Guest guest Posted August 10, 2010 Report Share Posted August 10, 2010 Excellent information. Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter August 2010 - Vol 4, Issue 12 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member, Amy C. O'Hara. Amy is an attorney with Littman Krooks LLP with offices in New York City, White Plains, NY and Fishkill, NY. Most of her work involves helping people with special needs planning (trusts, guardianships and government entitlements), estate planning and administration (wills and trusts), elder law issues (Medicaid and Medicare, Veterans' Benefits, guardianships). Your Special Needs Trust Explained A Special Needs Trust (SNT) is a discretionary trust created for a person with a disability, referred to as the " beneficiary, " as a way to supplement his public benefits and enhance his lifestyle. Public benefits often include Supplemental Security Income (SSI), Medicaid, and Section 8 Housing. One of the many appealing aspects of a SNT is that the beneficiary does not have direct access to the trust assets, which are, therefore, not countable when establishing financial eligibility for public benefits. SNT assets can be used to purchase a home for the beneficiary, services that Medicaid does not cover (including special therapies, wheelchairs, handicap accessible vans and mechanical beds), recreational and cultural experiences and, for the most part, any services or items that would enrich the beneficiary's life. Several requirements must be met when establishing a SNT. First, the trustee must be given absolute control over the distribution of the trust assets. Neither the beneficiary nor anyone acting on his behalf can demand distributions be made from the trust. Second, the beneficiary cannot have authority to revoke or amend the trust; otherwise the trust assets would be deemed an available resource to the beneficiary, and he would lose his public benefits. Third, the trustee should not give cash outright to a beneficiary receiving SSI, as this would cause an immediate dollar-for-dollar reduction or loss of public benefits. Generally speaking, there are three types of SNTs: (a) a first party special needs trust; ( a pooled special needs trust; and © a third party supplemental needs trust. First Party Special Needs Trusts A first party SNT is funded with assets owned by the trust beneficiary. A first party SNT--also commonly referred to as a " self settled " or " (d)(4)(A) " Trust--may be established to protect current or future means-tested government benefits if an individual is about to receive a settlement, inheritance or other monies that will bring his countable assets to more than $2,000. First party SNTs are most commonly required when an individual with disabilities has received a settlement from a personal injury action or an inheritance from a well-meaning person who did not understand that such a gift could disqualify the beneficiary from important government aid. Another common use for a first party SNT is for divorce alimony or property division, or for child support payments when dealing with a child who has a disability. Unless such funds are sheltered in a first party SNT or used to purchase exempt resources, the beneficiary would lose his benefits and be required to pay medical bills and many other expenses from the assets until those assets have been spent down to $2,000. When establishing a first party SNT, there are key requirements that must be provided for in the trust agreement; otherwise, the SNT may not protect the beneficiary's continued eligibility for public benefits. Also, the beneficiary must be under 65 years of age at the time the SNT is funded and must be disabled as defined in the Social Security Act. Additionally, the law requires that the SNT must be for the benefit of the individual with disabilities and that it be established by a parent, grandparent, legal guardian of the individual's property, or the court. The trust agreement must provide a Medicaid payback provision requiring the state Medicaid agency to be reimbursed upon the death of the beneficiary. Finally, the SNT must be irrevocable. Pooled Trusts A pooled SNT is also funded with assets that are owned by the trust beneficiary. At times the settlement or inheritance the person receives is small, and a first party SNT may not be the best solution, especially if there is no parent, grandparent or legal guardian available to establish the trust. If spending the funds for the individual's care or needs or exempt resources is not a viable option, it may be more practical to place the litigation proceeds or inheritance in a pooled special needs trust. Pooled trusts are established and managed by nonprofit organizations. The assets in the trust are pooled together for investment purposes, but the nonprofit organization manages a sub account for the beneficiary. A major difference between a first party SNT and a pooled trust is that an individual with disabilities can establish the pooled trust sub account himself. This is an attractive option for many beneficiaries who have no living parents, grandparents, or a legal guardian of their property. Third Party Supplemental Needs Trusts A third party SNT is funded with assets that are owned by parents, relatives or friends, but not assets owned by the trust beneficiary. Third party SNTs are an ideal estate planning vehicle for parents and other friends and relatives who want to leave an inheritance to an individual with disabilities. Parents frequently say that their greatest worry is how their child with disabilities will fare once they have passed away. Not only will a third party SNT shelter an intended inheritance, it can be used during the parents' lifetimes for ongoing expenses that are not covered by government entitlements. A significant attraction of the third party SNT is that, unlike a first party SNT, when the beneficiary dies, there is no Medicaid payback requirement. The person who created the third party SNT (often a parent) chooses and has complete control over selection of the trust remainder beneficiaries. A third party SNT can either be testamentary (created under a will) or inter vivos (created during lifetime). Additionally, an inter vivos third party SNT can often be made revocable or provide an easy mechanism for changes of trustee lineup or remainder beneficiaries if the parents want flexibility to change the trust agreement in the future. Thoughtful consideration should also be given to the designation of the trustee of any SNT. For example, in situations where the beneficiary's parents have large estates, sometimes it is recommended that the parents not serve as trustees of an irrevocable SNT due to potential adverse tax consequences. In choosing a trustee, consider the potential trustee's ability to (a) be sensitive to the beneficiary's disabilities, ( actively monitor any services provided, © aggressively advocate for all entitlements, and (d) prudently invest SNT funds. Because of the trustee's many roles, consider appointing a professional corporate trustee, either to serve alone or to serve jointly with a family member trustee. Have you had your special needs trust reviewed lately? Whether you are a trustee or a parent, it is a good idea to have the SNT reviewed periodically (ideally, annually) with your special needs planning attorney. Some of the questions that should be reviewed include: 1. Have there been any changes in the laws that affect the SNT? 2. Do you need to make any changes to the trustees or trust advisors? Perhaps a successor trustee is ill or recently passed away and you need to designate a new successor trustee. Or perhaps you want to consider a corporate trustee if you have not previously designated one. 3. Do you understand the tax ramifications? It is important for you to understand how the income earned in the SNT is reported and on what type of income tax return. Questions you want to review with your attorney are whether your trust is a " grantor trust " for income tax purposes or whether it is considered a " qualified disability trust. " Also, what are the gift tax reporting implications, if any, when a third party makes a gift to the trust? 4. Is the trustee making any distributions that would cause the beneficiary to lose benefits? Constant monitoring and oversight must be made regarding SNT distributions. For example, if the trust is paying housing costs for the beneficiary, the beneficiary may suffer a reduction in his SSI benefit. 5. Are the assets designated to pour into the SNT as intended? Your last will and testament will not control the disposition of certain assets, such as annuities, insurance policies, and retirement plans, if you designate beneficiaries other than the SNT. Your attorney can help you check and update your beneficiary designations on these assets to make certain that they pass to the SNT at your death, if intended. This overview and list of questions to be reviewed with a special needs planning attorney demonstrates that SNTs are very complex and require careful consideration and planning to ensure that the appropriate SNT has been set up for the beneficiary. By understanding the terms and requirements of the SNT chosen for the beneficiary, you will be in a better position to help protect the beneficiary's benefits and quality of life. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted August 24, 2010 Report Share Posted August 24, 2010 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter August 2010 - Vol 4, Issue 13 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Amos Goodall of the State College, Pennsylvania law firm Goodall & Yurchak, P.C. His practice emphasizes estate planning and implementation for elders, persons with special needs and their families. A member of the Special Needs Alliance and of the National Academy of Elder Law Attorneys, Amos is also a Fellow of the American College of Trust and Estate Counsel. Crummey Doesn't Mean Lousy How can families transfer and hold funds to be used to help a child with special needs while avoiding gift taxes or a reduction in their protection from estate taxes? How can parents provide a way for other family members to do so as well? Parents should consider creating " standalone " special needs trusts for their children with disabilities. This is an excellent idea for many reasons, including supplying an account for other relatives to contribute to for the child's benefit. Without this, a well-meaning relative may simply name the child with disabilities as a beneficiary on a life insurance policy or in a will -- either jeopardizing the child's benefits or requiring the creation of a much more restrictive kind of trust. Also, grandparents often want to provide for all their grandchildren, and while a Section 529 education account may be appropriate for a child going to college, a special needs trust may be more appropriate for a child with disabilities Gift and estate tax laws can complicate matters for wealthy persons when funding a standalone trust. A contribution to a trust is a gift subject to gift tax, like most other gifts. Most families are aware of the annual exclusion from federal gift tax, which permits gifts of up to $13,000 (adjusted annually for inflation) per year from each person making a gift to each recipient, without the gift counting against the $1 million limit on gifts that can be made without payment of federal gift tax. Since married partners can allocate their annual exclusion to their partners, grandparents can give $26,000 to each grandchild in a particular year without any gift tax consequences. Gifts that exceed the annual exclusion will either be subject to a gift tax or will reduce the donor's protection from state and federal estate taxes. Unfortunately, this annual exclusion does not normally apply to gifts to a trust. This is because the annual exclusion is available only if the recipient has a " present interest " in the gifted property -- the immediate right to use the property. Gifts in trust usually limit the use of the property to a trustee's discretion or to distribution at a later time. A number of years ago, attorneys devised a method of making gifts to trusts qualify for the annual exclusion by including a special withdrawal power in the trust, and this technique was recognized in a case called Crummey v. Commissioner. As a result, trusts incorporating this withdrawal power are known as " Crummey trusts " and the withdrawal powers are called " Crummey powers. " These Crummey powers are often found in trusts that own life insurance, sometimes called " life insurance trusts. " How do Crummey trusts work? The donor (such as a parent) creates a trust which contains a provision that allows the donee or beneficiary to withdraw funds deposited into the trust for a period of time, typically 30 days from the date of notice to the beneficiary. At the end of the 30 day notice period, if the beneficiary has not withdrawn the funds, the beneficiary loses the right to do so. The IRS generally classifies gifts to Crummey trusts as present interest transfers, therefore eligible for the annual exclusion. It may not be surprising to learn that Crummey beneficiaries very rarely exercise their power to withdraw the donated funds! This technique by itself is not necessarily useful to parents of children with disabilities, since most agencies hold that a " withdrawable " transfer is an available resource. In the year of gift, the amount will be " available " ; afterwards, the child may be considered to have made a gift by not exercising the withdrawal power. Thus, the Crummey case alone may not solve the problem. Fortunately, attorneys have devised a second technique that can be useful for beneficiaries with special needs -- a trust which gives the right of withdrawal to someone other than the beneficiary with disabilities (even though the person with disabilities is the person the trust is really designed to benefit). This technique was approved by the Tax Court in a case known as Estate of Cristofani. In Cristofani the donor created an irrevocable trust naming her children as primary trust beneficiaries and minor grandchildren as contingent beneficiaries. In an effort to multiply the allowable gift tax exclusions, the trust gave both the children and the grandchildren Crummey withdrawal rights. If children and grandchildren did not withdraw the funds, the funds remained in the trust for the benefit of the children, only going to the grandchildren if their parents did not survive the donor for 120 days. The grandchildren's possibility of getting the trust property if their parents didn't survive is called a " contingent remainder. " The IRS took the position that the annual exclusion did not apply to the gifts which the grandchildren had the right to withdraw, because all the grandchildren had was a " contingent remainder, " but the Tax Court disagreed. The Tax Court held that the grandchildren's withdrawal rights made the gifts qualify for the annual exclusion, even though the trust really benefited their parents. Thus, the court's decision in Cristofani suggests that a trust could include a Crummey withdrawal right for a person other than the beneficiary with a disability, which would cause the gift to qualify for the annual exclusion without the gift being an available resource to the disabled donee. This planning strategy has some limits. The IRS believes that trusts like the one in the Cristofani case give rise to a suspicion that there is collusion between the parties, a secret agreement that the withdrawal right will not be exercised. The IRS has indicated that it will consider challenging arrangements where the withdrawal power resides in someone other than a current beneficiary. In one opinion, the IRS said: " the Service will deny exclusions for powers by individuals who either have no property in the trust except for Crummey powers or hold only contingent remainder interests. " Even though one more Tax Court case like Cristofani has been decided in favor of a beneficiary, it would still be very aggressive planning to rely on that case and Cristofani when the IRS has said it will continue to challenge such trusts. Therefore, if avoiding the gift or estate taxes is important, the Crummey withdrawal power should be limited to someone who will be receiving at least some of the assets in the trust after the child with disabilities passes on, and even then, the family will need to be prepared to prove to the IRS that there are circumstances indicating that there was no collusion between the donor and the holder of the Crummey withdrawal power. A carefully planned trust with named remainder beneficiaries can theoretically give withdrawal powers to these beneficiaries, so that grandparents and others could make annual exclusion gifts into this trust-assuming that they will ultimately be used for the benefit of the child with disabilities, without being deemed an available resource and without interfering with a child's present benefits. Alternatively, the trust could give a set amount -- preferably more than 5% -- to other children, and those children would have the Crummey withdrawal powers. This is a specialized planning technique, and it should only be attempted with the advice of an attorney who is well versed in both special needs and tax law. However, it can allow parents and others to benefit a child with special needs while reducing tax consequences. Most people will not have to worry about federal gift or estate taxes, so the complexities of a trust with Crummey powers can be avoided. However, if these taxes are a part of your planning, a properly constructed trust with Crummey powers can be advantageous. A knowledgeable special needs attorney can help you make this decision. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . 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Guest guest Posted September 14, 2010 Report Share Posted September 14, 2010 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter September 2010 - Vol 4, Issue 14 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance members V. Wilcenski and Tara Anne Pleat. EDWARD V. WILCENSKI, Esq., is a founding partner of the law firm of Wilcenski & Pleat PLLC in Clifton Park, New York. He practices in the areas of special needs planning, elder law and trust and estate planning and administration. A member and past president of the Special Needs Alliance, Ed writes and lectures frequently on issues affecting individuals with disabilities and their families. TARA ANNE PLEAT, Esq. is a founding partner of the law firm of Wilcenski & Pleat PLLC in Clifton Park, New York. She focuses her practice in the areas of special needs planning, trust & estate planning and administration, long term care planning and elder law. Tara is a member of the Special Needs Alliance, frequently speaking on estate planning and administration, special needs planning and related disability issues for state and local bar associations and community organizations. Retirement Accounts and Government Benefits For many individuals retirement plans are an important part of their financial security. While retirement plans can be great wealth building tools, they can also present some significant challenges if an individual with disabilities needs to qualify for some government benefits. Retirement plans can be an issue in several different contexts. Parents often want to leave retirement accounts to their children with disabilities as part of their estate plan. People with disabilities may have their own retirement plan that was funded before the onset of their disability. In some cases a person with disabilities may have employment through a PASS Plan or a supported job opportunity that includes either employer funding of a retirement plan or the employee's option to self-fund a retirement plan through wage deferral or withholding. In each of these cases it is important to know how retirement plans can affect eligibility for government benefits and what options are available to minimize or avoid the loss or reduction in benefits. In this issue of The Voice, we discuss how retirement plans may affect eligibility for means-tested government benefits. The next issue of The Voice will address options to shelter retirement plan benefits in order to preserve needed government benefits. What is a Retirement Plan? While there are many different types of retirement plans, the following are the most common plans: a.. Individual Retirement Accounts (IRAs). IRAs are retirement accounts that are owned and funded by individuals with income they have earned through employment. b.. 401(k) Plans. 401(k) plans are employer sponsored retirement plans that are funded by an employee's salary deferral and in some cases also by employer contributions. 401(k) plans are typically offered by private and corporate employers. c.. 403( Plans. 403( plans function essentially the same way as 401(k) plans. They are retirement plans that are administered for the employees of educational institutions, hospitals and municipalities. Generally speaking, each of these plans defers income taxes. This means that money you put into the plan is not taxable in the year of contribution, and it grows tax free within the plan. But when you withdraw funds from one of these plans, the amount withdrawn is considered taxable income, just like wages. Thus the tax is deferred but not avoided altogether. There are rules which govern the manner and timing of withdrawals from these plans. These rules are designed to encourage people to save for their retirement, and then use the money once they do retire. The two most important rules for our purposes are as follows: a.. Rule 1. Prior to reaching age 59 ½, a retirement plan owner who withdraws funds from his or her retirement plan will be subject to an excise tax (like a penalty) equivalent to 10% of the total distribution. This is in addition to the ordinary income tax that applies to the distribution. This rule is designed to encourage people to keep money in the plan until they retire. There are some exceptions to this rule, however, the most important of which allows a person with a recognized disability to withdraw funds from a retirement plan before age 59 ½ without incurring the 10% excise tax penalty. b.. Rule 2. Once an individual reaches the age of 70 ½, the individual must begin taking required minimum distributions from the retirement plan. The IRS has a special life expectancy table that is used to calculate one's required minimum distributions. If the individual fails to take a minimum distribution after reaching age 70 ½, then there will be a 50% excise tax on the total amount of the required distribution. That excise tax is in addition to the ordinary income tax payable on the distribution. This rule is designed to encourage people to use the money when they retire. Retirement Plans and Government Benefit Eligibility People with disabilities often need help from government benefit programs that provide monthly income, medical care, attendant care, housing and food. Many of these programs, including Medicaid, Supplemental Security Income (SSI) and food stamps, are means-tested. These programs count the amount of an applicant's monthly income and also the applicant's resources (bank accounts, stocks, retirement plans, and other assets) in determining eligibility for benefits. For those individuals with disabilities who have worked and accumulated money in a retirement plan, how will those plans be treated when it comes time to apply for benefits? If a parent wants to name a child with disabilities as a beneficiary of the parent's retirement plan, how will that affect the child's eligibility for benefits? If a child is offered a retirement plan as part of her employment benefit package in a supported work opportunity, how will that affect her current or future eligibility for benefits? In almost all cases a retirement plan inherited outright by a person with disabilities will be treated as an available asset or as monthly income that will reduce or eliminate means-tested government benefits, including SSI, Medicaid and food stamps. The fact that the retirement plan is taxable as funds are withdrawn does not mean it will not affect eligibility for needs-based benefits. For example: If Sam inherits a $100,000 IRA from his mother at her death, that IRA account exceeds the $2,000 Medicaid and SSI asset limit and will disqualify him from those benefits. In the next issue of the Voice we will discuss planning opportunities available to Sam's mother to avoid this result but still protect the retirement plan for Sam's benefit. If the retirement plan is owned by the individual with disabilities, the effect of the plan on government benefits is more complicated. The government benefit program will need to determine if the retirement plan, or any portion of the plan, can be accessed by the individual. In other words, are the plan's assets available to the individual? This issue of availability will vary from plan to plan, and some state Medicaid rules may vary on how availability is determined. In most cases, if the plan owner is no longer working, the retirement plan will be available and counted as a resource. If the plan owner is still working, the retirement plan may prohibit the owner from withdrawing funds from the plan while employed. In that case the plan should not be counted as an available asset. If the retirement plan allows a hardship waiver of the prohibition on withdrawing from the plan or the option of borrowing against the account, then the plan may be counted as an available asset depending upon how the plan defines " hardship " or under what circumstances employees can borrow again their account. In some cases the retirement plan may be treated as monthly income rather than an asset if the plan has been converted from a lump sum to irrevocable periodic payments from the plan over the life expectancy of the plan owner. Income usually reduces or offsets means-tested government benefits, so having a retirement plan treated as income rather than an asset probably will not help. Again, if Sam inherits a $500 per month IRA annuity from his mother at her death, the $500 will offset and reduce his SSI income dollar for dollar (other than $20 that will be disregarded). Instead of receiving his SSI income of $674 plus $500, Sam will receive $500 from the inherited IRA and $194 from the SSI program for total monthly income of $694. The rules governing the treatment of retirement plans vary depending upon the source of the retirement plan and may vary from state to state. Individuals with retirement plan assets should seek legal advice before applying for means-tested government benefits. In the next article of The Voice, Alliance member Ken Shulman will address planning options to shelter retirement plan benefits and preserve eligibility for needs-based benefits. