Working and Receiving SSI Benefits

Disabled workers must limit their hours to keep a paycheck and benefits

As many of our kids with special needs approach adulthood, a conflict becomes clear. How can my adult child gain independence with working and still be eligible for Supplemental Security Income (“SSI”) and Medicaid?

Your adult child can retain his or her federal government benefits and work part-time. The Social Security Administration (“SSA”) website is full of examples of the calculations you can use to determine if your child is earning too much money to maintain benefits eligibility.

See the chart below for more details about SSI monthly benefits.

Currently, the maximum monthly amount of SSI paid to an individual is $841.00. SSA will deduct from the maximum qualifying amount (using $841 in this example) a certain amount for earned income. The amount deducted depends on many factors.

For the new high school graduates under the age of 22 and attending college, these adults can earn income and have as much as $1,930 a month exempt from the benefits deduction. Keep in mind that there is an annual cap for this exemption of $7,670 earned income. For the months after the student has reached the total annual exclusion for “Student Earned Income Exclusion,” then the Social Security Administration can allow the student to exclude the first $65 earned, and then calculate one-half of the remaining monthly earned income to deduct from the $861 SSI monthly benefit. Math is not my friend, but here is my attempt to calculate – if your adult disabled child (who regularly attends school – at least 8 hours a week at college) works part-time and earns $400 a month, then Social Security ignores $65, leaving $335 to divide in half, leaving $167.50 as the amount to reduce from the monthly benefit of $841.00, yielding a $673.50 payment.

If your child wants to work so many hours a month that his or her benefits are jeopardized, one option is to suggest he or she perform hours of volunteer work for a local charity.

Qualifying for SSI and Medicaid is also dependent on the value of the recipient’s assets. Cash is considered an asset and the cap is $2,000.00.

Click here to see my video about SSI and bank accounts.

TIP: Do not have joint bank accounts with your adult disabled child. As a parent, you may be the Representative Payee (“Rep Payee”) for checks issued by the government, but keep your money separate from your child’s money. In other words, do not commingle your money with theirs. Other than a Rep Payee account, your adult disabled child should only have two other types of bank accounts – ABLE account, also known as a 529 A account, and an account owned by your child’s Supplemental Needs Trust. Here is a link to my video about bank accounts for people with disabilities.

Have Questions about the ABLE account and the IRS? See the IRS bulletin below.

IR-2018-139: Tax reform allows people with disabilities to put more money into ABLE accounts, expands eligibility for Saver’s Credit

Internal Revenue Service (IRS) sent this bulletin at 06/15/2018 11:05 AM EDT

IRS Newswire

June 15, 2018

Issue Number: IR-2018-139

Inside This Issue

Tax reform allows people with disabilities to put more money into ABLE accounts, expands eligibility for Saver’s Credit

WASHINGTON – People with disabilities can now put more money into their tax-favored Achieving a Better Life Experience (ABLE) accounts and may, for the first time, qualify for the Saver’s Credit for low- and moderate-income workers, according to the Internal Revenue Service.

The Tax Cuts and Jobs Act, the tax reform legislation enacted in December, made major changes to the tax law for 2018 and future years, including increasing the standard deduction, removing personal exemptions, increasing the Child Tax Credit, limiting or discontinuing certain deductions and changing tax rates and brackets.

The new law also enables eligible individuals with disabilities to put more money into their ABLE accounts, qualify for the Saver’s Credit in many cases and roll money from their 529 plans — also known as qualified tuition programs — into their ABLE accounts.

States can offer specially designed ABLE accounts to people who become disabled before age 26. Recognizing the special financial burdens faced by families raising children with disabilities, ABLE accounts are designed to enable people with disabilities and their families to save for and pay for disability-related expenses. Though contributions are not deductible, distributions, including earnings, are tax-free to the designated beneficiary if used to pay qualified disability expenses. These expenses can include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services and other disability-related expenses.

Normally, contributions totaling up to the annual gift tax exclusion amount, currently $15,000, may be made to an ABLE account each year for an eligible person with a disability, known as a designated beneficiary. But, starting in 2018, if the beneficiary works, the beneficiary can also contribute part or all of what they make to their ABLE account.

