Acronyms that sound similar can be confusing, and there are plenty of them in the elder law and estate planning realm. In this post, we will provide clarity with regard to Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
Social Security Eligibility
When you work and pay FICA taxes, you earn retirement credits that lead to eligibility for Social Security and Medicare. This year, you get one credit for every $1,730 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 eligibility age. For Medicare, it is 65 for everyone. The full eligibility age for Social Security is somewhere between your 66th and 67th birthdays depending on your birth year.
SSDI
This plan is disrupted if you become disabled along the way. Thankfully, there is recourse. If you have at least 40 credits with 20 of the credits being accumulated in the 10 years prior to the onset of your disability, you can qualify for Social Security Disability Insurance.
The exact amount of your benefit will depend on the extent of your contributions over the years. In 2024, the average benefit is about $1,500, and the maximum monthly SSDI benefit stands at $3,822.
There is also the matter of health insurance if you are no longer able to obtain coverage from your employer. If you qualify for SSDI, you automatically qualify for Medicare 24 months after you start to receive your benefit.
The key point to understand is the fact that you can potentially qualify for this benefit regardless of your assets and your income.
SSI
Supplemental Security Income is another disability benefit. People who are 65 years of age and older can potentially qualify if they are not disabled. This is a need-based program, so you cannot qualify if you have more than $2,000 in countable assets in your name.
These payouts are very modest. The average benefit is just under $700 a month, and the maximum is $943. People who qualify for this benefit also qualify for Medicare, and there is no waiting period.
Special Needs Planning
As estate planning attorneys, we advise clients who want to provide resources for loved ones with disabilities who are relying on SSI and Medicaid. A significant direct inheritance could impact eligibility, so you have to implement a special needs planning strategy.
This will revolve around the utilization of a supplemental needs trust. You fund the trust and you name a trustee to act as the administrator. Many people will use a professional like a trust company or the trust department of a bank. However, any competent adult can technically act as the trustee.
As you have seen, SSI benefits are very limited, and Medicaid does not cover every treatment that a person may want or need. The trustee would be able to utilize assets in the trust to satisfy the unmet needs of the beneficiary. Benefit eligibility would not be disrupted.
Medicaid Estate Recovery
Medicaid can attach property that is left in the estate of a person who was enrolled in the program.
When it comes to the remainder in a supplemental needs trust that is funded by a third party, the assets would be protected. A successor beneficiary that is named by the grantor would assume the role.
Sometimes a person with a disability will receive a personal injury settlement or judgment or come into money for some other reason. The funds can be used to establish a first-party supplemental needs trust. The situation would be the same while the individual is living.
After their death, the assets would be available to Medicaid during the estate recovery phase.
Schedule a Consultation Today!
We are here to help if you are ready to work with an Oklahoma City estate planning attorney to put a plan in place. You can schedule a consultation right now if you call us at 405-843-6100.
Our Tulsa office can be reached at 918-615-2700, and you can use our contact form if you would rather send us a message.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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