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted September 28, 2010 Report Share Posted September 28, 2010 Good and important information. Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter September 2010 - Vol 4, Issue 15 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Ken Shulman, a partner in the Boston, Massachusetts office of Day Pitney LLP. His practice includes estate planning and related issues for families who have children with disabilities, and elder law. He presently serves on the board of the Asperger's Association of New England and on the Combined Jewish Philanthropies Committee on Disabilities. He previously served on the board of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. He is a co-author of Special Needs Trust Administration Manual, A Guide for Trustees, available through DisABILITIESBOOKS. Planning Options With Retirement Benefits In the most recent issue of The Voice, Tara Pleat and Ed Wilcenski described the various types of retirement plans and discussed how these plans affect eligibility for means tested public benefits, primarily Supplemental Security Income (SSI) and Medicaid. In this issue, we will discuss the planning options available to retirement account owners, primarily parents, to shelter these assets for their children who receive means tested benefits. Retirement assets increasingly make up a significant portion of many individuals' wealth. With fewer employers offering a defined pension benefit (payments of a specific monthly sum to the retired worker), most retirement nest eggs now consist of 401(k) or 403( plans and IRAs. When passing these assets on to their children through their estate plans, parents and their lawyers must contend with the convergence of several competing interests, including public benefits issues, taxes and charitable intent. A recent article (by fellow Alliance member Ed Wilcenski) on Forbes.com describes some of the complexity. It is important to remember that retirement benefits are not controlled by your will. Rather, their disposition is controlled by the beneficiary form you filled out in association with the retirement plan. For example, if your will states that you leave all your assets to Neal, but your IRA beneficiary form names as beneficiary, will receive your retirement assets. We often see situations where parents have created wills and a special needs trust for their child with a disability but have neglected to revise their beneficiary designations so that the child's share goes to a special needs trust. It is not uncommon to see a situation where a parent has designated his spouse as primary beneficiary of his retirement plan and his three children as contingent beneficiaries. If one of those children is receiving public benefits, the parent has created a significant and unnecessary problem that can easily be avoided. The Basics SSI and Medicaid have asset and income limitations. Leaving retirement funds directly to a person receiving these benefits will almost always disqualify the beneficiary from receiving SSI and Medicaid. Most retirement funds consist of tax deferred assets. Generally, the employee receives a deduction for contributions made to the retirement fund. However, when distributions are made from the funds, they are taxed at ordinary income tax rates. Roth IRAs consist of previously taxed assets, and distributions come out tax-free. The Internal Revenue Code requires mandatory distributions from retirement funds when the owner reaches 70½ years of age. A person can choose to begin receiving distributions without penalty at age 59½. When the owner of a retirement plan dies, special rules mandate at what rate an inherited retirement account must be paid out to the beneficiary. These complicated rules about inherited retirement plans make planning with them particularly challenging when the beneficiary receives means tested public benefits. These include: a.. Retirement funds left directly to an individual may be stretched out over the beneficiary's life expectancy to preserve some of the income tax benefits offered by the retirement account. This is attractive from an income tax perspective, but this is not an option for a beneficiary receiving means tested benefits because direct receipt of the funds will usually disqualify the person from receiving benefits. b.. If retirement funds are left to a trust for the benefit of a beneficiary, the favorable tax treatment can be preserved if the trust provides that all of the retirement account's annual required minimum distribution is to be paid out to the beneficiary each year. Such a trust is sometimes referred to as a " conduit trust. " Unfortunately, a conduit trust will not preserve eligibility for means tested benefits because of the mandatory distributions to the beneficiary. c.. Because a special needs trust is a discretionary trust, not a conduit trust, another subset of rules applies, the most important of which is that the age of the oldest beneficiary, either the special needs beneficiary or any contingent beneficiary, will be the measuring life for determining the rate at which retirement funds must be distributed to the trust and, therefore, taxed. For instance, assume that Jack is the primary beneficiary of a special needs trust that is the beneficiary of an IRA from his deceased father. Also assume that Jack receives SSI and is 35 years old. The special needs trust provides that at Jack's death any remaining funds in the trust will go to his sister, , who is 52. The result is that 's age will be the measuring age for determining at what rate the payments from the retirement account must be distributed to the special needs trust. Since is older than Jack, the IRA must be distributed over a shorter period of time than if Jack's age was used to determine the distribution rate. Another important rule is that all beneficiaries of a trust that receives an inherited retirement account must be individuals in order for the trust to be entitled to receive funds from the retirement account on a stretched out basis. If any beneficiary is not an individual, then the retirement funds must be paid out within five years. Importantly, a charity is not an individual for retirement plan purposes. If Jack's special needs trust provided that at Jack's death any remaining funds would be distributed to United Cerebral Palsy instead of to his sister, the distributions from the retirement fund to the special needs trust would have to be made over a five year period rather than over Jack's life expectancy. Since parents often want the organization or organizations that cared for their child with a disability to receive the remaining funds in the special needs trust, this can be problematic. Solutions When applying these basic rules about retirement benefits to planning in the special needs area, there are several conclusions that we can draw: First and foremost, and worthy of repetition: Do not name your special needs child directly as a beneficiary of a retirement plan if your child receives or may later need SSI, Medicaid, or other benefits such as Section 8 assistance or food stamps. The distributions from the retirement account will either reduce the entitlements or eliminate them entirely. Instead, if you want your child to receive your retirement benefits, the named beneficiary on the account can be the special needs trust for your child. Even so, this trust should contain special provisions not typically found in special needs trusts to insure the most favorable stretch-out and tax treatment discussed above. Consultation with a qualified expert is critical. Second: Pay attention to the remainder beneficiaries in the special needs trust. In the example where Jack is 35 and his sister is 52, the funds will be distributed over the sister's life expectancy using the applicable IRS tables. This means that the funds will have to be taken out over a shorter period of time, thereby reducing the time during which the assets could continue to grow tax free. It also means that more income taxes may have to be paid by the special needs trust than if receipt of the retirement fund could be stretched out over a longer period. The result is even less favorable if a charity is named as the contingent beneficiary, which would require the funds to be distributed to the special needs trust within five years, resulting in large tax payments by the trust and reduced opportunities for growth. Third: Given these complexities, parents should consider the possibility of leaving their retirement benefits to children without disabilities and leave other assets-cash, stocks, real estate, insurance, etc.--- to the special needs trust. Leaving non-retirement assets to the special needs trust avoids the unsatisfactory consequences associated with the shorter pay-out required when the special needs trust names an older contingent beneficiary or where the parents would like to name a charity as a beneficiary of the trust. The retirement funds left to the children without disabilities can be stretched out to the extent permitted by law, and more of the favorable tax treatment and opportunities for tax deferred growth can be maintained. While Roth IRAs do have mandatory annual distributions, they are not taxable to the beneficiary. Accordingly, the Roth IRA may be a good choice for funding a special needs trust, especially if the IRA names other individuals relatively near in age to the child with disabilities as the successor or contingent beneficiaries. In any case, consulting a special needs lawyer who understands special needs entitlements, estate and income taxes and the rules regarding distributions from retirement plans is crucial when planning for the proper disposition of retirement assets for children with disabilities. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted October 12, 2010 Report Share Posted October 12, 2010 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter October 2010 - Vol 4, Issue 16 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by SNA member Hyman G. Darling, a partner in the Springfield, Massachusetts, firm of Bacon , P.C. Mr. Darling concentrates his practice in estate planning, elder law, probate, special needs and guardianships/conservatorships. Before joining Bacon , he was a trust officer for several years. A frequent speaker for civic and charitable organizations, he serves on the American Cancer Society National Professional Advisory Committee and the boards of several western Massachusetts nonprofit organizations for persons with disabilities. He is a member of the National Academy of Elder Law Attorneys Board of Directors. Life Insurance on a Child with Special Needs: Benefits and Challenges Parents with a special needs child often insure themselves to provide for their child when they have died. A more complicated issue is whether the parents should consider purchasing life insurance on the life of their child to address the possibility that they will outlive their child. Purchasing a life insurance policy on the life of a child with disabilities can provide several benefits for family caregivers. The purpose of this article is to explain these benefits, provide an overview of the application process and describe the types of policies that may be available, while highlighting some of the special considerations that family caregivers should understand. The information here expands on suggestions offered on Life Insurance and Children with a Disability in an earlier article in The Voice. Benefits of Life Insurance For caregivers who have foregone career development to provide care to a child with special needs, retirement savings, pension amounts and even Social Security benefits may be adversely affected. A life insurance policy on the life of the child may help to replace the caregiver's lost wages and retirement accounts at the child's death. In most cases, when the insured person dies, insurance proceeds will be paid to the designated beneficiaries free of any income tax. Although it is not pleasant to think about, having a life insurance policy may help cover funeral expenses and make up for lost income opportunities. Before you purchase life insurance on the child with disabilities, you should know something about the process of purchasing a policy and the available options. Process of Purchasing a Life Insurance Policy First, you should contact a reputable advisor. The insurance industry can be driven by commissions, so find an advisor who will put your family needs ahead of personal gain and who understands the guidelines for writing policies on a person with disabilities. Some advisors may suggest that a child with special needs may not be insurable due to pre-existing conditions or disabilities. Do not accept this response as a final denial of coverage. Despite such conditions, there may still be options to obtain insurance, such as requesting a rating, a graded life benefit, or a policy based on the functional level of your child (explained in more detail below). One of the important considerations when applying for insurance is to present the medical and psychological issues in a light most favorable for issuance of the policy. The details about any medical or psychological issues must be completed accurately and honestly, but there is usually no requirement to volunteer additional information. If the company wishes to request further explanation about test results or details surrounding the capacity of a person to perform certain tasks, it may do so at a later date. Another important consideration is to determine the amount of coverage to request, which depends on your reasons for purchasing a policy. If the proceeds are intended to cover only funeral and related expenses, there is probably no need for a substantial death benefit. If the proceeds will be used to support dependents or to replace a caregiver's lost wages, a larger death benefit may be appropriate. When the application is complete, the advisor will send it, along with required medical information, to the underwriter. After underwriter review of the application and the requested death benefit, the company then determines whether to decline the application or to approve it with a standard benefit, a rated benefit, or with lower coverage than requested. Since the child is often a minor or is receiving Medicaid or other means-tested government benefits, the child should not own the policy. The cash value of the policy is a countable asset of the owner for purposes of Medicaid and SSI, programs which have very low asset limits. Loss of these critical benefits could be catastrophic for the child. You may be the owner, as long as you do not have long-term care or estate tax issues, which could cause complications for you. An alternative could be to have another child own the policy, or, for a larger policy, to have an appropriate type of trust as the owner and the beneficiary. After the details of the policy have been arranged, it is time to start making payments. The premiums, of course, will also be a factor for determining how much insurance to request. It is interesting to note that sometimes, a person who is younger will have a higher cost of insurance than that of an older person. For instance, a person who is only 10 years old may have a premium greater than that of a 20 year old since a 20 year old has already lived to the age of 20 whereas the 10 year old has 10 more years to obtain that age. On the other hand, some companies do charge more if the insured person is older. For instance, the sample analysis by one company for a male age 10 with a death benefit of $25,000 will cost $179 per year whereas a 20-year-old male would pay $202 per year for the same coverage. The cost of premiums will also vary depending upon whether the policy is " term " insurance or " whole life " insurance. Term insurance is guaranteed for a set number of years such as 20 years. When the term ends, the insurance company may or may not agree to renew the policy for an additional term. There is no accumulated cash value to a term insurance policy. Whole life insurance, on the other hand, is typically for the lifetime of the insured with a guaranteed death benefit regardless of the age at death so long as the proposed premium schedule is maintained. The insurance company cannot refuse to renew the policy as long as premiums are paid. Whole life insurance typically accumulates a value over time referred to as the cash surrender value. Term life insurance is cheaper than whole life insurance as it does not provide any cash value. Note that there are also " hybrid " policies that combine aspects of term and whole life insurance. These policies are a little more difficult to understand, and an explanation here would unnecessarily bog us down -- ask your insurance advisor for an explanation and comparison of the different types of policies. The above steps and considerations highlight the process of purchasing an insurance policy on the life of a person with special needs. The following summarizes in more detail the types of policies that may be available. Insurance Policies for People with Special Needs Even though premiums may be higher, a whole life policy that guarantees coverage for the lifetime of your child will ensure continued coverage if health conditions deteriorate over time. If your child's health is stable and not likely to deteriorate over time, then term insurance may be less risky. Due to the inherent risk of insuring a person with special health care needs, many companies establish guidelines for writing policies on individuals with disabilities and have separate allocations, referred to as the " tables, " regarding the cost of insurance. The company may rate certain conditions or possibly assign an insured person what is known as a " graded life benefit. " A rating or a graded life benefit is not a denial of coverage, but rather is an adjustment the insurance company makes about how or when benefits will be paid. Instead of paying a fixed amount upon the death of the insured party, a graded life benefit may schedule various benefit amounts based on the number of years of survival after the application. For instance, if the insured dies in the first year, the premium will merely be returned without interest. If the insured dies in the second year, the death benefit may be 50% of the face amount of the policy, death in the third year being 75% of the face amount, and in the fourth year and thereafter, the death benefit will be the full amount. However, if the insured dies as a result of an accident and not from natural causes, then the full face amount may be paid. Other policies may be issued as well as charged based on the level of functioning of the insured. Thus the amount of insurance for which a high functioning person can qualify may exceed the amount issued to a person with more severe impairments. For illustration purposes, the following summarizes how at least one insurance company describes certain levels of functioning: a.. High functioning autism is comparable to an IQ of 70. The insured should have no or only minimal impairment in sensory motor ability and should have well developed language skills. b.. Mild functioning autism is comparable to an IQ range between 50 and 70. To qualify under this description, an insured should have minimal impairment in sensory motor ability and be able to acquire grade school academic skills. The insured should be able to achieve vocational skills for self-support, even with assistance or guidance, but may also be able to live independently or with limited supervision. c.. Moderate functioning autism is comparable to an IQ range between 35 and 49. To qualify under this description, an insured should be able to acquire some communication and personal care skills through training. The insured may have academic skills limited to the early grade school level, and social skills are significantly impaired, but the insured may be able to perform unskilled or semi-skilled labor under supervision. d.. Severe functioning autism is comparable to an IQ range between 20 and 34. Insured parties in this description show poor motor development, minimal speech, and little to no communication skills. e.. Profound functioning autism is comparable to an IQ of about 20 or less. Insured parties in this description have minimal speech development and self-care ability, may need to live in a closely supervised setting, and may be able to perform only a few simple tasks with training. In each of the above descriptions, the underwriting decision of a company will depend on various issues such as the diagnosis, the presence of co-morbid disorder such as depression, anxiety and obsessive compulsive disorders, any history of seizures and epilepsy, level of intellectual functioning, IQ, and the ability to work and live independently. The mere fact that a person has a disability of any type may affect the premiums or terms of the life insurance policy, but is not necessarily a cause for denial. In addition, since there is no cost to applying for a policy, there is really nothing to lose in an attempt to obtain coverage. It may be that if a person has not been fully diagnosed when the application is denied, an application may be resubmitted a few years later when a person may have been sufficiently trained in self-sufficiency tasks to allow a policy to be issued. Whether you would benefit from purchasing insurance on your child is complicated and, sadly, is premised on the possibility that you could outlive your child. The cost of any policy must be weighed against the potential benefits to you. Having a knowledgeable insurance advisor review options can help you make an informed decision. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted November 3, 2010 Report Share Posted November 3, 2010 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter November, 2010 - Vol 4, Issue 17 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Wilcenski, a founding partner of the law firm of , Wilcenski & Pleat, PLLC in Clifton Park, New York. He practices in the areas of Special Needs Planning, Elder Law, and Trust and Estate Planning and Administration. Ed is a past President of the Special Needs Alliance, and writes and lectures frequently on issues affecting individuals with disabilities and their families Dear Grandma and Grandpa... Each year as we approach the holiday season, we receive questions from our clients as to how grandparents and other relatives can make gifts to children with special needs without creating problems for government benefits. These conversations don't involve gifts of toys and other items of personal property, since these items are typically excluded as " exempt " resources and have no impact on public benefits. Instead, the questions usually involve how grandparents and other family members might make gifts of cash or other financial assets. Most of our clients are informed enough to know that a direct gift of cash is almost always a bad idea. In fact, the challenge often lies not in the discussion of the type of gift, but rather in determining how best to raise the topic in the first place. Indeed, discussions of money can often be awkward and uncomfortable for both sides. In this issue of The Voice, we thought it might be helpful if we wrote a letter to Grandma and Grandpa on behalf of the grandchild with special needs, in hope that it may facilitate a more detailed discussion with those who are inclined to be generous. Dear Grandma and Grandpa: Thank you so much for thinking about me again at this time of year. I know how lucky I am to have such generous family and friends. I am writing this letter to you because sometimes things that are done with the best intentions can result in unintended problems. Sometimes those problems occur immediately, but in many cases they don't happen until many years later. I understand that you are concerned that I may not be able to work and support myself when I get older and that you would like to provide some financial assistance to help make it easier for me when that day comes. I want to explain some of the things that can happen when these acts of generosity are carried out for the right reasons, but in the wrong way. Counting Your Nickels You probably know that I get special help because of my disability. Sometimes that help comes in the form of a check each month, and sometimes that help comes in the form of government funded insurance to pay for social workers, therapists, and other aides that are not available through the school district or through mom and dad's health insurance. These programs have very strict limits on what I can own and what I can earn. When someone gives me money or opens an account in my name, I have to tell the government that I have assets in my name (even if I'm too young or incapable of spending it). When that happens, it puts my benefits at risk. Delaying (not avoiding) the Problem You might be thinking that a safe way to make gifts is to open an account which is not available to me until I reach 18 or 21. This is partially true, because some government programs will disregard these accounts until I reach the age when the account will be put into my name. More often than not, however, these accounts create significant complications in the future, often involving additional time, effort and expense at precisely the time when you thought the money would be available to help. For example, a Uniform Transfers to Minors Act (UTMA) account becomes my property when I reach the age of 18 or 21. This occurs automatically, regardless of whether I am participating in one of those means tested government programs, and even if I am not capable (because of my disability) of managing that money. When this happens, I am really stuck. On the one hand, by law the money is considered mine when the account terminates on my 18th or 21st birthday. This means I will likely lose my Supplemental Security Income (SSI), Medicaid