This additional contribution is limited to the poverty line amount for a one-person household. For 2018, this amount is $12,140 in the continental U.S., $13,960 in Hawaii and $15,180 in Alaska. However, the designated beneficiary is not eligible to make this additional contribution if their employer contributes to a workplace retirement plan on their behalf.

In addition, starting in 2018, ABLE account beneficiaries can qualify for the Saver’s Credit based on contributions they make to their ABLE accounts. Up to $2,000 of these contributions qualify for this special credit designed to help low- and moderate-income workers. Claimed on Form 8880, Credit for Qualified Retirement Savings Contributions, this credit can reduce the amount of tax a person owes or increase their refund. Like other IRS tax forms, Form 8880 will be revised later this year to reflect changes made by the new law.

In addition, some funds now may be rolled into an ABLE account from the designated beneficiary’s own 529 plan or from the 529 plan of certain family members.

Like other workers, ABLE account beneficiaries and other people with disabilities should make sure they are having the right amount of income tax withheld from their pay. Because of the far-reaching tax changes taking effect this year, the IRS urges all employees to perform a paycheck checkup now. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty. The easiest way to do that is to use the fully-accessible Withholding Calculator, available on IRS.gov.

For more information about ABLE accounts and the tax reform changes, visit IRS.gov/taxreform.

More Children in Need, Less Resources?

Although the Center for Disease Control issued their assessment in 2014 that 1 in 68 school-aged children are on the Autism spectrum, federal funding for the care of these Americans is in jeopardy. A person diagnosed with Autism Spectrum Disorder, or diagnosed with any of the many other related conditions may qualify to receive disability-related Medicaid benefits.

Analysis from Avalere predicts that Medicaid, which provides supports and services to disabled children and adults, could see a reduction funding of up to $215 billion should the Graham-Cassidy bill be passed.

Three Republican senators and all Democratic senators vowed to vote against the latest attempt to repeal and replace the ACA, stalling the vote. The effort to change healthcare laws is not over. Parents and advocates of children and adults with special needs must get educated and involved in the healthcare debate. The Affordable Care Act has many problems that need to be addressed, but if you or a loved one is the recipient of Medicaid benefits, speak out to block a disaster and offer a solution.

The Changing World of Retirement Planning Seminar

Who can predict that our professional lives will end when we want and how we want?

With proper planning, you can feel more at ease about the unknown. Find out where to put your pre-retirement savings!

Click here to see more information about our upcoming Estate Planning seminar.

The Changing World of Retirement Planning

Determine how your assets are distributed with the assistance of an estate planning attorney.

The Challenging World of Retirement Planning Workshop

Hello All!

We will be a part of a new, fabulous workshop at Houston Community College (5601 West Loop South) in late September through early October. Attorney Leona Filis will be presenting on Estate Planning strategies.

Click the link below for the details.

Free Workshop

Estate Planning Seminar March 11th

Good morning! We are getting ready for our joint presentation with Blake Douglas.

Estate Planning – whether you are a college student or grandparent, there are legal documents to assist you and your loved ones in stressful times of need.

Thank you Barbara Pardue for the fabulous Facebook event design.

No automatic alt text available.

https://www.facebook.com/events/794520557363555/

See you at the office building 5600 NW Central Drive – large conference room on the 1st floor at 2 pm.

Estate Planning – Protecting the Future Interests of Those You Love

Planning for the future of your loved ones in the event of your death is generally a difficult topic for many. Unfortunately, those of us who have family members with disabilities cannot afford to ignore estate planning. Many hours of hard work by parents and caregivers go into the qualification process for government benefits for our disabled children and relatives. Twenty-page forms to fill out and hour-long calls with multiple agencies are just a couple of examples of what parents endure to obtain essential benefits for their children. Rules for eligibility for State Waiver programs, SSI and Medicaid are confusing.

What parents, family members, and close friends do not want to see happen is the disqualification of eligibility of benefits. To avoid possible disqualification of benefits, I have seen grandparents attempt to do the right thing and disinherit certain grandchildren, out of love and out of a misguided attempt to protect their loved ones with disabilities from losing benefits. The law provides a better way to protect your loved one’s eligibility for benefits through Special Needs Trusts (“SNT”).

