the beneficiary's address A change in his/her living arrangements A change in his/her income (including the receipt of any direct income or ISM from the trust, but not distributions that are "not income") A change in any (countable) resources New eligibility for other public benefits Substantial medical improvements that may result in the beneficiary no longer being considered disabled)

What Must be Reported to SSA A change in the beneficiary's marital status Admission to or discharge from any health facility or public facility, such as a hospital or nursing home Any intended trip outside the United States.

What Must be Reported to SSA The report should be in writing to the Social Security Administration and include the beneficiary's name and Social Security number, the name of the person making the report, and a description of the event reported and the date it happened. The report is due within 10 days after the end of the month in which the event occurred.

Appealing a Denial of Benefits If SSA notifies you or the beneficiary that it intends to reduce or eliminate the beneficiary's benefits, you should appeal immediately, and certainly within 10 days of the receipt of SSA's notice. Only then will SSI and Medi-Cal benefits be continued pending the result of the appeal. Section 416.11336(b). You are allowed up to 60 days to appeal an SSI decision (Section 416.1409). You are allowed only 10 days after receipt of the notice to file an appeal if you want to preserve the benefits during the appeal (which can take months). Otherwise, they will be suspended.

MORE REFERENCE MATERIALS ON OUR WEBSITE The Dale Law Firm MORE REFERENCE MATERIALS ON OUR WEBSITE More reference materials are on our website at www.achievingindependence.com Materials on Social Security can be seen at www.achievingindependence.com/ssa Transmittal 35 is a must read for all professionals. This is a pdf file and must be opened with Adode Acrobat. Materials on administration of retirement plan proceeds in a Special Needs Trust can be seen by clicking here (925) 280-0172 www.achievingindependence.com