and other government benefit programs as of that date. Yet, at the same time, my disability may prevent me from making my own decisions with the money, so I may not be capable of taking any steps in order to protect my eligibility for benefits. In many cases I will need to hire a lawyer in order to get court permission to put the money in a different type of account, usually a type of " first party supplemental (special) needs trust " account. Depending on the amount in the account, I could end up with quite a bit less than you originally intended once the costs and expenses of the proceeding have been paid. In addition, any funds remaining in that trust at my death would have to first reimburse the government for any services it has paid on my account through the Medicaid program before it could pass to anyone else (your other grandchildren, for example). I know you wouldn't want that. Words Matter I know that you have been buying savings bonds for me from the day I was born. Sometimes you put my name on the bond, sometimes you put both my parent's and my names on the bond, and sometimes you put my parent's name on the bond, " payable on death " to me. These bonds can create the same types of problems that a Uniform Transfers to Minors Act account can create. At some point they will be countable in determining my continuing eligibility for one of these really important programs, and I may not be capable of taking any steps to protect the bonds without the assistance of a lawyer and the permission of a judge. The Unlucky Beneficiary Maybe you were thinking that you can avoid some of these problems by waiting until the end of your life before the property is given to me, perhaps by naming me as a beneficiary on a life insurance policy, an annuity, or even a small retirement account. But remember that those proceeds are available (and countable) to me when you die if I am the named beneficiary. Just as with the Uniform Transfers to Minors Act account, the government benefit programs will count any assets that come to me by beneficiary designation. Hoping for the Best, but... While it may be difficult for you (and for me) to admit, it could turn out that I will not be ready to manage money when I turn 18 regardless of possible concerns with government benefits. We both know how difficult it is to predict how any young child may act when he or she reaches adulthood. I may be able to read and write, have conversations, go to school and hold down a job, but I may simply be unable (or unwilling) to make good decisions with my money. I may spend it irresponsibly, I may give it away, or (worse yet) I may not be able to tell when someone is taking advantage of me. Government benefits aside, it just may not be a great idea for me to have direct access to a lot of money when I get older. What Can You Do? There are ways that you can help me. Depending on the size of the gift, it may be easiest to simply give the gift to my parents and ask them to hold it for me. So long as the bank account is in their name and uses one of their social security numbers, it won't create a problem with my government benefits. For smaller gifts, this can be the best solution. If you think that I may one day go on to higher education, you could open a " 529 Account " for my benefit. These accounts earn money on a tax free basis, and have other tax advantages too. But the most important thing is that the accounts are considered owned by the person holding the money (i.e., the " owner " of the account), and not the person who might be using the money to pay for education expenses at some point in the future. Some grandparents open these accounts in the name of their children (i.e., the parent of the child with special needs). If it turns out that I'm not able to go to school, the money could be used for one of your other grandchildren who will have that opportunity. Your financial advisor can help you set up one of these accounts (although you might want to check with my parents' special needs trust lawyer to be sure the account is titled correctly, and that the government benefit program rules which deal with these types of accounts haven't changed). It may be that my parents have done their estate planning and have already created a " supplemental (special) needs trust " for me as part of that plan. These trusts are specifically designed to hold money for people with special needs, and can provide the best of both worlds: a trustee is appointed to manage the money (sometimes a parent will serve as the trustee), and the trust is " exempt " in determining eligibility for most government benefit programs (i.e., the government won't treat the money as if I own it). You could also name the trust as the beneficiary of a life insurance policy or retirement account. Just remember that if you are thinking about a significant sum of money, it's important for you to talk to a lawyer who has experience working with these types of trusts. And, of course, you could always buy me some toys... But In The End, What I'm Really Thankful For ... ...is knowing that you are thinking about me this holiday season. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted November 11, 2010 Report Share Posted November 11, 2010 Happy Veterans Day and thanks to those who have served our country. Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter November, 2010 - Vol 4, Issue 18 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Menashe, of Lynnwood, Washington. is a member of the National Academy of Elder Law Attorneys and is a past Chair of the Elder Law Section of the Washington State Bar Association. 's practice emphasizes estate and long-term care planning, special needs trusts, probate, guardianship and Social Security/SSI disability appeals. Veteran's Benefits As our nation commemorates Veterans Day, honoring and remembering those who have served and sacrificed, it is an appropriate time to consider the financial, medical, and other assistance available to veterans, their families and survivors. Veterans Benefits are administered at the federal level by the Department of Veterans Affairs (VA), which is the second largest cabinet-level department and has a budget of $114 billion this year. While the full range of VA benefits extends to housing and home loan guarantees, job training, small business loans, burials, and memorials, this article will examine the four major benefit programs the VA oversees: a.. Disability Compensation; b.. Pension; c.. Free or Low Cost Medical Care; and d.. Education Programs To be eligible for most VA benefits, a person must have been discharged from service under other than dishonorable conditions. Disability Compensation Disability compensation is paid to veterans who were injured or contracted a disease while on active duty or who had an injury or disease that was made worse while on active duty. Payments range from $123 to $2,673 a month, depending on the veteran's level of disability. In addition, the monthly payments can be increased further if the veteran's disabilities are very severe or resulted in loss of a limb or if the veteran has a spouse or dependent children or parents. Disability compensation is tax-free. The key to receiving disability compensation is having a service-connected disability with a disability rated from 10% to 100%. Some conditions are presumed to be service-connected. For instance, a veteran who served in Vietnam and has one of several conditions, including Hodgkin's disease, Type 2 diabetes, and prostate cancer, is presumed to have a service-connected disability due to the effects of Agent Orange. The VA also pays a benefit, called Dependency and Indemnity Compensation (DIC), to certain survivors of: (1) a service member who died while serving; (2) a veteran whose death resulted from a service-related injury or disease; or, (3) in some cases, a veteran with a service-connected disability that was rated as totally disabling. The survivors eligible for DIC include a surviving spouse, a minor child and, in some cases, a disabled adult child that the VA has determined to be " helpless. " A disabled adult child is a child who before age 18 became permanently incapable of self-support. A spouse's basic DIC benefit is $1,154, while the maximum benefit available to a child, including a disabled adult child, is $488 a month. Pension Unlike VA compensation, the VA pension does not require that a veteran have a service-connected disability. Instead, a pension is paid to wartime veterans with limited income who are permanently and totally disabled or age 65 and older. The wartime service requirement does not mean that the veteran had to serve in actual military conflict but rather that the veteran must have served for at least one day during a time period that the VA defines as a wartime period. Service from August 2, 1990 to the present is considered to be a period of war (technically as the Gulf War period), as are several other periods, including World War II, Korea, and Vietnam. The VA pension supplements the veteran's other countable income to bring total income up to the pension benefit amount. At first blush, the income limit seems unusually strict, as a veteran with no dependents is only allowed an income of $11,830 a year. However, unreimbursed medical expenses reduce countable income. While there is no set limit on a veteran's assets, the VA will deny a pension application when it considers net worth to be excessive for a person's particular situation, with that benchmark commonly set at a house, car, personal possessions and $80,000 or less in other assets. There is an increasingly well known component of the VA pension, called Aid and Attendance, which can increase the benefit paid by as much as $1,632 a month for a single veteran. Significantly, this benefit can cover a portion of long-term care costs for a veteran who requires assistance with basic activities of living. The VA pension also benefits dependents and survivors. For instance, a surviving spouse of a veteran is eligible for an Aid and Attendance benefit of up to $1,055 a month. In addition, like with compensation, minor children and adult children who became disabled before age 18 can be eligible for pension benefits. Medical Care The VA offers veterans a range of health care services called a Medical Benefit Package, including preventive medicine, inpatient care, outpatient care, medications and supplies. In addition, in certain circumstances, the VA can pay for specialized services such as bereavement counseling, long-term care, and medical equipment and aids. While all veterans are potentially eligible for benefits, the VA is required to stay within the limits of funds allocated by Congress, and thus the VA has instituted a priority system, ranging from 1, as the highest priority, and 8 as the lowest, with more covered services and no or reduced co-pays at the higher priority levels. The highest priority group, Priority Group 1, is for veterans with a service-connected disability rated 50% or higher or who are determined to be unemployable due to a service-connected condition. Beyond that, there are many factors which contribute to the priority group a veteran is assigned. For instance, a former prisoner of war or Purple Heart recipient is in Priority Group 3, and a veteran exposed to Agent Orange during the Vietnam War will be in Priority Group 6. Priority Groups 7 and 8 are affected by household income. Until 2009, the VA had not been enrolling new Priority Group 8 Veterans. The VA is now enrolling Priority Group 8 Veterans whose income exceeds by not more than 10% the set income threshold of $29,402 a year for a veteran with no dependents. The VA also has a program called CHAMPVA, which shares the cost of health care services and supplies with eligible beneficiaries. Spouses and minor children, and in some cases disabled adult children, are eligible for this benefit if, generally speaking, the related veteran died on active duty or is, or at death was, permanently and totally disabled due to a service-connected disability. Education Programs The new " Post 9/11 GI Bill " offers current service members and veterans substantial assistance with education and training at accredited colleges and universities. Assistance includes up to 100% of tuition and fee coverage (based on the highest public institution rate in a state), a monthly housing allowance, and up to $1,000 a year for books and supplies. An additional benefit, called Yellow Ribbon payments, pays for 50% of expenses above the normal highest rate when an institution matches the other 50%. To be eligible for full benefits, a veteran must have 90 days of service after September 10, 2001, and must have served 36 months of total service or have been discharged for a service-connected disability. Benefits are reduced, from 90% to 40%, for those with less than 36 months of service. More Information The VA has just launched an advertising campaign, entitled " My VA, " aimed at increasing veterans' awareness of the benefits to which they may be entitled. The VA has estimated that of 23 million eligible veterans, only about 8 million use VA services. The VA has invited veterans and their families to visit the VA website as the first stop for information on benefits that are available through the VA. In addition, veterans' services organizations, such as the Veterans of Foreign Wars and the American Legion, can be a very valuable source of support, information, and advocacy. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted December 7, 2010 Report Share Posted December 7, 2010 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter December 2010 - Vol 4, Issue 19 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Albuquerque, New Mexico Special Needs Alliance member Nell Graham Sale. Nell's practice concentrates on taxation, estate planning, estate administration, business succession, disability planning and elder law. She is a Certified Elder Law Attorney as designated by the National Elder Law Foundation. The recipient of much recognition from her peers, Nell is a fellow in the American College of Trust and Estate Counsel and since 2007 has consistently been selected for inclusion in Super Lawyers. Not least importantly, Nell is a regular contributor to the blog at her firm, Pregenzer, Baysinger, Wideman and Sale. What Health Reform Means for Persons with Disabilities The Patient Protection and Affordable Care Act of 2010 (ACA) embodies many reforms of the health insurance industry in the United States. The principal objective of the ACA is to ensure access to health insurance for everyone. As of 2014, almost everyone in the United States will be required to have health insurance. In addition, no one may be denied coverage by health insurance companies, regardless of age, preexisting conditions, or the amount of coverage that may be subsequently needed. The rationale for these reforms is that if all Americans are members of the insured pool, the risks for insurance companies will be spread across a larger group of persons so that the cost of private insurance will be less. The ACA is in some respects similar to Medicare, a health insurance system run by the federal government, funded by a 2.9% tax imposed on everyone who earns wages, with 1.45% each paid by the worker and the employer. Medicare provides health insurance coverage for all individuals who are over age 65 and eligible for Social Security or Railroad Retirement benefits and for those who have received Social Security Disability Insurance benefits for two years or more. There are no exclusions for preexisting conditions, degree of health need, or age after 65. The pool of the insured under Medicare includes those who are healthy and those who are not. The ACA provides that, by 2014, the pool for private health insurance coverage will be expanded to include nearly everyone. The pool will include younger, healthier citizens than the current Medicare pool. The Congressional Budget Office worked over the numbers daily during the legislative deliberations on the ACA, and the conclusion was that this should work. Beginning in 2014, health insurance exchanges will be created through the ACA to provide a mechanism for access to health insurance with sufficient coverage -- that is, hospitalization, prescription drug coverage, rehabilitation, mental health services, substance abuse treatment, preventive and wellness health coverage, chronic disease management, pediatric coverage (including dental and vision for children) and maternity coverage. The health insurance exchanges will provide a marketplace in which to compare plans. The four types of plans that will be available will be labeled Bronze, Silver, Gold and Platinum. Health insurance companies that intend to participate in the exchanges must offer at least one Silver and one Gold plan. The Bronze plan will pay 60% of the insured's costs, the Silver 70%, the Gold 80% and the Platinum 90%. Bronze plans will have a $5,950 annual limit for out of pocket expenses. Small businesses will be able to access health insurance for their employees through the exchanges. As noted earlier, health insurance companies will not be able to exclude anyone from coverage for a preexisting condition or set a cap for the amount of coverage. Beginning in 2014, all individuals in the United States who do not have health insurance coverage will pay a penalty. There is a sliding scale of assistance and premium credits to make health insurance affordable. The term " affordable " means that the premiums may not exceed 8% of the family's annual income. If an individual refuses to obtain health insurance, a penalty of the greater of $95 or 1% of his or her annual taxable income will be charged in 2014. In 2015, the penalty is $325 or 2% of taxable income, and in 2016, $695 or 2.5% up to a maximum of $2,085. If a person's income is too low, there is an exemption from the penalty. In 2014, employers with more than 50 employees will be required to provide health insurance coverage for employees or the employer will be penalized. There will be a uniform enrollment form for health coverage through the exchanges. The exchanges can be a clearinghouse to determine eligibility for Medicaid, the Children's Health Insurance Program, or premium credits using this uniform enrollment form. Moreover, the exchanges can screen for families that may be exempt from tax penalties. Until the ACA, the only health care coverage available to persons with disabilities has been either Medicare or Medicaid. Medicare is only available to workers (and certain dependents of workers) who have a sufficient work history to be eligible for Social Security benefits. For persons with disabilities who have a limited work history, unless they became disabled before age 22 and later qualified for Medicare upon the worker parent's retirement, disability or death, Medicaid has been the only available source of health care coverage. Because Medicaid provides health coverage only to the poor, disabled individuals often require special needs trusts in order to shelter so-called excess resources. For special needs planners, assuring access to Medicaid has been a primary focus of planning. Because the ACA eliminates the option for health insurance companies to deny coverage for a preexisting condition, new health insurance options will open up for some folks with disabilities. As of September 23, 2010, health insurers are no longer permitted to deny coverage to children under the age of 19 who have a preexisting condition. Depending on the disability, a disabled child who has recovered a personal injury settlement does not necessarily have to plan exclusively for continuing eligibility for Medicaid by transferring the recovery to a special needs trust. Parents who have health insurance through employer-sponsored group health plans can now add a disabled child to their coverage, and can enroll a child up to age 26 as a dependent on the parent's health plan if the child is without alternative coverage. Thus, there is significant relief here. Although the ACA will provide near universal access to health insurance in 2014, it does not expand the services available for the long term care needs of people with disabilities or long term chronic diseases. It is still the case that these types of services are available only through private resources or Medicaid. Look for future Voice articles that will cover some of the ACA's provisions in greater detail. For example, we plan to discuss one provision in the ACA called the CLASS Act, which may provide some relief for long term care needs, and the extension of Medicaid eligibility to adults who have less income than 133% of the federal poverty guidelines ($14,412 for a single person in 2010). We will also describe coverage available to persons with preexisting conditions that would otherwise make them uninsurable. These provisions also will open up health coverage for some disabled individuals. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted December 14, 2010 Report Share Posted December 14, 2010 Very good and timely article... Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter December 2010 - Vol 4, Issue 20 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Walnut Creek, California Special Needs Alliance member W. Dale of The Dale Law Firm, PC. Mr. Dale is a disability rights advocate and attorney dedicated to providing quality estate planning. He is a frequent speaker on a variety of disability related topics across the country. Mr. Dale regularly teaches courses to the public, financial professionals, and other attorneys on special needs trusts and trust administration. Additionally, Mr. Dale serves as the trustee for the Golden State Pooled Trust. Mr. Dale offers numerous videos and handouts to the public and his colleagues, many online through his Achieving Independence initiative. The Past, Present and Future of Community Living for Persons with Disabilities - A Christmas Carol Defining the Issue - Tiny Tim's Story The holidays are a time of hope and renewal providing an opportunity to look at past accomplishments, while planning for the future. Many families are trying to figure out how to plan for the future under the limitations of today's economy. This is a difficult undertaking under normal circumstances. Planning for the future needs of persons with disabilities can be a particularly daunting task, especially when special needs trusts may be needed. Even if we may believe that we can control our future through our present actions, it is very important that a special needs trust be as flexible as possible. Take, for instance, a fictional example of Tiny Tim, a 17 year-old young man who has autism. Doctors have advised that he will need assistance for the rest of his life and that his likely lifespan is 87 years. With this information, it becomes clear to Tiny Tim's parents that they will need to prepare to provide for Tiny Tim for approximately 70 more years. This will include health care, living arrangements, education, therapy, recreation, and protection. How can Tiny Tim's parents face the challenge of taking care of Tiny Tim for seven decades, especially with the inevitability of their own deaths or potential incapacity? Traditionally, advisors would recommend that the parents create a special needs trust. Be warned, however, that a special needs trust focused only on protecting Tiny Tim's eligibility for government assistance may not sufficiently meet the challenge. What if government benefit programs, such as SSI and Medicaid, no longer exist in 70 years? The government may do away with such programs or could introduce alternate programs that operate very differently. This highlights one reason why, in planning for someone like Tiny Tim, it is essential that a comprehensive plan have the flexibility to adjust as the programs and systems that provide for Tiny Tim continue to evolve. A plan for the next 70 years of Tiny Tim's life that focuses only on public benefits is not likely to take care of him or enable him to enjoy the quality of life that a parent would wish for him. The solution (and therefore, the challenge) is to create a private social service system that will provide advocacy, comfort and security for the next 70 years, no matter what the future might bring. To Look Forward We Need to Look Back - The Ghost of Deinstitutionalization Past America's history of caring for people with disabilities has been, at times, haunting. From almshouses and asylums to mental institutions and state hospitals, the nation has explored numerous methods of " dealing " with people who are unable to care safely for themselves. Beginning in the 1960's, persons with disabilities and their families initiated a dramatic movement to limit the practice of institutionalization in favor of community-based services. In 1963, President Kennedy called for Congress to develop comprehensive community programs to integrate persons with disabilities into the community. In replacing institutions, community-based programs would provide outpatient care, day treatment, rehabilitation, foster care services, and public education with mental health and related services. A 1961 report by the Joint Congressional Commission had provided policy recommendations calling for communities to become responsible for the treatment of persons with disabilities in locally-based programs. The ultimate goal was that the system of state hospitals would be completely replaced by a comprehensive community-based service system. Unfortunately, Congress did not fully follow the Joint Commission's recommendations. Today, many community programs for persons with disabilities are poorly funded and staffed. Most state hospitals have been closed, yet the full scope of services was never moved into the community. Without additional planning, Tiny Tim is almost certain to experience the pinch of inadequately funded state programs and the frustration of understaffing. Disability Today - The Ghost of Deinstitutionalization Present The deinstitutionalization movement has made considerable progress, but budget deficiencies, politics and a variety of other causes have forced cuts and stagnation in community and residential programs across the country. Many states have a moratorium on building new residential programs at the very time that this need has increased. Many communities have reduced attendant care programs that are often essential in providing persons with disabilities essential activities of daily living. Mental health programs have been underfunded for decades, and many experts believe that the lack of services has resulted in the unnecessary " criminalization " of persons with mental illness. It appears that many of our legislative leaders have lost the vision of community living for persons with disabilities and treat the funding of community programs as " humbug. " Were it not for the dedication of families and the disability organizations which advocate for quality programs, the future would certainly look bleak. How does that affect Tiny Tim? Using the example set forth in the novel that gave us this character, " A Christmas Carol " by Dickens, the lesson becomes clear: When the community participates in recognizing and supporting the needs of their disabled citizens, everyone is blessed. The Immediate Challenge in the Next Decade - The Ghost of Deinstitutionalization Future The United States is struggling out of a recession, but growth is sluggish. As the United States continues to fight on-going wars overseas, the first wave of Baby Boomers is currently reaching retirement age. There has been a rise in applications for Social Security Disability benefits in the last two years. A shrinking work force and increased need for funding multiple government objectives is putting the Social Security system under great stress. Many services that have been developed over the past 30 years, such as respite care and day programs, will close due to lack of funding. Even programs that will continue are likely to face extreme cutbacks. Public agencies and caseworkers who traditionally monitor the welfare of persons with disabilities are having their budgets cut and caseloads increased. We can anticipate that the lack of oversight by the traditional government entities will increase the possibility that Tiny Tim will live in substandard conditions. Although services will become more difficult to obtain, people with disabilities will still rely heavily on these public benefits for at least the next decade. Currently, many services can only be acquired by qualification for Medicaid. In certain states, such as California, private and nonprofit organizations are beginning to fill the gap of services vacated by the government. Private case management may become increasingly important as an alternative to overburdened government caseworkers. But private case management is unlikely to be free, forcing people like Tiny Tim or his advocates to make difficult choices between certain services. Are These the Shadows of the Things That Will Be, Or Are They Shadows of Things That May Be, Only? The old saying rings especially true for special needs, " Those who cannot learn from history are doomed to repeat it. " Clearly, learning from the past is key to planning for the future. Our main lessons are: 1.. Families have always been the strongest advocates for our disabled citizens. 