Special Needs Trusts can offer protection of assets and income. Special Needs Trusts allow friends and families to enhance the quality of life of a special needs beneficiary.

“Income” for most public benefits agencies is defined as:

(a) actual cash distributions to the individual, and
(b) distributions that could be converted to food and shelter, and
(c) in-kind support and maintenance.

The more practical trust that is utilized is a 3^rd party Special Needs Trust. Parents and grandparents who leave an inheritance to a child with a disability will

(a) create a 3^rd Party Special Needs Trust,
(b) obtain a Taxpayer ID Number from the IRs, and
(c) draft a Last Will and Testament naming the trustee of the SNT as the beneficiary.

If you do not have a Will, Texas Intestate Succession law could distribute your estate directly to your child, thus creating another scenario where government benefits could terminate.

Another “funding” source for a Special Needs Trust – If you or someone you know is anticipating the eventual relocation to a nursing home, applicants should review eligibility laws of the Texas Medicaid Program. The state has a “look back” period of 5 years to review transactions that may have been made to spend down an estate to reach eligibility for Medicaid. Many transfers of income and assets can subject the Medicaid beneficiary or applicant to a transfer penalty. There are certain transfers of assets that are not subject to penalty such as contributions to a Special Needs Trusts for a person under the age of 65 with a permanent and total disability. Another transfer example is payment to an attorney for estate planning.

Contact The Filis Law Firm for more information on Estate Planning that will be most suitable for you and your family.

Guardianship of an Adult Disabled Child

Is your child nearing his or her 18th birthday? What does this mean for them and what does this mean for you?

The State of Texas recognizes your child as an adult when you child turns 18 years old. He or she can enter into contracts and attend ARDs alone. You as the parent will lose your status as the natural guardian of your child and lose the right to be noticed for your child’s school ARD meetings. You may be excused from your child’s doctor’s exam room.

If your child’s capacity level is such that a Power of Attorney is not an acceptable option, look into Guardianship. Guardianship of the Person can offer you legal rights to protect your child.

Attached is the Harris County Clerk’s filing fee schedule for costs Fee Schedule for a list of court costs. Note there are ad litem and attorney fees to consider.

The Texas Department of Aging and Disability Services (DADS) offers a handbook on Guardianship – Guardianship Brochure.

Feel free to contact me for more information on planning for your child’s future.

Financial Planning

Knowing that you must prepare for your child’s future is nothing new. Knowing how to properly plan for your child’s future when he or she is diagnosed with a disability is confusing and frustrating. The wait on Interest Lists for Medicaid Waiver Programs can be up to ten years. Once you finally start to receive benefits, you have to have a plan in place to maintain the benefits. That is where Special Needs Trusts and ABLE Act accounts (529A) can be fantastic resources for your estate planning.

Another planning consideration for parents of children with special needs is insurance. Life Insurance to truly cover expenses for of lives of your loved ones. Life Insurance should not just cover the “breadwinner” parent. In the event the care-giver parent dies, the family must hire others to continue to provide appropriate care for the child or children with special needs.

Unfortunately the insurance discussion does not end with life insurance. If the “breadwinner” parent becomes disabled, he or she may become underemployed or unemployed and disability insurance can help.

As a member of Heights Go Givers (HGG), I have had many opportunities to meet with professionals from the Heights and surrounding area on a weekly basis. Over the past few months I have had the pleasure of learning about the character and professionalism of Michelle Gessner of gessnerwealthstrategies.com. Substantively, Michelle has proven herself to be very knowledgeable, both in one-on-one discussions and as a speaker at conferences and meetings I have attended. If you are looking for a brilliant, compassionate, and disciplined advisor, contact Michelle.

IR-2018-139: Tax reform allows people with disabilities to put more money into ABLE accounts, expands eligibility for Saver’s Credit

News Essentials

The Newsroom Topics

IRS Resources

Issue Number: IR-2018-139

Inside This Issue