2.. Benefits and services have changed dramatically in the past 50 years. There is no reason to assume that this situation will not continue. 3.. Much of the progress that has been made is due to the commitment of service organizations such as the ARC, United Cerebral Palsy, the National Alliance for the Mentally Ill and many other advocacy organizations working with persons with disabilities and their families. Supporting these organizations is key to continued advocacy for our most vulnerable citizens. 4.. Families will continue to need attorney advocates who will help navigate the system, and who will work to sustain - and in some cases create - whatever system may be needed not only to prevent abuse and neglect, but also to promote independence, autonomy and quality of life. Preparing a special needs trust for Tiny Tim will entail much more than having an attorney fill out a form. The plan must be comprehensive and adjustable to enable long term support. A law practice dedicated to planning for people like Tiny Tim will often take steps that traditional estate planning practices would not need. For example, certain practitioners employ social service staff as part of their practice or maintain a good working relationship with care managers and advisors who can assess the needs of both Tiny Tim and his caregivers. Practitioners may also develop techniques such as allowing for oversight by an advisory committee or trust protector under the counsel of a knowledgeable attorney to address future changes in the continuum of care. The option of having a trust and a team that re-evaluates itself periodically as needed during the beneficiary's lifetime can be quite useful. Hope, Not Fear The purpose of this article is not to inspire fear, but to encourage hope. As attitudes, technology and treatments improve and advocates, service providers, attorneys, trustees and care managers come together, the future may be brighter than we can currently imagine. The key factors for constructing this future will be respect for each other, conviction in our efforts, and the support of community programs. With families, advocacy organizations and professionals working together to advocate for the good of persons with disabilities, we will all be able to say, just like Tiny Tim, " God bless us, every one. " About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted January 11, 2011 Report Share Posted January 11, 2011 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter January, 2011 - Vol 6, Issue 1 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by , a partner with Oast & Hook, P.C. in Suffolk and Virginia Beach, Virginia. She is the editor of the firm's weekly newsletter, the " Oast & Hook News, " which is available on the firm's website. She is certified as an elder law attorney by the National Elder Law Foundation. Ms. is the co-author of the " Special Needs Trusts " chapter for the Elder Law in Virginia handbook published by Virginia CLE. She is a member of the Board of Directors and the immediate past president of Commonwealth Community Trust, a pooled trust in Richmond, Virginia. She retired from the United States Air Force as a Lieutenant Colonel with over 20 years active duty service, and earned her Juris Doctorate degree from the College of and School of Law. Special Benefits for Military Families -- Elect With Care Many families of children with disabilities are also military families. One benefit that may be available for these children is the military Survivor Benefit Plan (SBP). The SBP will pay up to 55% of the military member's retirement pay to a spouse or a dependent child when the retiree dies. The benefit is adjusted annually for inflation. The military member also has the option to select a lower benefit at a lower cost and has the option to choose coverage for only the spouse, spouse and children, or only children. If a member wants to decline SBP coverage entirely, he or she can only do that with the written consent of the spouse. If a member selects spouse and children coverage, the children do not receive SBP until after the death of the military retiree and his or her spouse. The member's military retirement pay is reduced by approximately 6.5% for spousal coverage, and he or she pays approximately $20 per month for dependent children coverage. SBP can be an excellent benefit for children with disabilities, but families need to be aware of all the options for their children before deciding to elect child coverage. Receipt of the SBP benefit may result in the child losing other important disability benefits. Children with disabilities are usually eligible for Supplemental Security Income (SSI) at age 18 if they meet the income and asset requirements for these benefits. SSI provides funds for food and shelter. Children with disabilities that occurred prior to age 22 may also be eligible for Social Security on the record of a disabled, retired or deceased parent. SBP can provide an additional source of income for the child with disabilities. If a child with disabilities is receiving SSI, the SSI payment is reduced dollar-for dollar by unearned income; therefore if the child also receives SBP, SSI could be reduced or eliminated. Because the child is the SBP beneficiary, the SBP funds cannot be paid directly into a special needs trust in order to avoid receipt of the monthly income by the child. Congress would have to amend the U.S. Code in order for the SBP payments to be paid directly into a trust without the payment being considered as received by the child. Children with disabilities who are receiving SSI are also able to receive Medicaid, including Medicaid waiver services. Medicaid can provide for supervision, job training and assistance in addition to health benefits. In military families, a child with disabilities who is over 18 years of age can be designated an Incapacitated Dependent with the filing of a DD Form 137-5. This designation can also permit the child to be eligible for health care benefits under TRICARE. TRICARE and Medicaid complement each other, and together can provide a wide array of services and benefits for the child with disabilities. Some states have an absolute income cap for Medicaid benefits while other states allow a recipient to spend down excess income on medical services in order to qualify for benefits. If a child's SBP income is too high, he or she may not be able to receive Medicaid or Medicaid waiver services. Military families should consider all benefits that will be available to their children with disabilities, and decide before the military member retires whether or not SBP is a good fit for their child. This is particularly true if the family wants the child to receive Medicaid waiver services in the community. Unfortunately, once the SBP beneficiary payments start, there is no way to stop them. If the military member has already made an SBP election involving the child with disabilities, he or she can apply to the Board for Correction of Military Records for their respective service in order to modify the SBP election. This application must be made while the military member is still alive, using the DD Form 149. The member will have to justify the change in the election. For example, he or she might explain that they did not understand that electing coverage for the child with disabilities could adversely impact the child's eligibility for other important benefits. A completed DD Form 149 should be sent to the service address listed on the form. The Board for the military member's service meets periodically to review and act on such requests. Military families who are eligible to receive SBP and have a child with a disability should work with a qualified attorney to ensure that they are fully educated on all benefits for which their children are eligible. It is critical that parents do their homework and make the appropriate decisions before the military member retires. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted March 4, 2011 Report Share Posted March 4, 2011 FYI Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter March, 2011 - Vol 5, Issue 4 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Massachusetts Special Needs Alliance member S. Starr, an attorney with Starr Vander Linden LLC with offices in Worcester & Fitchburg, Massachusetts. Her practice focuses on estate planning, elder law, and government benefits issues for families which include individuals with special needs. is a Fellow of the National Academy of Elder Law Attorneys, the 2007 recipient of The Theresa Award, a national honor recognizing extraordinary contributions of attorneys to the community of individuals with disabilities, and a recipient of the 2008 Scholar Mentor Award from Massachusetts Continuing Legal Education, Inc. The Impact of Special Needs Trusts on Eligibility for Subsidized Housing The federal and state governments subsidize housing for elderly persons and individuals with disabilities. The subsidies come in the form of below-market rent units in public and private housing developments and Section 8 vouchers for use in the private market. Tenants in subsidized housing typically pay rent of 30% to 40% of monthly adjusted income. Some disabled individuals are beneficiaries of special needs trusts. These trusts are of two types: third party trusts, created either by third parties (the beneficiary's parents, siblings or others) and funded with the third parties' contributions, and first party trusts, created by the disabled persons themselves (or others on their behalf) and funded with their own assets. Generally the goal of these trusts is to allow the beneficiary to qualify for income from the Supplemental Security Income (SSI) program and for Medicaid. Beneficiaries of such trusts who live in subsidized housing often ask " How does a special needs trust affect my eligibility for subsidized housing and the amount of my rent? " Subsidized Housing Eligibility Rules To understand the effect of a trust on eligibility, it is essential to understand the housing eligibility rules. Unlike many public benefits programs, the federal housing programs, most notably the Section 8 program, determine financial eligibility based only on income. There is no asset limit to qualify for the rent subsidy. Rent is based on a percentage of the tenant's income. As the tenant's income increases, the thirty percent of income allocated to rent will increase proportionally. At some point the increased rent could equal or exceed the fair market rental value for the unit, making the subsidy meaningless. a.. " Income " includes regular income from employment and public benefits such as Supplemental Security Income (SSI) and Social Security Disability Income (SSDI) as well as " income " derived from net family assets. b.. Net family assets include the net cash value of assets after deducting reasonable liquidation costs but exclude necessary items of personal property such as " furniture " and " automobiles " . To determine the income derived from net family assets the rules require the housing agency to consider the greater of (1) actual income derived from all net family assets or (2) a percentage of the value based on the current passbook savings rate. Many subsidized housing programs have used an imputed passbook savings rate of 2% for many years even though that rate is high in today's financial market. For example, if a tenant has $50,000 in the bank earning 3% interest, the tenant will be considered to be receiving $1,500 annually ($125 mo). Thirty percent of that additional income plus other monthly income would be the tenant's monthly rent. If the tenant owns vacant land with a value of $50,000, income will be imputed based on the passbook savings rate even though the asset generates no actual monthly rental income for the tenant. If the housing program is using an imputed interest rate of 2%, then $1,000 annually ($83.33 month) will be imputed as income to the tenant for purposes of calculating the rent. How Funding a Trust Can Affect Rent When a subsidized housing tenant receives a lump sum, concerns often arise about how that will affect eligibility for the subsidized housing benefit. The tenant may be receiving other government benefits in addition to subsidized housing that will also be affected by the lump sum. The consequences of giving away assets for federally subsidized housing are different from the consequences of giving away assets for the Medicaid and SSI programs. Because assets do not count in the determination of eligibility, the subsidized housing rules do not impose eligibility penalties on individuals who have given away assets. However, net family assets include the value of assets disposed of for less than fair market value during the preceding two years unless the total fair market value of the gifts is $1,000 or less. This includes assets placed in an irrevocable trust except when the assets were received through a lawsuit settlement or judgment. If a tenant receives a bequest of $50,000 and transfers it to special needs trust, for example, and if the bequest is earning interest at a rate of 2%, a transfer of the $50,000 bequest to the special needs trust will result in the beneficiary being deemed to receive income of $1,000 per year (or $83.33 per month) for two years following the transfer. If the tenant receives a lawsuit settlement of $50,000 and puts the funds into a special needs trust, no income should be imputed from the transfer. Trusts The existence of a trust, just as the existence of any asset, has no direct impact on eligibility for subsidized housing. A trust can, however, impact eligibility in one of two ways depending upon the terms of the trust. a.. If the trust is revocable, or if the tenant has access to principal, then its value is included in the calculation of net family assets when calculating the tenant's actual or imputed income. b.. If the principal is not accessible to the tenant, which is generally the case with special needs trusts, income may be imputed from trust distributions. Regular recurring payments from a trust for the benefit of the tenant may be treated as income to the tenant even though no cash is paid directly to the tenant. For example, if the trustee pays a $200 utility bill every month, that payment may be treated as regular recurring income to the tenant. The tenant's countable monthly income will thus be $200 higher and will result in an increased rental payment of approximately $66. There is an exception for the value of groceries provided by a non-household member, which presumably would include a trustee. Because distributions from a trust are considered income, and because income affects eligibility and the rental calculation, the trust beneficiary is often at a disadvantage compared to a tenant who owns assets of equal value in the tenant's own name. If a tenant owns the assets, then the only impact on eligibility and the rental calculation is the income generated by or imputed from the assets. If the tenant pays a $200 utility bill every month out of the tenant's savings account, that is not treated as income for purposes of calculating the rent. If the assets are instead in a special needs trust for the tenant, and the trustee pays the same $200 utility bill every month from the trust, the tenant is considered to have $200 of additional income every month, thereby increasing the monthly rent. If eligibility for SSI, Medicaid or other need based benefits is not a concern, then consideration should be given as to whether a special needs trust is the best option for the tenant. Not All Income Is " Income " Federal regulations exclude temporary, nonrecurring or sporadic income (including gifts) from the definition of income. Thus, to maintain a beneficiary's lower rent the trustee of a special needs trust should be advised to make irregular distributions on behalf of the trust beneficiary rather than recurring payments. For example, in one month the trustee might pay $400 toward that $200 current utility bill and a credit toward the next month's bill. Then several months later the trustee might pay for six months of cable TV or take the beneficiary shopping for clothing. With creative budgeting, it is possible to administer a special needs trust without causing an increase in the beneficiary's rent. If possible, the trustee should make large onetime expenditures and leave regular recurring expenses for the tenant to pay. This strategy provides more total benefit to the tenant/beneficiary by maintaining eligibility for the lowest monthly rent, thus enabling the individual's funds to stretch further. For some people with disabilities, a subsidized housing benefit may be as important or more important than income or medical benefits they receive. A special needs attorney can help evaluate the impact of a lawsuit settlement or inheritance on this benefit, whether a special needs trust is advisable, and how to administer the trust to minimize the impact on the tenant's rent. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted March 25, 2011 Report Share Posted March 25, 2011 FY Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter March, 2011 - Vol 5, Issue 5 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the email newsletter of The Special Needs Alliance. This installment was written by Losavio, an attorney with Losavio & De LLC in Baton Rouge, Louisiana. Holding both a law degree and LLM in tax, Pete is certified as an elder law attorney by the National Elder Law Foundation and as a Tax Specialist and Estate Planning and Administration Specialist by the Louisiana Board. Pete is a charter member of the Life Care Planning Law Firms Association and a member of the Society of Louisiana CPAs. He limits his practice to asset protection, life care planning and estate and tax planning. The Pitfalls of Caregiver Employment: Paying, Withholding, and Reporting Requirements A person hiring a caregiver must exercise care in the hiring and paying of the caregiver. This applies to any prospective employer of the caregiver, whether the employer is a family member or a trustee who will pay the caregiver from a special needs trust. Besides the practical considerations such as the caregiver's competency and background, there are many legal pitfalls in caregiver employment. The first matter to address is the classification of the caregiver as an employee or an independent contractor for income tax purposes. Before the employer can know how to treat payments made to the caregiver, the employer must make a critical determination as to whether the caregiver is an independent contractor or an employee. For federal tax purposes, there is an important distinction between an independent contractor and an employee. The classification as an independent contractor or employee affects how the federal income tax, Social Security, and Medicare taxes are paid, and how caregivers file their income tax returns. In addition, the classification affects the worker's eligibility for employer Social Security contributions and Medicare benefits. If the caregiver is classified as an employee, then the employer must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay state and federal unemployment taxes on the wages paid to the caregiver. To determine whether the employer must register and pay state unemployment tax for a caregiver, the employer can contact the appropriate state taxing authority. Internal Revenue Service Publication 926 contains contact information for the states. (http://www.irs.gov/pub/irs-pdf/p926.pdf.) Furthermore, if the caregiver is an employee and not an independent contractor, state law may require that the caregiver be covered under workers' compensation. In some states, the failure to provide workers' compensation coverage is a criminal offense. If the caregiver sustains a work-related injury, then there may be liability on the part of the employer, homeowner, and person with the disability. In general, a homeowner's insurance policy does not cover a caregiver for an employment related personal injury. For example, consider the situation where a caregiver ruptures a disc while lifting a person with a disability. The situation may not be covered by the homeowner's insurance policy, and the employer, homeowner, and person with a disability may find that they are personally liable to the caregiver for the personal injury. This type of liability can be substantial. The law considers many facts in deciding whether a worker is an independent contractor or an employee. The relevant facts are behavioral control, financial control, and the relationship of the parties. Facts concerning behavioral control show whether the employer has a right to direct or control how the worker does the work. A worker is an employee of a business if the business has the right to direct and control the worker. It doesn't matter how much control the business actually exercises, just that it has the right to do so. Facts concerning financial control determine whether there is a right to direct or control the business part of the work. Since caregivers do not have a significant investment in their work, this factor favors them being classified as employees. Also, caregivers do not have the opportunity to make a profit, indicating that they are employees. Facts concerning the relationship of the parties illustrate how the employer and the worker perceive the relationship. If the caregiver receives benefits such as insurance, paid leave, sick leave or vacation, this would indicate that the person is an employee. If the caregiver does not receive benefits, he or she could either be an employee or independent contractor because this factor is not determinative and should not be relied on to establish independent contractor status. As explained above, a caregiver is usually an employee when the employer has the right to direct and control the caregiver. The employer need not in fact exercise significant control, but need only have the right to do so. The caregiver is usually under the control of the employer as to when, where and how the work is to be performed. If the caregiver works exclusively for the employer, this would indicate that the caregiver is an employee. If the caregiver is not an employee of an agency, the caregiver will usually be treated as an employee. IRS has published several rulings in which it held that caretakers were employees. Therefore, it would be very difficult to argue that a caretaker is an independent contractor. If unusual circumstances exist, a written contract would be necessary to document independent contractor status. Although not determinative, a written contract may show what the employer and the caregiver intended concerning the responsibility regarding the withholding and payment of taxes. If the caregiver is an employee, the employer has a responsibility to withhold, remit, and pay certain taxes if the wages of the caregiver exceed a certain annual amount, currently $1700.00. The employer must withhold income tax and the caregiver's portion of Social Security and Medicare taxes. Also, the employer is responsible for paying Social Security, Medicare, and unemployment (FUTA and SUTA) taxes on the caregiver's wages. The employer is responsible for payment of the employee's portion of taxes if the employer neglects to properly withhold it from the employee's wages. If wages total $1,000.00 or more to all household employees in any calendar quarter, Schedule H must be filed by the end of the month following the close of the quarter. If the employee earns $1700.00 or more per year, the employer must give the caregiver a Form W-2, which is a wage and tax statement showing the amount of wages earned and taxes withheld from the employee's pay. In addition, the employer is required to file copies of the W-2 with the Social Security Administration and the State Department of Revenue, if applicable. There is a special reporting rule for hiring domestic help. The employer does not have to report payments to domestic help unless they exceed $1,700.00 per year. Income tax withholding is not required for a household employee, but the employer must withhold Social Security and Medicare taxes from the employee's cash wages and also pay an equal amount, unless the wages are below $1,700.00. Once payments to a non-exempt employee equal or exceed $1,700.00, the entire amount, including the first $1,700.00, is subject to Social Security and Medicare taxes. The employer can be liable for failing to file Forms W-2 and 1099. A trustee of a special needs trust may not be liable to file a Form 1099 because the trustee is not engaged in a trade or business. However, out of an abundance of caution, a trustee may want to file the Form 1099. Under the Small Business Job Act of 2010, the employer can pay penalties of up to $100 for failure to timely file a correct information return with an annual maximum penalty of $1.5 million. In addition, there is another penalty of $100 for failing to timely provide a correct payee statement, with the annual maximum penalty of $1.5 million. The employer could be liable for $250 per payee if the employer fails to timely file and timely provide each payee with a 1099 or W-2. If the caregiver is an independent contractor and is paid $600.00 or more in one calendar year, then the employer would be required to give the caregiver a form 1099-MISC, which is a miscellaneous income reporting of what has been paid to the caregiver. The caregiver would be responsible for paying his or her own income tax and self-employment tax. The employer would not have to withhold taxes on the caregiver. However, the employer is required to file copies of the 1099-MISC with the Internal Revenue Service. If the employer is not sure whether the caregiver is an employee or an independent contractor, the employer can obtain a Form SS-8 which determines a worker's status for the purposes of federal employment taxes and income tax withholdings. It is unlawful to employ a non-citizen who cannot legally work in the United States. If the employer hires a person to work on a regular basis, the employer and the employee must each complete part of the U.S. Citizenship and Immigration Services Form I-9, Employment Eligibility Verification. The employer must verify that the employee is either a U.S. Citizen or an alien who can legally work in the United States. The employer must keep the Form I-9 for his records. In summary, if the caregiver is an employee, the employer has the responsibility to withhold income taxes, pay Social Security and Medicare taxes, pay federal and state unemployment taxes, and file various payroll forms including Form W-2. Also, the employer may be responsible for workers' compensation coverage. The employer must also verify if the caregiver is a U.S. citizen or person who can legally work in the United States. If the caregiver is an independent contractor, the employer must file a Form 1099-MISC and be concerned with potential liability for a work-related injury. Any trustee of a special needs trust who is employing caregivers for the trust beneficiary should seek help from a tax specialist if there are any questions about compliance with these responsibilities. Of course, this entire issue can be avoided if the caregiver is employed by an agency. For most people, any additional cost is far outweighed by the relief from the burdensome tax and reporting requirements of hiring the caregiver directly. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted April 6, 2011 Report Share Posted April 6, 2011 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter April, 2011 - Vol 5, Issue 6 The Voice, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the email newsletter of The Special Needs Alliance. This installment was written by Sarasota, Florida attorney Alice , a member of the Special Needs Alliance and active participant on its Public Policy Committee. She is a partner at Boyer & , P.A., where her practice includes special needs and long term care planning, estate planning, probate and end-of-life issues. Alice is also an active member of the National Academy of Elder Law Attorneys, a past Chair of the Florida Bar Elder Law Section, and an adjunct professor in the Stetson University College of Law Elder LL.M. program. The Pre-Existing Condition Insurance Plans (PCIP) Under 2010's Health Care Reform Law The 2010 health care reform law, now referred to as the " ACA " (Affordable Care Act), is much like a jigsaw puzzle. To create comprehensive reform, a number of pieces must be in place. One of the most important pieces prohibits private insurance companies from denying coverage to individuals based upon the fact that they have a pre-existing condition. Until the ACA, most persons covered under a group health insurance plan could be covered even when a pre-existing condition was present. However, individuals with pre-existing conditions but lacking group coverage found health insurance to be either unavailable or prohibitively expensive. Therefore, a critical component of the ACA is that, beginning in 2014, insurers will no longer be able to deny coverage to any individual on the basis that he or she has a pre-existing condition. While this is an encouraging development, proponents of health care reform understood that tens of thousands of Americans with pre-existing conditions would remain uncovered until 2014. Individuals who are already ill would continue to go without coverage and without treatment, become more seriously ill and as a result would need care in a more expensive environment such as a hospital or emergency room. Some would die without necessary medical attention. To avoid the human tragedy and economic loss that results from non-coverage, the ACA included a provision known as " Pre-Existing Coverage Insurance Plans, " or " PCIPs. " In November, 2010, the Centers for Disease Control reported that more adults between the ages of 18 and 64 went without health care between 2008 and 2010 than ever before. (See http://www.cdc.gov/vitalsigns/healthcareAccess/LatestFindings.html for this and most of the following data.) Between January and March, 2010, as many as 30 million Americans had been uninsured for more than 12 months. Of the more than 46 million adults in the 18-64 age group, 30% have a disability. The 30% with a disability had gone for more than 12 months without health care. Persons with disabilities were shown to be about twice as likely to skip or delay medical care. The elimination of pre-existing condition exclusions was a key element of the ACA and provides new planning opportunities for persons with disabilities. The federal government set aside five billion dollars in funding for the program until the 2014 plans come into existence. The programs are completely federally funded and states are not required to participate financially. Twenty-three states and the District of Columbia have chosen to have the federal government administer the program; the remaining states are self-administering the PCIPs under their own rules within the parameters of the ACA. A PCIP is an insurance plan that does not exclude persons with pre-existing conditions and that has affordable premiums in comparison to the individual plans currently on the market. The ACA defines a pre-existing condition as a condition, disability or illness (physical or mental) which you have before enrolling in a health plan. To qualify to participate in a PCIP, an applicant must (1) be a U.S. Citizen or in the country legally; (2) have a pre-existing condition; and (3) have been without insurance coverage of any kind (including but not limited to Medicaid or COBRA coverage) for at least the preceding six months. Documentation regarding the lack of insurance is required in most states, and may include either a denial by an insurance company, a letter from your doctor, or both. There is no age limitation for applicants to the PCIP coverage. A PCIP is not a free pool or plan. Premiums vary by state, and, within the states, by age and plan chosen. A visit to www.healthcare.gov or www.pcip.gov will lead you to a map of states and updated information about rates and plans. As an example, the Texas PCIP is federally administered and has premiums varying from $261 to $749 per month. In addition, there are deductibles ranging from $1,000 to $3,000 depending upon the plan chosen. Co-payments also apply; however, the total amount paid out by an individual cannot be higher than $5,950 annually. This is a requirement of the ACA. The Special Needs Alliance works with individuals who have been determined to be disabled either by the Social Security Administration or through a state's disability determination process. We are keenly aware that many people do not want to make a disability application, have not recognized that a disability is present, or have a condition which, while not currently disabling, is likely to become so. It is very important to recognize that approval to be insured under a PCIP does not require that the pre-existing condition be disabling. This fact can be very important in situations where caregivers for persons with disabilities have pre-existing conditions and are without medical insurance but have chronic illnesses which might be related to or affect their ability to provide care. The PCIP program initially began with a single option plan; however, experience rapidly showed that this single option was insufficient. The Secretary of HHS has now announced that beginning in 2011, three plan options will be available in federally administered programs. The first is the " standard " plan, with two separate deductibles - a $2,000 deductible for medical expenses and a $500 deductible for prescription drugs. Premiums are lower than they were in 2010. The second program is the " extended " plan and has a $1,000 medical deductible and a $250 drug deductible. The premiums for this plan will be slightly higher than the 2010 single plan premiums. Finally, there is a " health savings account " option that has a $2,500 deductible but with premiums that are 16% less than the 2010 plan. Persons choosing this option will have the tax advantages that apply to any individual who is accessing an HSA. For persons with disabilities who cannot otherwise qualify for Medicaid assistance, the PCIPs offer relief until the total prohibition against exclusion of pre-existing conditions in health insurance coverage comes into effect in 2014. At that time, the PCIPs will cease to exist and all citizens will be able to choose from individual, group and state health exchange policies without concern for their existing health status. Success of the PCIP program has been difficult to assess. In the first months that the program was available, enrollment was scarce. However, between late 2010 and March of 2011, enrollment has doubled from 12,000 to 24,000 people. Those observing the program's growth cite an initial lack of education about the availability of PCIP coverage as the reason for the gradual acceptance of the program's benefits. However, many also recognize that, while PCIP coverage can be a literal lifesaver for many people, it remains economically unfeasible for others. Premiums and deductibles remain out of reach for many people, especially in today's economy. Currently insured individuals (including but not limited to those with Medicaid or COBRA coverage) who might consider shifting to a PCIP plan will often find it too financially risky to go without any insurance for the six months required before they can qualify for PCIP coverage. Nonetheless, for the disability community, we know that coverage is now available to persons of all ages who have been uninsured for at least six months, and that coverage is comprehensive, providing preventive care, acute care and prescription medication benefits. In most states, applications can be made online. Further information is available at www.pcip.gov or 1-866-717-5826. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2010 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted May 3, 2011 Report Share Posted May 3, 2011 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter May, 2011 - Vol 5, Issue 8 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the email newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Mason, a partner in the Savannah elder law firm of MasonCerbone and the North Carolina firm of Mason Law, PC. Bob is certified as an elder law attorney by the National Elder Law Foundation, is past Chairman of the Elder Law Section of the North Carolina Bar, and secretary of the Elder Law Section of the Georgia State Bar. You can e-mail Bob at ram@..., or visit his website at www.masonlawpc.com. Avoid This Common Banking Error Many people make mistakes in titling bank and investment accounts. Often advisors and bankers counsel customers to " put your child's name on the account " or to set the account up as a " pay on death " (POD) account. However well-intentioned the advice, the results of either approach to titling an account can be surprising and unpleasant. Good intentions do not good advice make. The Allure of Joint and POD Accounts Often the attraction is probate avoidance. Either a joint account with survivorship features or a POD account will pass as a nonprobate asset and avoid a state-mandated probate process, which can in exceptional cases take several months to a year or longer. For joint accounts, the attraction is often convenience. Unlike a POD account, during the parent's lifetime a joint account holder has immediate co-ownership rights, and, thus, immediate access to the account. An older person may feel better knowing that a trusted son or daughter has immediate access to an account " in case something happens. " The Dangers of Joint and POD Accounts If the POD or joint account payee is a child with disabilities, the result could be terrible for the child upon the parent's death because the receipt of the account could jeopardize continuing qualification for public benefits such as Medicaid or SSI. There are other compelling reasons why a joint account may not be the proper approach: a.. The co-owner child now owns the account as much as the parent. What if the child is sued? What if the child goes through a messy divorce? Or what if the IRS takes a keen interest in the child's affairs? Those events happen to the best of children; nevertheless, in those cases the joint account will be presumed to be owned by the child. b.. Another problem is that the co-owner/child's sibling may be out of luck. This happens all the time. For example, Mom wanted the kids to share equally, but after Mom is gone Sis suddenly recalls that Mom wanted her to have the accounts since she " was the one who always helped Mom. " Because Sis was a co-owner of Mom's accounts and likely had survivorship rights, she owns the accounts now. Usually there is nothing the rest of the family can do about it, even with legal assistance. A Better Way If the goal is asset management in the event the owner becomes incapacitated, one effective approach is a properly drafted power of attorney. A power of attorney has nothing to do with appointing lawyers. The word " attorney " has its roots in an old French Norman word for " legal substitute. " A power of attorney is simply a document signed by someone called the " principal " appointing an " attorney-in-fact " or " agent " to manage some or all of the principal's financial and business affairs. The terms of the power of attorney document control what the agent may, or may not, do. If the document covers a broad spectrum of duties, then it is a " general " power of attorney. An agent can be given very broad powers, but if that makes the principal nervous, the instrument can require the agent to secure some other person's permission before use. (Note: Many banks and financial institutions prefer to use their own POA forms, but a growing number of states have laws requiring the institutions to accept other, often attorney-drafted, power of attorney documents.) If the goal is to avoid probate upon death of the account owner, the better approach may be a revocable or living trust. The assets in the trust will avoid probate. In fact, a revocable trust can also assist in post-incapacity management of the person's assets because a successor trustee named in the trust agreement can step in to handle continuing management of all assets held in the trust. Moreover, in contrast to the unlimited access of a joint account co-owner who may have issues with his own creditors, the assets in the trust are protected from the trustee's creditors. Finally, all of the above considerations especially apply if the parent has a child with disabilities. There will rarely, if ever, be an appropriate time to name a child with disabilities as the co-owner of a joint account or the beneficiary of a POD account. Carefully consider using a special needs trust, either under a will, as part of a revocable trust, or created as a separate trust document, to hold that child's intended inheritance. Properly drafted, the special needs trust assets will not jeopardize the child's continuing eligibility for various public benefits. Here's the point: Do not put your children on the accounts as a joint owner. Instead, execute a power of attorney that grants appropriate sorts of powers to an agent whom you completely trust to assume the day to day responsibility for managing your financial and business affairs when and if needed. Alternatively, consider a revocable trust. In the meantime, keep the accounts in your name. The downside to the advice given here: Some fees to a lawyer. The upside: You may avoid a train wreck. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted June 17, 2011 Report Share Posted June 17, 2011 Here is a topic that recently came up on IPADDU... This is particularly well written. It makes a very complicated issue, a little more understandable. Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter June, 2011 - Vol 5, Issue 10 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Bryn Anne Poland and Pi-Yi Mayo, of the Law Office of Pi-Yi Mayo, in Baytown, Texas (www.pi-yimayo.com). Their practice focuses on elder law and special needs planning, including special needs trusts, Medicare set-asides, and Qualified Settlement Funds. Both are members of the National Academy of Elder Law Attorneys and the Texas chapter (TX NAELA). Pi-Yi is a Certified Elder Law Attorney, Special Needs Alliance Executive Committee member, and currently serves on the Board of the TX NAELA chapter. Bryn graduated from Washburn University School of Law in 2007 and currently serves as Co-Chair of the Elder Law Committee of the Houston Bar Association. Together they have authored many papers covering topics from long term care insurance to Pickle people (http://www.pi-yimayo.com/Papers.htm). Planning for Adult Children with Disabilities As parents of children with disabilities age, there are many issues that they must address. First, parents must plan for their own retirement, possible disability and eventual death. To add stress and complication to that planning, parents must also consider the impact their retirement, disability or death will have on their children. Often, parents seek counsel and devise a plan to ensure that their child will be able to obtain or maintain access to Supplemental Security Income (SSI) and the Medicaid program while their children are still young. As both parents and children age, parents should revisit those plans and inquire into any other programs or benefits that might be available. One important social security insurance benefit is the Childhood Disability Benefit (CDB), which is sometimes referred to as the Disabled Adult Child (DAC) benefit. For purposes of this article we refer to the benefit as Childhood Disability Benefit or CDB. Childhood Disability Benefits Defined CDB is a monthly cash payment to a child based on the social security earnings record of a parent of that adult child. The amount of the payment is based on the parent's primary insurance amount (PIA). A disabled adult child is entitled to one-half of the parents' PIA if the parent is living, and three-fourths of the PIA if the parent is deceased. If both parents are disabled, retired or deceased, the child is entitled to CDB benefits on the higher account of the two. A disabled adult child is entitled to CDB based on the social security record of a parent only if all of the following conditions are met: 1.. An application for CDB is filed; 2.. The child meets the definition of " disabled " applicable to all social security disability insurance (SSDI) applicants; 3.. The child is not married, or is married to a social security beneficiary; 4.. The child is age 18 or older and under a disability which must have begun before age 22; and 5.. The parent is entitled to social security disability insurance or retirement insurance benefits, or is deceased. In some cases a child may be eligible for CDB benefits on the account of a grandparent or stepparent. If the disabled adult child is eligible, the child will receive a notice from the Social Security Administration that he or she is entitled to benefits based on a parent's social security earnings record. In many cases the child may have received SSI prior to the start of CDB. If the CDB benefit is higher than the SSI maximum federal benefit ($674 in 2011), the SSI benefits will be terminated. In addition, the child will also be eligible for Medicare after a 24 month waiting period from the date of the first month the child became eligible to receive CDB. If an adult disabled child loses eligibility for SSI when CDB begins, he or she can often continue eligibility for Medicaid. In many cases, Medicaid funds the vital supports and services the child is receiving. Many states have rules and regulations in place that provide for continuing Medicaid eligibility even after the child's eligibility for SSI is terminated. When a child qualifies for and receives CDB, the additional income is excluded from countable income for Medicaid eligibility if the child's SSI was terminated because of the increased income but the child is otherwise eligible for SSI: determined disabled and having countable resources of $2,000 or less. In some states the transition from SSI-linked Medicaid to CDB Medicaid is automatic and in others, the state Medicaid agency may require a new application. Regardless of the mechanism, it is important for families to be aware of the benefit and the transition, so that the transition can be managed as necessary to prevent an interruption in benefits. How Does Work Affect CDB? There are two timeframes where work can affect eligibility for CDB. First, in order to be eligible for CDB, a child cannot have participated in Substantial Gainful Activity (SGA) after the onset of disability but prior to initially qualifying for CDB. In 2011, an individual earning more than $1,000.00 per month is presumed to be engaged in SGA and therefore not disabled. If the individual is blind, the SGA amount is slightly higher. If the CDB benefit has not started, the individual should seek advice as to how much he or she is able to earn while still maintaining eligibility for CDB upon the retirement, disability or death of a parent. While working at the SGA level of earnings before initially qualifying for CBD can have a harsh affect on eligibility, working is not as problematic if the individual works or attempts to work after initially qualifying for CDB. If a disabled adult child is receiving CDB and would like to engage in an employment opportunity, the individual can participate in a trial work period. During a trial work period, the individual can continue to receive full CDB benefits for a period of 9 months while working and earning above the current SGA amount. After that allowed time period, if the individual continues to have earnings that are " substantial, " the CDB benefits will end; however, for any month when the individual does not meet the definition of Substantial Gainful Employment, he or she will be eligible for monthly benefits. If the individual's income dips below the current SGA amount, or if the income stops completely within 36 months of having received CDB benefits, then no new application or disability determination is needed. Here are two illustrations of how work can affect eligibility for CDB: Tim was disabled before the age of 22 but from age 25 to 27 he was able to work full time and had SGA. Tim had to stop working for health reasons and re-apply for SSDI on his own account after working for two years. Tim's father then retires when Tim is 32. Tim cannot qualify for CDB on his father's account because Tim had SGA before his father retired. Tim meets all of the requirements for CDB except that he had SGA before he could apply for benefits when his father retired. In the second example, Tim has no SGA before his father retires when Tim was 32. When his father retires, Tim will be eligible for CDB to supplement his SSDI benefits. At age 35 Tim is able to work and earn $2,000 per month for two years. Tim will lose his CDB benefit after a 9 month trial work period. After working for two years Tim must quit his job because of his disabilities. He can again qualify for CDB even though he had SGA for two years because his employment occurred after he qualified for CDB. How Does Marriage Affect CDB? If a disabled adult child receiving CDB marries, that child may or may not lose her eligibility for CDB. As noted above, a disabled adult child who is receiving CDB is doing so based upon having a disability that began before reaching age 22 and the retirement, death or disability of a parent who had a social security work record. The marriage of a CDB beneficiary to another social security beneficiary will not cause the CDB beneficiary to lose eligibility for those benefits. If the disabled adult child marries a person who is not a social security beneficiary, then the disabled adult child will lose the CDB eligibility that derived from the parent's status as a wage earner. Conclusion CDB, DAC, SSI, SSDI and SGA may sound like a new variety of clustered alphabet soup. In fact, parents, caretakers and adult children with a disability need to know the meaning and function of each of these abbreviations and the relevant rules that apply to the programs in this alphabet soup. Keeping the CDB eligibility rules in mind while reevaluating a care plan for aging parents and disabled children can help relieve stress and provide groundwork for maintaining Medicaid benefits. The potentially increased CDB cash payment can help a disabled adult child significantly, but ensuring Medicaid eligibility after the payment increase is of crucial importance for many such adults. Knowing these rules will allow caretakers to take action immediately if the disabled child receives notice that Medicaid will be terminated because the child is no longer eligible for SSI. In addition, understanding when a disabled adult child can seek Substantial Gainful Activity and just how much the child can earn each month will allow families to better evaluate each decision as it relates to these often vital benefits. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted June 17, 2011 Report Share Posted June 17, 2011 As a member of the Board of Directors of the Special Needs Alliance, if you wish to receive these articles directly, usually twice a month, go to www.specialneedsalliance.org<http://www.specialneedsalliance.org>, and you can sign up directly. There is also a " button " on my web site to sign up for the special needs alliance articles. Rubin<mailto:BRIAN@...> * [cid:image003.jpg@...]<http://www.snfp.net/> The Law Offices of Rubin & Associates Law practice limited to serving the future & legal planning needs of Rubin's fellow Illinois families of children & adults with intellectual disabilities, developmental disabilities, & /or mental illness... (E) brian@...<mailto:brian@...> - (W) www.SNFP.net<http://www.snfp.net/> (O) 847-279-7999 - (F) 847-279-0090 - (TF) 866.TO.RUBIN Mail: 1110 West Lake Cook Road, Buffalo Grove, Illinois 60089-1997 * President, The Arc of Illinois 2011-2013 * Member by invitation of SNA, the Special Needs Alliance (web site<http://www.specialneedsalliance.org/>). The SNA is the national non-profit association of experienced " Special Needs Planning " Attorneys. Rubin is a member of SNA's Board of Directors. * Member of the Special Needs Law Steering Committee of NAELA,<http://www.naela.org/>the National Academy of Elder Law Attorneys. <http://www.naela.org/> * Was a Charter Member of the Academy of Special Needs Planners * Has been awarded the dale Hubbell Peer Review<http://martindale.com/> Rating of AV Preeminent, the highest rating given<http://martindale.com/>. * For more information about Rubin, please visit our web site<http://www.snfp.net/>. Notices: 1. This message does not create an attorney-client relationship, and is not legal advice absent such a relationship with the recipient. This message may contain confidential information protected by the attorney-client and/or work product privilege. The information is only for the use of the intended recipient. If you are not such recipient, disclosure, copying, distribution or reliance upon this e-mail is strictly prohibited. If you have received this transmission in error, please notify The Law Offices of Rubin & Associates by e-mail and destroy the original message and all copies. 2. IRS CIRCULAR 230 NOTICE: TO THE EXTENT THAT THIS MESSAGE OR ANY ATTACHMENT CONCERNS TAX MATTERS, IT IS NOT INTENDED TO BE USED AND CANNOT BE USED BY A TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED BY LAW. 3. Disclaimer Regarding Electronic Signature. If this communication concerns negotiation of a contract or agreement, electronic signature rules do not apply to this communication: contract formation in this matter shall occur only with manually-affixed original signatures on original documents. The Signature given hereon is not an electronic signature and is provided only for the purposes of providing information as to the identity of the sender and for no other purpose(s) whatsoever. From: IPADDUnite [mailto:IPADDUnite ] On Behalf Of ELLEN BRONFELD Sent: Friday, June 17, 2011 3:20 PM IPADDUnite ; teri steinberg; Betty Korey; Eissman; Whitefield; Robynn Medansky; Barb Cabin; Geri Brown; Debbie Rudin Subject: Fw: [voice] The Voice - Special Needs Alliance newsletter Here is a topic that recently came up on IPADDU... This is particularly well written. It makes a very complicated issue, a little more understandable. Ellen Ellen Garber Bronfeld egskb@...<mailto:egskb%40sbcglobal.net> [voice] The Voice - Special Needs Alliance newsletter June, 2011 - Vol 5, Issue 10 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Bryn Anne Poland and Pi-Yi Mayo, of the Law Office of Pi-Yi Mayo, in Baytown, Texas (www.pi-yimayo.com<http://www.pi-yimayo.com>). Their practice focuses on elder law and special needs planning, including special needs trusts, Medicare set-asides, and Qualified Settlement Funds. Both are members of the National Academy of Elder Law Attorneys and the Texas chapter (TX NAELA). Pi-Yi is a Certified Elder Law Attorney, Special Needs Alliance Executive Committee member, and currently serves on the Board of the TX NAELA chapter. Bryn graduated from Washburn University School of Law in 2007 and currently serves as Co-Chair of the Elder Law Committee of the Houston Bar Association. Together they have authored many papers covering topics from long term care insurance to Pickle people (http://www.pi-yimayo.com/Papers.htm). Planning for Adult Children with Disabilities As parents of children with disabilities age, there are many issues that they must address. First, parents must plan for their own retirement, possible disability and eventual death. To add stress and complication to that planning, parents must also consider the impact their retirement, disability or death will have on their children. Often, parents seek counsel and devise a plan to ensure that their child will be able to obtain or maintain access to Supplemental Security Income (SSI) and the Medicaid program while their children are still young. As both parents and children age, parents should revisit those plans and inquire into any other programs or benefits that might be available. One important social security insurance benefit is the Childhood Disability Benefit (CDB), which is sometimes referred to as the Disabled Adult Child (DAC) benefit. For purposes of this article we refer to the benefit as Childhood Disability Benefit or CDB. Childhood Disability Benefits Defined CDB is a monthly cash payment to a child based on the social security earnings record of a parent of that adult child. The amount of the payment is based on the parent's primary insurance amount (PIA). A disabled adult child is entitled to one-half of the parents' PIA if the parent is living, and three-fourths of the PIA if the parent is deceased. If both parents are disabled, retired or deceased, the child is entitled to CDB benefits on the higher account of the two. A disabled adult child is entitled to CDB based on the social security record of a parent only if all of the following conditions are met: 1.. An application for CDB is filed; 2.. The child meets the definition of " disabled " applicable to all social security disability insurance (SSDI) applicants; 3.. The child is not married, or is married to a social security beneficiary; 4.. The child is age 18 or older and under a disability which must have begun before age 22; and 5.. The parent is entitled to social security disability insurance or retirement insurance benefits, or is deceased. In some cases a child may be eligible for CDB benefits on the account of a grandparent or stepparent. If the disabled adult child is eligible, the child will receive a notice from the Social Security Administration that he or she is entitled to benefits based on a parent's social security earnings record. In many cases the child may have received SSI prior to the start of CDB. If the CDB benefit is higher than the SSI maximum federal benefit ($674 in 2011), the SSI benefits will be terminated. In addition, the child will also be eligible for Medicare after a 24 month waiting period from the date of the first month the child became eligible to receive CDB. If an adult disabled child loses eligibility for SSI when CDB begins, he or she can often continue eligibility for Medicaid. In many cases, Medicaid funds the vital supports and services the child is receiving. Many states have rules and regulations in place that provide for continuing Medicaid eligibility even after the child's eligibility for SSI is terminated. When a child qualifies for and receives CDB, the additional income is excluded from countable income for Medicaid eligibility if the child's SSI was terminated because of the increased income but the child is otherwise eligible for SSI: determined disabled and having countable resources of $2,000 or less. In some states the transition from SSI-linked Medicaid to CDB Medicaid is automatic and in others, the state Medicaid agency may require a new application. Regardless of the mechanism, it is important for families to be aware of the benefit and the transition, so that the transition can be managed as necessary to prevent an interruption in benefits. How Does Work Affect CDB? There are two timeframes where work can affect eligibility for CDB. First, in order to be eligible for CDB, a child cannot have participated in Substantial Gainful Activity (SGA) after the onset of disability but prior to initially qualifying for CDB. In 2011, an individual earning more than $1,000.00 per month is presumed to be engaged in SGA and therefore not disabled. If the individual is blind, the SGA amount is slightly higher. If the CDB benefit has not started, the individual should seek advice as to how much he or she is able to earn while still maintaining eligibility for CDB upon the retirement, disability or death of a parent. While working at the SGA level of earnings before initially qualifying for CBD can have a harsh affect on eligibility, working is not as problematic if the individual works or attempts to work after initially qualifying for CDB. If a disabled adult child is receiving CDB and would like to engage in an employment opportunity, the individual can participate in a trial work period. During a trial work period, the individual can continue to receive full CDB benefits for a period of 9 months while working and earning above the current SGA amount. After that allowed time period, if the individual continues to have earnings that are " substantial, " the CDB benefits will end; however, for any month when the individual does not meet the definition of Substantial Gainful Employment, he or she will be eligible for monthly benefits. If the individual's income dips below the current SGA amount, or if the income stops completely within 36 months of having received CDB benefits, then no new application or disability determination is needed. Here are two illustrations of how work can affect eligibility for CDB: Tim was disabled before the age of 22 but from age 25 to 27 he was able to work full time and had SGA. Tim had to stop working for health reasons and re-apply for SSDI on his own account after working for two years. Tim's father then retires when Tim is 32. Tim cannot qualify for CDB on his father's account because Tim had SGA before his father retired. Tim meets all of the requirements for CDB except that he had SGA before he could apply for benefits when his father retired. In the second example, Tim has no SGA before his father retires when Tim was 32. When his father retires, Tim will be eligible for CDB to supplement his SSDI benefits. At age 35 Tim is able to work and earn $2,000 per month for two years. Tim will lose his CDB benefit after a 9 month trial work period. After working for two years Tim must quit his job because of his disabilities. He can again qualify for CDB even though he had SGA for two years because his employment occurred after he qualified for CDB. How Does Marriage Affect CDB? If a disabled adult child receiving CDB marries, that child may or may not lose her eligibility for CDB. As noted above, a disabled adult child who is receiving CDB is doing so based upon having a disability that began before reaching age 22 and the retirement, death or disability of a parent who had a social security work record. The marriage of a CDB beneficiary to another social security beneficiary will not cause the CDB beneficiary to lose eligibility for those benefits. If the disabled adult child marries a person who is not a social security beneficiary, then the disabled adult child will lose the CDB eligibility that derived from the parent's status as a wage earner. Conclusion CDB, DAC, SSI, SSDI and SGA may sound like a new variety of clustered alphabet soup. In fact, parents, caretakers and adult children with a disability need to know the meaning and function of each of these abbreviations and the relevant rules that apply to the programs in this alphabet soup. Keeping the CDB eligibility rules in mind while reevaluating a care plan for aging parents and disabled children can help relieve stress and provide groundwork for maintaining Medicaid benefits. The potentially increased CDB cash payment can help a disabled adult child significantly, but ensuring Medicaid eligibility after the payment increase is of crucial importance for many such adults. Knowing these rules will allow caretakers to take action immediately if the disabled child receives notice that Medicaid will be terminated because the child is no longer eligible for SSI. In addition, understanding when a disabled adult child can seek Substantial Gainful Activity and just how much the child can earn each month will allow families to better evaluate each decision as it relates to these often vital benefits. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org<http://www.specialneedsalliance.org>. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted June 30, 2011 Report Share Posted June 30, 2011 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter June, 2011 - Vol 5, Issue 11 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the email newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Craig C. Reaves of Reaves Law Firm, PC. in Kansas City, Missouri. Holding the CELA (Certified Elder Law Attorney) designation from the National Elder Law Foundation, he is a Past President and Fellow of the National Academy of Elder Law Attorneys, a Fellow of the American College of Trust & Estate Counsel (ACTEC), and has been selected for inclusion on the Kansas and Missouri Super Lawyers list for every year since 2005. Mr. Reaves is an adjunct professor of elder law at the law schools of the University of Kansas and the University of Missouri-Kansas City. He practices law in Kansas and Missouri with major emphasis in the areas of estate planning, elder law, special needs trusts and planning for persons who have a disability. The Mission Project One of the more difficult things to do for a parent of a young adult who has a disability is find appropriate housing--a place that provides a safe environment and yet promotes growth and independence. Sometimes this is relatively easy because the disability is slight and the child is capable of holding a job and living totally independently. Or, on the other extreme, the child needs full time care and supervision. But what about those in between: those who are high functioning, but not quite to the point of really being able to live completely on their own, yet they are beyond living in a group home and are stifled living with their parents? Where can they live? What if there was a community where: a.. individuals who have a disability could live in their own apartment, but have a group of similarly situated friends nearby; b.. there were within walking distance restaurants, grocery stores, places to shop, swimming pools, a gym and other recreational facilities where they were welcomed; c.. the police and shop owners recognized and watched out for them; d.. their parents were involved in, but not controlling, their lives; e.. they could get together as a group and openly discuss any problems they are having with a counselor who can help guide them; f.. they could take dance lessons, acting lessons, computer lessons and exercise classes if they want, but were not forced to participate; g.. they could have a job, reliable and free transportation to and from the job, and even a job coach if one is needed; h.. there were opportunities to plan a group trip, pick the place to go, save money towards the expense and travel with their friends to places like Chicago, St. Louis, Cozumel and the Rocky Mountains; i.. there was a telephone hotline answered 24 hours a day by someone they know, who cares about them and will answer their questions about anything they want to know at that moment. Wouldn't that be a nice place to live? So you think this is a utopian dream? Well think again. Such a place exists in a suburb of Kansas City. It all started in 2003 with the vision of three couples, all parents of a child with a developmental disability who was in his or her early twenties, living at home and, although comfortable, was becoming bored and on the verge of no longer advancing. After encouraging their respective children during their early years to push themselves and become more independent, the parents now found themselves enabling their children to regress and plateau in their own homes. So the parents began researching available options locally and across the country. Nothing seemed to fit. After hours of discussions that sharpened their focus, they developed core values to guide them through a design process for a new community. They wanted, first of all, a place that was safe for their children. Next came employment, then continuing education, physical fitness, social activities, parental input (not control), increasing independence and continuity. These parents looked all over Kansas City for a community that satisfied their core values and settled on the older, close-in suburb of Mission, Kansas. They then named their dream " The Mission Project. " Buying an apartment building for housing was considered, but rejected. Not only would it require a large outlay of money and debt, but it would make it more expensive and complicated when other families joined. Also, they did not want to become landlords, and they wanted the flexibility to move elsewhere if the community changed. They found an apartment complex, met with the manager and shared their vision - each child living in a separate apartment, paying his or her own rent through SSI, Section 8 vouchers and jobs, having parents and case managers who would be around but not living there. The manager agreed and The Mission Project found a home. Next the parents met with the mayor, city council, police and local businesses for the purpose of sharing with them the parents' vision and the purpose of the project. They also assured these community leaders and business owners that The Mission Project would not become too large and overwhelm the community with young adults who had disabilities. The parents wanted to make sure that their children would not be discriminated against, ridiculed or feared if they were walking around the community alone or in a group. In order to help support the local businesses that were interacting with their children, the parents instituted " Mission First, " a commitment to first try to purchase anything they wanted in Mission. So now the parents drive from other communities in the Kansas City area to Mission to buy their groceries, hardware and anything else they can purchase from the local merchants. The first participants moved in during the summer of 2004. Today it has grown into a community of fifteen individuals who have all of the amenities described above, plus more. Each participant has a family member who is a voting member of the non-profit corporation that is The Mission Project. All of these members have a job, ranging from serving on a committee (such as the steering committee, fundraising, government relations, membership, education, social, etc.) to answering calls that come into the helpline, overseeing the newsletter the participants produce or chaperoning outings such as movies, bowling, dancing or group trips out of town. A goal of The Mission Project is to foster and promote independence and self-governance in the group and in individual lives. A supports scale was developed and success is measured in terms of growth of the participants towards independence, individuality and as part of the larger Mission Project community. Results are very positive. The vision of the founding parents is coming true. Because there is not space in this article to fully describe this program, you are encouraged to check out their website at www.TheMissionProject.org. If you want even more information, feel free to contact them directly. You will find a group of people who are not only excited about what they are experiencing, but are very willing to help and share with others. -------------------------------------------------------- Related Innovative Housing Models Research Note to Families from Special Needs Alliance Publications Committee: Nationwide, families of adults with disabilities are searching for ways to develop independent, supportive housing for their kin. The Mission Project is a wonderful example of an innovative and cost-effective plan that was developed, funded and managed by parents themselves. A group in Western North Carolina is working to support family efforts to develop housing where adults with a wide variety of disabilities can live independently. Now we need your help. To save research time for individual families getting started on this difficult journey, we are compiling a list of innovative housing models from around the country to be posted on a website currently being built (myownkey.org). Please send information about plans for supportive housing that you are part of - or know of - to djohnston@.... Please put HOUSING PLAN in the subject line. Don't be shy! Simple plans that have worked for your family will be useful to others. Information about plans that have not worked, and why, could be just as useful. -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted July 12, 2011 Report Share Posted July 12, 2011 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter July, 2011 - Vol 5, Issue 12 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the email newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member M. McCarten, at the Nashville, Tennessee law firm of White & Reasor, PLC, where he focuses on estate planning, general tax matters and counseling families on special needs planning. Mr. McCarten has been listed in The Best Lawyers in America since 2003 in several categories, is a Fellow in the American College of Trust and Estate Counsel, has served as the Chair of the Tennessee Bar Association's Tax Section, and serves on the Boards of The ARC of son County, Tennessee and the Autism Society of Middle Tennessee. You can learn more about Jim, his firm and his practice at www.whitereasor.com. The New Medicare Surtax: Will You or Your Special Needs Trust Be Affected in 2013? When Congress passed the President's health care reform initiative in March of 2010, the legislation came in two separate bills. First came the Patient Protection and Affordable Care Act (PPACA), followed by the Health Care and Education Reconciliation Act (HCERA) several days later. One focus of the HCERA was to implement the tax provisions designed to pay for healthcare reform. Several cases are pending in various federal courts challenging the constitutionality of the PPACA, but even if the courts eventually were to declare the PPACA to be unconstitutional, the non-insurance tax provisions in the HCERA will apply to taxpayers, including the disabled beneficiaries of special needs trusts (SNTs) and/or SNTs themselves. Like most taxes, the financial impact of the new tax in the HCERA can be minimized with proper planning. What follows is a very brief overview of the new tax, some general planning opportunities, and a brief discussion on how the tax will apply to SNTs. Who Will Be Subject to the New Surtax? One of the largest tax increases arising out of the President's health care reform initiatives is a new tax on the qualified unearned or passive income of individuals, trusts and estates. That tax begins January 1, 2013, will be imposed at a 3.8% rate and is designated as a Medicare contribution tax (the Medicare surtax). Initially advertised as applying only to high income individuals, the Medicare surtax also applies to estates and trusts once the taxable income reaches the top marginal tax rate. Estates and trusts reach the threshold for taxation at the top marginal rate with far less income than individual taxpayers. In 2011, a trust hits the top marginal income tax rate as soon as its taxable income exceeds $11,350. While this threshold is indexed for inflation, that amount is not likely to change significantly by 2013. As a result, even though no one would describe most SNT beneficiaries as wealthy, some SNTs will end up with income subject to this new tax. In contrast, individuals will be subject to the new tax only if they receive passive income during a year in which their modified adjusted gross income (MAGI) exceeds a certain threshold. For single individuals, the MAGI threshold is $200,000. For married individuals, the MAGI threshold is $250,000. ($125,000 for married individuals filing separately). When an individual's MAGI exceeds the applicable threshold, and he/she received passive income during the year, the Medicare surtax will be assessed against the lesser of the taxpayer's net investment income or the amount by which the taxpayer's MAGI exceeds the applicable threshold above. Scheduled Tax Rate Changes in 2013 So what do all these new rules, terms and alphabet soup actually mean for taxpayers? The so-called Bush era income (and estate) tax cuts are scheduled to expire after December 31, 2012, reverting to the rates that existed prior to 2001. If the income tax cuts do expire, the top marginal tax rates will affect relatively few individuals but many irrevocable trusts. At the end of this article is a chart showing the top 2012 and 2013 tax rates, with and without surtax, on various types of income: earned, taxable interest, dividends and capital gains. Investment income is precisely the type of income traditionally earned by a trust, and as the chart demonstrates, the tax rates applicable to most types of investment income will increase to nearly 40%. Add in the new 3.8% Medicare surtax, and the top marginal rates applicable to most forms of passive types of income jump to nearly 45%. Passive Income Subject to or Exempt from the Surtax What types of income are unearned or passive income for this new Medicare surtax? Generally, these are what one normally would consider investment income. The definition specifically includes interest, dividends, royalties, annuities, rents and capital gains. It also includes gross income from businesses in which the taxpayer is not actively involved. A good rule of thumb is that if the income is subject to self-employment tax or FICA tax, it is not passive income. Almost everything else is treated as passive income. For planning purposes, distributions from regular IRAs or qualified plans as well as distributions from Roth IRAs will not, themselves, be subject to the tax. However, taxpayers must recognize that distributions from regular IRAs and qualified plans will increase the taxpayer's MAGI, so such distributions must be reviewed when planning to avoid this new tax. Deductions, Keeping Schedules and Estimated Taxes The deductions available for reducing the Medicare surtax base are not yet fully clear. Most advisors believe that a taxpayer's gross passive income should be reduced by all deductions properly allocable to that income, including capital losses, passive losses and investment interest expenses, to name a few. The IRS will likely issue written guidance on these deductions as we get closer to 2013. Still, taxpayers should be aware that the preparation of tax returns is about to become even more complex. For example, passive losses may be limited or suspended for regular tax purposes but should be fully deductible for the Medicare surtax. Thus, taxpayers will need to keep schedules based upon the type of taxes to which the taxpayer is subject (regular income tax, Medicare surtax and the alternative minimum tax). When planning for this new tax, advisors and trustees must understand that it applies to all passive income earned beginning as of January 1, 2013. Just like the regular income tax, the new Medicare surtax will be subject to the estimated tax requirements and its penalty provisions. Thus, if, when returns are filed on April 15, 2014, the tax ends up being due for the 2013 tax year and the taxpayer's estimated tax payments did not anticipate that extra tax amount, penalties will be assessed. Planning Ahead Much like the regular income tax, certain types of investment income are tax-favored for purposes of the Medicare surtax. Specifically, municipal bond interest, tax-deferred growth in individual retirement accounts and other retirement plans, as well as cash value buildup in life insurance are exempt from this tax. Nevertheless, trustees should first consult with their certified financial planners, CPAs and/or other tax advisors before moving significant portions of an investment portfolio into such investments. Tax planning with regard to the Medicare surtax will focus on two primary concepts: (1) managing the timing of income which increases the taxpayer's MAGI, and (2) managing when the taxpayer recognizes passive income. In other words, how much income is recognized in any one year and thus might be subject to the tax. Trustees and financial planners must explore traditional tax planning strategies for the deferral of income, whether applied to the taxpayer's passive income or other types of income, in order to reduce the taxpayer's MAGI. Tax deferred annuities will likely help manage the amounts of taxpayer's income, both regular income and passive income, recognized in any single year. Special Needs Trust Tax Planning For trustees of special needs trusts, the primary planning issue is who will report the income. If the trust is a first-party SNT (created to hold the beneficiary's own funds, such as the proceeds from a lawsuit or an unrestricted gift or inheritance), the trust is taxable as a grantor trust. This means that the income is actually reported on the beneficiary's tax return, at which point it is the beneficiary's MAGI which serves as the threshold for application of the tax. If the trust is a third-party SNT (created as part of the parents' or grandparents' estate plan and funded with their assets), the trustee must determine whether the trust income is being accumulated or distributed. If the income is being accumulated, it will be taxable to the trust at the higher marginal estate and trust tax rates. If some or all of the trust income is being used for the benefit of the special needs beneficiary, that income will be reported on the tax return of the beneficiary and the tax analysis will be similar to that of a first-party SNT. Planning opportunities are available in both circumstances, but the planning is so vastly different that trustees should consult and work closely with their tax advisors. While the President and Congress meant this new tax to apply only to the wealthy, the Medicare surtax unfortunately may adversely impact the beneficiaries of third-party SNTs with accumulated passive income in excess of $11,350 annually. While most SNTs will not fall into this category, it is unfortunate that these beneficiaries with disabilities, who are among those meant to benefit from healthcare reform, will be among those who will bear the burden of paying for these much needed benefits. How High Will Rates Go? Type of Income 2012 (Pre-Expiration of the Bush-era tax cuts) 2013 (Post-Expiration of the Bush-era tax cuts) 2013 (Adding the new Medicare Surtax) Earned Income 35% 39.6% 40.5%* Taxable Interest 35% 39.6% 43.4% Dividends 15% 39.6% 43.4% Capital Gains 15% 20.0% 23.8% * This figure does not include the already existing Medicare surtax on wages (1.45% paid by employee) or self-employment income (2.9%). -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted July 27, 2011 Report Share Posted July 27, 2011 Powerful information. Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter July, 2011 - Vol 5, Issue 13 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the email newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Jim Caffry, a sole practitioner in Waterbury, Vermont. Jim's practice is concentrated in special needs planning and advocacy. One of Jim's three children, his eleven year old son, has autism and other special needs. Jim is a current member of the Vermont Developmental Disabilities Council, and a past member of the Vermont Autism Task Force and the Vermont Act 135 Autism Planning Committee. You can learn more about Jim, his firm and his practice at www.caffrylaw.com. Better Advocacy Through Acronyms Parents, caregivers and advocates of children and adults with special needs are inundated with acronyms as they navigate their state's disability systems. Among the acronyms they likely encounter: EPSDT-Early Periodic Screening, Diagnosis and Treatment; FIT-Family Infant & Toddler programs; IEP-Individualized Educational Program; FAPE-Free Appropriate Public Education; SSI-Supplemental Security Income; CDB-Childhood Disability Benefits; and HCBS-Home and Community Based Services. There are two other acronyms, however, that should become familiar in the never-ending effort to advocate for children with special needs-FOIA and APA. Armed with an understanding of FOIA and the APA, families and other advocates can access vast amounts of information that impacts the quality of life of people with special needs. Understanding FOIA and the APA will empower families and advocates to play a constructive and productive role in shaping the laws, regulations, and public policy impacting their state's special needs community. What are these " acronyms of better advocacy " ? FOIA stands for Freedom of Information Act. APA stands for Administrative Procedures Act. Although these laws may go by another name in some states, all 50 states have adopted some version of both FOIA and the APA. The website of the National Freedom of Information Coalition provides information about every state's FOIA law (http://www.nfoic.org/state-foi-laws). Florida State University Law School lists every state's APA citation (http://www.law.fsu.edu/library/admin/admin3.html). An internet search will almost certainly provide mountains of helpful information in plain English about how to put each state's FOIA and APA laws to work. It is always a good idea to review the actual language of a state's laws and not to rely solely on other sources. At this point you may be thinking " Why should I really care about FOIA or my state's APA? " Well, you should if this scenario sounds even a little familiar to you... Parent of special needs child-Question to a state human services agency employee: " Why does the agency in our state only provide Services X and Y? I recently read an article that our neighboring state has Alternative Service Z for children with the same diagnosis as my child. Why can't we do Alternative Service Z here in our state? Agency staff-Answer: " Because our disability system provides Services X and Y, and that's the way we have always done it in this state. " SN parent-Question: " OK, I understand that, but it does not answer the question of why our state cannot offer Alternative Service Z too. " Agency staff-Answer: " Like I said, it is the long-standing policy of this state that we provide Services X and Y for the type of disability your child has. " SN parent-Questions: " Hmmm. Has anyone at the agency ever looked into whether or Alternative Service Z could be implemented in our state for the same or less cost that the current Services X and Y? Is the policy limiting services in our state to " only services X and Y " in writing? Is it an agency policy, or a formally adopted rule? Or is it in an actual law adopted by the state legislature and signed by the governor? " Agency Staff-Answer: " The agency considered alternatives way back when we started providing Services X and Y. and it says right in the agency program manual that service options are X and Y. " Although you may be thinking that it would feel pretty good to give this agency staffer a candid assessment of his or her customer service skills, it is best to stay calm and thank the person for his or her time. Remember, FOIA Is Your Friend " Show me the documents. " When you hang up the phone, take a few moments to write down as many details of the conversation as you can recall. Next, take a careful look at your state's FOIA law. Then write a " Freedom of Information Act Request " or " public records request " letter to the agency providing a detailed description of the public information you want the agency to produce. Not sure how to write the FOIA request? There are many samples out there-an internet search for " sample FOIA request " produced more than 110,000 hits. The scope of your FOIA request can be very broad, very narrow, or both. For example: " I am requesting that any and all documents in the possession of the agency regarding Disability Services X and Y in this state be made available for inspection and copying. This request for public information includes all manuals, reports, studies, internal communications between any agency staff members, and external communications between any agency staff members and any other person, including, but not limited to, any state legislators and any service providers of Services X and Y. In addition, I am also requesting any and all documents in the possession of the agency regarding this state's consideration of and decision not to provide Alternative Disability Service Z. Alternative Service Z is currently available in the neighboring State of A. This FOIA request seeks all documents that the agency has identifying Alternative Service Z, including any documents identifying the legal, economic and/or public policy bases for the agency's decision not to make Alternative Service Z available in this state. " Generally speaking, all FOIA laws will impose time limits within which public agencies must provide a response to a citizen's FOIA request. If a public agency refuses to comply fully with the FOIA request and the dispute ends up in court, the public agency may even have to pay for the attorneys' fees of the person requesting the public records. " Redact it! " FOIA laws all have exemptions specifying the information that public agencies do not have to make available in response to a FOIA request, including confidential information about people receiving services. Do not let a public agency get away with telling you that you cannot have the information you asked for in your FOIA request because it contains confidential information. First, your state's FOIA law will probably include a requirement that any public agency that refuses to make documents available must identify every document withheld and provide the reason the agency withheld the document from you. Second, if a public record contains both information responsive to your FOIA request and confidential information, the public agency is generally required to redact the confidential information and to provide the document to the person requesting it. " Redact " is just a fancy way of saying " take a big black marker, cross out the confidential stuff, and give me the document with rest of the information. " An example of this could be if you wanted to know how many people in your county had been diagnosed with autism and were receiving Medicaid-funded home and community based services. You might want to know the range of services these people were receiving and the range of their waiver budgets. You could file a FOIA request with the public agency and ask for " copies of all current service agreements for all individuals with autism in Washington County receiving home and community based services. " The agency might give you an answer like " Sorry, that information is confidential. " Your response should be: " Redact the names, addresses and social security numbers of the people receiving the services, but the ages, service program details and the service budgets details are all public information that the agency is required to provide. " You might be able to skip a step by stating upfront in your FOIA request letter that the agency should redact confidential information on any documents containing both confidential information and responsive public information. Know Your State's APA When it comes to programs and services for people with disabilities in every state, the legal " chain of command " generally runs this way: (A) federal laws; ( federal regulations; © state laws; (D) state regulations; and finally, (E) state agency policies, practices, guidance documents, procedures or program manuals. The federal laws and regulations that authorize states to develop Medicaid programs providing services to different populations of people with disabilities are very broadly written. In other words, states have a lot of flexibility in designing and implementing disability service programs within their Medicaid programs. As many parents already know, much of how a disability program actually works is based on state agency " policies " and " practices. " Unlike laws and formally adopted regulations, many state agency policies and practices have not gone through a public review process known as " notice and comment. " Instead, many state policies and practices are developed, consciously or by inertia, internally, within the state agency. That is how we end up with a public agency's " because-that-is-the-way-we-have-always-done-it " policy. APA to the rescue This is where your state's administrative procedures act can help. The general purpose of a state's administrative procedures act is that public agencies should maximize the involvement of the public in the development of rules that implement laws. If a decision about what services your child is or is not receiving is based on a public agency's unwritten policy or practice, your state's APA may give you the right to force the agency to put the policy or practice in writing in a single document. Remember to give the agency a written FOIA request for all documents relating to the policy, including internal agency emails. The state's APA may even require that certain policies or practices be adopted as regulations, complete with publication, " notice and comment, " and a vote by an official body. Strength in numbers Even if your state agency has put its policy in writing, or even if it has adopted a rule for the current service program using the full formal process, this does not mean that parents are stuck with that program. Check your state's APA for the steps required to petition a public agency to adopt, amend or repeal a rule. Your state law may allow a single individual to file a petition for rule-making, but some states may require a minimum number of people to sign the petition for rule-making. Even if the APA in your state allows an individual to file the rule-making petition, it is a good idea to gather the signatures of as many like-minded parents as you can. It is a truism to say that the agency is going to take a petition with 100 signatures more seriously than it will take a petition from a single person. If your petition is to get your state agency to allow " Alternative Service Z " in your state, then it would be a good idea for your petition to include information about whether any other states already allow Alternative Service Z. If the other states already offering Alternative Service Z are doing so at the same or less cost than your state is implementing Services X and Y, your petition should highlight that fact. Be aware that an agency hostile to your proposal may produce facts and figures claiming that Alternative Service Z is much more expensive, so it is a good idea to present your own data at the start, if possible. If, after all of that effort, your public agency denies your petition, remember that all of the agency's internal communications and documentation generated or acquired during the agency's consideration of the rule-making petition are public records. Send the agency a new FOIA request for all public records related to the agency's consideration of your rule-making petition. After that, your next stop will likely have to be the legislature. Conclusion The Freedom of Information Act and Administrative Procedures Act exist in some form in every state to give all citizens access to public information and a voice in how public agencies implement the federal and state laws. FOIA and the APA are powerful tools for parents in their never-ending advocacy for their children with special needs. You may not win every battle, but you do not have to settle for the agency's " because-that-is-the-way-we-have-always-done-it " answer. They are public agencies, spending public money. You have a right to know how and why public agencies do what they do. Do not let anybody tell you otherwise. -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . 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Guest guest Posted July 27, 2011 Report Share Posted July 27, 2011 By the way, my fellow Special Needs Alliance member, the author of this article, was my co-presenter at the National Convention of the Autism Society of America, earlier this month, and is the father of an eleven year old son with Autism. His practice is in Vermont. Rubin<mailto:BRIAN@...> * [cid:image003.jpg@...]<http://www.snfp.net/> The Law Offices of Rubin & Associates Law practice limited to serving the future & legal planning needs of Rubin's fellow Illinois families of children & adults with intellectual disabilities, developmental disabilities, & /or mental illness... (E) brian@...<mailto:brian@...> - (W) www.SNFP.net<http://www.snfp.net/> (O) 847-279-7999 - (F) 847-279-0090 - (TF) 866.TO.RUBIN Mail: 1110 West Lake Cook Road, Buffalo Grove, Illinois 60089-1997 * President, The Arc of Illinois 2011-2013 * Member by invitation of SNA, the Special Needs Alliance (web site<http://www.specialneedsalliance.org/>). The SNA is the national non-profit association of experienced " Special Needs Planning " Attorneys. Rubin is a member of SNA's Board of Directors. * Member of the Special Needs Law Steering Committee of NAELA,<http://www.naela.org/>the National Academy of Elder Law Attorneys. <http://www.naela.org/> * Was a Charter Member of the Academy of Special Needs Planners * Has been awarded the dale Hubbell Peer Review<http://martindale.com/> Rating of AV Preeminent, the highest rating given<http://martindale.com/>. * For more information about Rubin, please visit our web site<http://www.snfp.net/>. Notices: 1. This message does not create an attorney-client relationship, and is not legal advice absent such a relationship with the recipient. This message may contain confidential information protected by the attorney-client and/or work product privilege. The information is only for the use of the intended recipient. If you are not such recipient, disclosure, copying, distribution or reliance upon this e-mail is strictly prohibited. If you have received this transmission in error, please notify The Law Offices of Rubin & Associates by e-mail and destroy the original message and all copies. 2. IRS CIRCULAR 230 NOTICE: TO THE EXTENT THAT THIS MESSAGE OR ANY ATTACHMENT CONCERNS TAX MATTERS, IT IS NOT INTENDED TO BE USED AND CANNOT BE USED BY A TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED BY LAW. 3. Disclaimer Regarding Electronic Signature. If this communication concerns negotiation of a contract or agreement, electronic signature rules do not apply to this communication: contract formation in this matter shall occur only with manually-affixed original signatures on original documents. The Signature given hereon is not an electronic signature and is provided only for the purposes of providing information as to the identity of the sender and for no other purpose(s) whatsoever. From: IPADDUnite [mailto:IPADDUnite ] On Behalf Of ELLEN BRONFELD Sent: Wednesday, July 27, 2011 3:28 PM IPADDUnite ; Cardoso Krasne; Randi Heichman; Needleman; Roseth; Janice Weinstein; Janice Kavanaugh; Carol Rapaport; Ester Stein; Geri Brown; Debbie Rudin; Barb Cabin; Eissman; Whitefield; Betty Korey; Shari Coe; Robynn Medansky; nn Schaider; Laurie ; Emde; Carleen Emde; teri steinberg; Gail Gordon Subject: Fw: [voice] The Voice - Special Needs Alliance newsletter Powerful information. Ellen Ellen Garber Bronfeld egskb@...<mailto:egskb%40sbcglobal.net> [voice] The Voice - Special Needs Alliance newsletter July, 2011 - Vol 5, Issue 13 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the email newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Jim Caffry, a sole practitioner in Waterbury, Vermont. Jim's practice is concentrated in special needs planning and advocacy. One of Jim's three children, his eleven year old son, has autism and other special needs. Jim is a current member of the Vermont Developmental Disabilities Council, and a past member of the Vermont Autism Task Force and the Vermont Act 135 Autism Planning Committee. You can learn more about Jim, his firm and his practice at www.caffrylaw.com<http://www.caffrylaw.com>. Better Advocacy Through Acronyms Parents, caregivers and advocates of children and adults with special needs are inundated with acronyms as they navigate their state's disability systems. Among the acronyms they likely encounter: EPSDT-Early Periodic Screening, Diagnosis and Treatment; FIT-Family Infant & Toddler programs; IEP-Individualized Educational Program; FAPE-Free Appropriate Public Education; SSI-Supplemental Security Income; CDB-Childhood Disability Benefits; and HCBS-Home and Community Based Services. There are two other acronyms, however, that should become familiar in the never-ending effort to advocate for children with special needs-FOIA and APA. Armed with an understanding of FOIA and the APA, families and other advocates can access vast amounts of information that impacts the quality of life of people with special needs. Understanding FOIA and the APA will empower families and advocates to play a constructive and productive role in shaping the laws, regulations, and public policy impacting their state's special needs community. What are these " acronyms of better advocacy " ? FOIA stands for Freedom of Information Act. APA stands for Administrative Procedures Act. Although these laws may go by another name in some states, all 50 states have adopted some version of both FOIA and the APA. The website of the National Freedom of Information Coalition provides information about every state's FOIA law (http://www.nfoic.org/state-foi-laws). Florida State University Law School lists every state's APA citation (http://www.law.fsu.edu/library/admin/admin3.html). An internet search will almost certainly provide mountains of helpful information in plain English about how to put each state's FOIA and APA laws to work. It is always a good idea to review the actual language of a state's laws and not to rely solely on other sources. At this point you may be thinking " Why should I really care about FOIA or my state's APA? " Well, you should if this scenario sounds even a little familiar to you... Parent of special needs child-Question to a state human services agency employee: " Why does the agency in our state only provide Services X and Y? I recently read an article that our neighboring state has Alternative Service Z for children with the same diagnosis as my child. Why can't we do Alternative Service Z here in our state? Agency staff-Answer: " Because our disability system provides Services X and Y, and that's the way we have always done it in this state. " SN parent-Question: " OK, I understand that, but it does not answer the question of why our state cannot offer Alternative Service Z too. " Agency staff-Answer: " Like I said, it is the long-standing policy of this state that we provide Services X and Y for the type of disability your child has. " SN parent-Questions: " Hmmm. Has anyone at the agency ever looked into whether or Alternative Service Z could be implemented in our state for the same or less cost that the current Services X and Y? Is the policy limiting services in our state to " only services X and Y " in writing? Is it an agency policy, or a formally adopted rule? Or is it in an actual law adopted by the state legislature and signed by the governor? " Agency Staff-Answer: " The agency considered alternatives way back when we started providing Services X and Y. and it says right in the agency program manual that service options are X and Y. " Although you may be thinking that it would feel pretty good to give this agency staffer a candid assessment of his or her customer service skills, it is best to stay calm and thank the person for his or her time. Remember, FOIA Is Your Friend " Show me the documents. " When you hang up the phone, take a few moments to write down as many details of the conversation as you can recall. Next, take a careful look at your state's FOIA law. Then write a " Freedom of Information Act Request " or " public records request " letter to the agency providing a detailed description of the public information you want the agency to produce. Not sure how to write the FOIA request? There are many samples out there-an internet search for " sample FOIA request " produced more than 110,000 hits. The scope of your FOIA request can be very broad, very narrow, or both. For example: " I am requesting that any and all documents in the possession of the agency regarding Disability Services X and Y in this state be made available for inspection and copying. This request for public information includes all manuals, reports, studies, internal communications between any agency staff members, and external communications between any agency staff members and any other person, including, but not limited to, any state legislators and any service providers of Services X and Y. In addition, I am also requesting any and all documents in the possession of the agency regarding this state's consideration of and decision not to provide Alternative Disability Service Z. Alternative Service Z is currently available in the neighboring State of A. This FOIA request seeks all documents that the agency has identifying Alternative Service Z, including any documents identifying the legal, economic and/or public policy bases for the agency's decision not to make Alternative Service Z available in this state. " Generally speaking, all FOIA laws will impose time limits within which public agencies must provide a response to a citizen's FOIA request. If a public agency refuses to comply fully with the FOIA request and the dispute ends up in court, the public agency may even have to pay for the attorneys' fees of the person requesting the public records. " Redact it! " FOIA laws all have exemptions specifying the information that public agencies do not have to make available in response to a FOIA request, including confidential information about people receiving services. Do not let a public agency get away with telling you that you cannot have the information you asked for in your FOIA request because it contains confidential information. First, your state's FOIA law will probably include a requirement that any public agency that refuses to make documents available must identify every document withheld and provide the reason the agency withheld the document from you. Second, if a public record contains both information responsive to your FOIA request and confidential information, the public agency is generally required to redact the confidential information and to provide the document to the person requesting it. " Redact " is just a fancy way of saying " take a big black marker, cross out the confidential stuff, and give me the document with rest of the information. " An example of this could be if you wanted to know how many people in your county had been diagnosed with autism and were receiving Medicaid-funded home and community based services. You might want to know the range of services these people were receiving and the range of their waiver budgets. You could file a FOIA request with the public agency and ask for " copies of all current service agreements for all individuals with autism in Washington County receiving home and community based services. " The agency might give you an answer like " Sorry, that information is confidential. " Your response should be: " Redact the names, addresses and social security numbers of the people receiving the services, but the ages, service program details and the service budgets details are all public information that the agency is required to provide. " You might be able to skip a step by stating upfront in your FOIA request letter that the agency should redact confidential information on any documents containing both confidential information and responsive public information. Know Your State's APA When it comes to programs and services for people with disabilities in every state, the legal " chain of command " generally runs this way: (A) federal laws; ( federal regulations; © state laws; (D) state regulations; and finally, (E) state agency policies, practices, guidance documents, procedures or program manuals. The federal laws and regulations that authorize states to develop Medicaid programs providing services to different populations of people with disabilities are very broadly written. In other words, states have a lot of flexibility in designing and implementing disability service programs within their Medicaid programs. As many parents already know, much of how a disability program actually works is based on state agency " policies " and " practices. " Unlike laws and formally adopted regulations, many state agency policies and practices have not gone through a public review process known as " notice and comment. " Instead, many state policies and practices are developed, consciously or by inertia, internally, within the state agency. That is how we end up with a public agency's " because-that-is-the-way-we-have-always-done-it " policy. APA to the rescue This is where your state's administrative procedures act can help. The general purpose of a state's administrative procedures act is that public agencies should maximize the involvement of the public in the development of rules that implement laws. If a decision about what services your child is or is not receiving is based on a public agency's unwritten policy or practice, your state's APA may give you the right to force the agency to put the policy or practice in writing in a single document. Remember to give the agency a written FOIA request for all documents relating to the policy, including internal agency emails. The state's APA may even require that certain policies or practices be adopted as regulations, complete with publication, " notice and comment, " and a vote by an official body. Strength in numbers Even if your state agency has put its policy in writing, or even if it has adopted a rule for the current service program using the full formal process, this does not mean that parents are stuck with that program. Check your state's APA for the steps required to petition a public agency to adopt, amend or repeal a rule. Your state law may allow a single individual to file a petition for rule-making, but some states may require a minimum number of people to sign the petition for rule-making. Even if the APA in your state allows an individual to file the rule-making petition, it is a good idea to gather the signatures of as many like-minded parents as you can. It is a truism to say that the agency is going to take a petition with 100 signatures more seriously than it will take a petition from a single person. If your petition is to get your state agency to allow " Alternative Service Z " in your state, then it would be a good idea for your petition to include information about whether any other states already allow Alternative Service Z. If the other states already offering Alternative Service Z are doing so at the same or less cost than your state is implementing Services X and Y, your petition should highlight that fact. Be aware that an agency hostile to your proposal may produce facts and figures claiming that Alternative Service Z is much more expensive, so it is a good idea to present your own data at the start, if possible. If, after all of that effort, your public agency denies your petition, remember that all of the agency's internal communications and documentation generated or acquired during the agency's consideration of the rule-making petition are public records. Send the agency a new FOIA request for all public records related to the agency's consideration of your rule-making petition. After that, your next stop will likely have to be the legislature. Conclusion The Freedom of Information Act and Administrative Procedures Act exist in some form in every state to give all citizens access to public information and a voice in how public agencies implement the federal and state laws. FOIA and the APA are powerful tools for parents in their never-ending advocacy for their children with special needs. You may not win every battle, but you do not have to settle for the agency's " because-that-is-the-way-we-have-always-done-it " answer. They are public agencies, spending public money. You have a right to know how and why public agencies do what they do. Do not let anybody tell you otherwise. -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org<http://www.specialneedsalliance.org>. " © 2011 Special Needs Alliance. . 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Guest guest Posted August 17, 2011 Report Share Posted August 17, 2011 FYI: Reprinted with permission of the Special Needs Alliance Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter August, 2011 - Vol 5, Issue 14 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Carol S. Battaglia of San Diego, California. She is one of the authors of Special Needs Trusts: Planning, Drafting and Administration, published by the State Bar of California. Carol also serves as counsel to the Special Needs Trust Foundation of San Diego, a charitable pooled special needs trust. Her practice is limited to the creation of estate plans using special needs trusts and assisting trial lawyers in implementing special needs trusts and other strategies to receive an injured party's settlement funds while maintaining eligibility for government assistance. Utilizing the Spend Down Option to Maintain SSI and/or Medicaid Eligibility People with special health care needs and limited funds of their own often rely on public benefits for their well-being. Some of the most common public benefits include Supplemental Security Income (SSI), administered by the Social Security Administration, and Medicaid, administered separately in each state. To be eligible for SSI and/or Medicaid, an individual usually is limited to $2,000 in resources (or $3,000 for a couple). For SSI, there also is a very low income ceiling. Because the resource limits for SSI and Medicaid are so low, the receipt of a lump sum, including an inheritance or a settlement, can easily disqualify the individual. Upon the receipt of sums in excess of the resource limits, the individual can opt to discontinue benefits, shelter the excess amounts in certain types of special needs trusts, or attempt to re-qualify for benefits through a process known as a " spend down. " What is a Spend Down? The term " spend down " describes the process of literally spending the excess money received by a benefits recipient down to the maximum allowable resource limits. By spending the excess funds in the month in which they are received, the individual can remain eligible for benefits. Note that although a spend down can preserve eligibility for SSI/Medicaid, it is likely that the individual may need to repay part or all of the SSI benefit for the month in which the lump sum is received. The reason for this is that SSI considers a lump sum to be income in the month received. Any income not spent in the month of receipt will be countable as a resource in the following month. Some state Medicaid agencies also treat a lump sum as income in the month of receipt; other states only count the lump sum as a resource in the month after the month of receipt. When Might a Spend Down be Appropriate? There are legal strategies that can help an individual maintain public benefit eligibility after receiving a lump sum. Transferring excess funds to a properly drafted and administered special needs trust is a common strategy. In several instances, however, a spend down might be a better choice. If the amount of the excess resources is relatively small, it might make more sense to spend the money rather than to incur the set-up and ongoing administration costs associated with a special needs trust. A spend down could also be a strong option is in the situation where the beneficiary has current need for high-ticket items such as a home, a handicap-modified vehicle, or even to pay off debt. Spending for these items would not be possible if the beneficiary were to rely solely on public benefits. Timing a Spend Down It is wise to have a spending plan in place prior to receipt of the lump sum. In order to minimize the loss of SSI and Medicaid, goods and services must be purchased in the same calendar month in which the lump sum is received. Note that the individual does not have a period of a month or 30 days to complete the spend down. If a lump sum is received on the 20th of August for example, the spend down must be completed in 11 days to bring resources below the applicable limit before September 1. Prioritizing Items and Services to Purchase To be clear, spend down does not imply or encourage the frivolous wasting of money. It is important that the funds be spent only on exempt resources and that the items purchased are solely for the benefit of the disabled recipient. There are certain resources that the SSI and Medicaid programs do not count in determining eligibility, including one's residence, a vehicle, household furnishings and certain burial arrangements. These are referred to as " exempt resources. " Purchasing exempt assets will ensure that the items will not be counted toward the asset limitation in determining eligibility. Purchasing items for other people is usually considered a gift of assets, and making a gift will usually cause a period of ineligibility for benefits. The following is a nonexhaustive list of exempt expenditures that the lump sum recipient could make and still qualify for SSI: a.. Purchasing a home; paying off a mortgage on a home; paying rent for that calendar month only; modifying a home to accommodate an individual's disabilities; home repairs, remodeling, or deferred maintenance expenses (including landscaping) b.. Purchasing home furnishings or appliances c.. Medical expenses/bills not covered by Medicaid or Medicare (e.g., better quality wheelchair than what is authorized by Medicaid/Medicare) d.. Dental expenses, eye glasses, physical therapy, support services not covered by any benefit program e.. Education expenses (including computer, software, books, etc.) f.. Entertainment/recreation expenses (books, magazines, movie/concert tickets, sporting events, audio/video equipment) g.. Vacation travel (airline tickets, train/bus passes, food & shelter while temporarily away from home on vacation, etc.) h.. Pay an attorney to do estate planning and/or Medicaid planning i.. Pay off debts (existing credit card debt, loans with supporting paperwork) j.. Pre-pay burial arrangements k.. Personal hygiene (haircuts, manicures) l.. Purchase an automobile, pay for registration and insurance m.. Purchase clothing n.. Set aside up to $2,000 for a single person, or up to $3,000 for a married couple, in non-exempt resources, e.g., in savings, checking, etc. Reporting the Spend Down The spend down must be reported to Social Security by the 10th day of the month following the month in which the lump sum was received. State Medicaid agencies have similar or even earlier reporting requirements. Here are some guidelines to follow in order to properly prepare for the reporting: a.. Keep sufficient funds in a bank account to repay SSI benefits for the month in which the excess funds were received-but remember that this amount needs to be included as part of the individual's countable resources. b.. Keep receipts for all items or services purchased, including payments for home remodeling. c.. The beneficiary must be on the title to any real property or vehicle purchased with the lump sum. d.. The beneficiary must be the loss payee for any auto or homeowners insurance purchased with the lump sum. e.. Make copies of current bank statements from all accounts, as well as a printout on the last day of the month showing the balance as of that day. f.. Checks to purchase items and services should clear the beneficiary's bank account by the last day of the spend-down month. If there is any question that a check may not clear the account in the month, payment should be made by certified check or a cashier's check. g.. Have the bank provide documentation of the bank balance on the first day of the next month to verify the spend down was successfully completed. An individual may have spent down the lump sum in the month of receipt, but an SSI check or other monthly income is deposited into the account at the beginning of the next month, pushing the bank balance above the non-exempt resource limit. That will not be a problem because the SSI check or other monthly income is not counted as part of the resource limit in the month the income is paid to the individual. In conclusion, spending down a lump sum can be a great option in certain circumstances, either alone or in conjunction with other options. Keep in mind, however, that a downside to a spend down is that the money will not be available in the future to pay for special needs. Careful thought and planning must go into the preparation for a spend down to minimize the ineligibility period and to avoid wasting critical funds. Although funds will no longer be available, if the spend down is done properly, the beneficiary's quality of life can be improved for years to come through use of the items and services purchased. -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . 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Guest guest Posted August 31, 2011 Report Share Posted August 31, 2011 FYI Reprinted with the permission of the Special Needs Alliance. Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter August, 2011 - Vol 5, Issue 15 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > Accessing Past Issues of The Voice Readers of The Voice have access to all of the archived issues going back to October, 2007 when we began regular publication as the e-mailed newsletter of The Special Needs Alliance. Today's issue provides in reverse chronological order the article titles, each linked to the corresponding article in our archives. As you can see, the articles address a myriad of topics. We suggest that you save this e-mail for ready access to articles you may wish to read in the future. We encourage readers to forward this email to other professionals, advocates and family members who may find these articles helpful. We always welcome your questions and ideas for future articles of The Voice. Readers' questions often have spurred members of The Special Needs Alliance to write an article in response. If you have a burning question or a topic request, please address it to Hales, bryan@..., who will relay it to our Publications Committee. Do you know someone who may be interested in receiving future editions of The Voice in their email? Forward them this email or send them to http://www.specialneedsalliance.com/subscribe.html. 2011 Utilizing the Spend Down Option to Maintain SSI and/or Medicaid Eligibility August 2011 - Vol. 5, Issue 14 Better Advocacy Through Acronyms July 2011 - Vol. 5, Issue 13 The New Medicare Surtax: Will You or Your Special Needs Trust Be Affected in 2013? July 2011 - Vol. 5, Issue 12 The Mission Project June 2011 - Vol. 5, Issue 11 Planning for Adult Children with Disabilities June 2011 - Vol. 5, Issue 10 Buying a House for a Special Needs Beneficiary: Proceed with Care! May 2011 - Vol. 5, Issue 9 Avoid This Common Banking Error May 2011 - Vol. 5, Issue 8 Decisions Arising with the Death of a Child April 2011 - Vol. 5, Issue 7 The Pre-Existing Condition Insurance Plans (PCIP) Under 2010's Health Care Reform Law April 2011 - Vol. 5, Issue 6 The Pitfalls of Caregiver Employment: Paying, Withholding, and Reporting Requirements March 2011 - Vol. 5, Issue 5 The Impact of Special Needs Trusts on Eligibility for Subsidized Housing March 2011 - Vol. 5, Issue 4 The Other Special Need: Planning for Those with Severe Mental Illness February 2011 - Vol. 5, Issue 3 Comparing Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) January 2011 - Vol. 5, Issue 2 Special Benefits for Military Families -- Elect With Care January 2011 - Vol. 5, Issue 1 2010 The Past, Present and Future of Community Living for Persons with Disabilities - A Christmas Carol December 2010 - Vol. 4, Issue 20 What Health Reform Means for Persons with Disabilities December 2010 - Vol. 4, Issue 19 Veteran's Benefits November 2010 - Vol. 4, Issue 18 Dear Grandma and Grandpa... November 2010 - Vol. 4, Issue 17 Life Insurance on a Child with Special Needs: Benefits and Challenges October 2010 - Vol. 4, Issue 16 Planning Options With Retirement Benefits September 2010 - Vol. 4, Issue 15 Retirement Accounts and Government Benefits September 2010 - Vol. 4, Issue 14 Crummey Doesn't Mean Lousy August 2010 - Vol. 4, Issue 13 Your Special Needs Trust Explained August 2010 - Vol. 4, Issue 12 Your Retirement Age Can Affect Your Child's Disability Benefits July 2010 - Vol. 4, Issue 11 Being Prepared For a Disaster July 2010 - Vol. 4, Issue 10 What happens when persons living with disabilities marry? June 2010 - Vol. 4, Issue 9 Housecleaning? Please Don't Pitch These Records! June 2010 - Vol. 4, Issue 8 Signing the Social Security Application May 2010 - Vol. 4, Issue 7 Life Insurance and Children With a Disability April 2010 - Vol. 4, Issue 6 18, 19, 21 Candles on that Cake March 2010 - Vol. 4, Issue 4 Pooled Trusts for Individuals with Special Needs March 2010 - Vol. 4, Issue 5 Taxes and Special Needs Trusts February 2010 - Vol. 4, Issue 3 Estate Planning for People with Disabilities January 2010 - Vol. 4, Issue 2 Medicare Premium Rules Will Affect Some Large Trusts January 2010 - Vol. 4, Issue 1 2009 Advocacy for Parents of Children with Disabilities December 2009 - Vol. 3, Issue 11 The Secret of When Less Is More December 2009 - Vol. 3, Issue 10 Top Ten Tips When Planning For Special Needs November 2009 - Vol. 3, Issue 9 What Property May a Person Receiving SSI Own? November 2009 - Vol. 3, Issue 8 " I'm Glad She Did That " August 2009 - Vol. 3, Issue 7 Letter of Intent June 2009 - Vol. 3, Issue 6 The Military's Survivor Benefit Plan and the Disabled Child June 2009 - Vol. 3, Issue 5 Special Needs Trusts and " Qualified Disability Trusts " April 2009 - Vol. 3, Issue 4 Generational Planning: When the Caregiver Needs Help March 2009 - Vol. 3, Issue 2 Planning for Multiple Generations January 2009 - Vol. 3, Issue 1 2008 Peering Into the Crystal Ball: Planning for Potential Disability December 2008 - Vol. 2, Issue 20 Choosing an Attorney to Help With Special Needs Planning December 2008 - Vol. 2, Issue 19 Is My Money Safe? November 2008 - Vol. 2, Issue 18 Alliance Praises Passage of ADA Amendments Act September 2008 - Vol. 2, Issue 17 Realistically Assessing an Exceptional Child s Future September 2008 - Vol. 2, Issue 16 August 2008 - Vol. 2, Issue 15 Insurance and Other Concerns for Parent/Caregiver August 2008 - Vol. 2, Issue 14 Remembering Harriet McBryde June 2008 - Vol. 2, Issue 13 What to Pay Before Funding a Special Needs Trust June 2008 - Vol. 2, Issue 12 Economic Stimulus Payments and TV Converter Box Coupons June 2008 - Vol. 2, Issue 11 Our Readers' (That Is, Your) Questions May 2008 - Vol. 2, Issue 10 An Introduction to " In-kind Support and Maintenance " April 2008 - Vol. 2, Issue 9 Income Tax Benefits for Families With Special Needs Children April 2008 - Vol. 2, Issue 8 Moving a Special Needs Trust to a New State March 2008 - Vol. 2, Issue 7 What Can a Special Needs Trust Pay For? March 2008 - Vol. 2, Issue 6 Structuring a Personal Injury Settlement February 2008 - Vol. 2, Issue 5 Beware of UTMA Accounts February 2008 - Vol. 2, Issue 4 Fixing a Flawed Special Needs Estate Plan January 2008 - Vol. 2, Issue 3 Questions About Setting Up a Special Needs Trust January 2008 - Vol. 2, Issue 1 Third Party Special Needs Trusts January 2008 - Vol. 2, Issue 2 2007 Managing Care: A Looming Perfect Storm December 2007 - Vol. 1, Issue 9 International Attention Focused on Disabilities December 2007 - Vol. 1, Issue 8 A Reader's Question About Pooled Trusts December 2007 - Vol. 1, Issue 7 Subsidized Housing and Special Needs Trusts November 2007 - Vol. 1, Issue 6 Special Needs Trusts and Individual Retirement Accounts November 2007 - Vol. 1, Issue 5 Veterans and Special Needs Trusts November 2007 - Vol. 1, Issue 4 Non-Profit Organizations as Trustees of Special Needs Trusts November 2007 - Vol. 1, Issue 3 Alternatives to Litigation Special Needs Trusts October 2007 - Vol. 1, Issue 2 Estate Planning for Families With Special Needs Children October 2007 - Vol. 1, Issue 1 -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted September 18, 2011 Report Share Posted September 18, 2011 FYI: Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter September, 2011 - Vol 5, Issue 16 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment's author is V. Wilcenski, Esq., a founding partner of the law firm of Wilcenski & Pleat PLLC in Clifton Park, New York. He practices in the areas of special needs planning, elder law and trust and estate planning and administration. A member and past president of the Special Needs Alliance, Ed writes and lectures frequently on issues affecting individuals with disabilities and their families. Special Needs Information on the Internet: Proceed with Caution The Good News About the Internet Like almost everyone else nowadays, lawyers who practice in the area of special needs often turn first to the Internet with their questions. When they learn of an unfamiliar disability or diagnosis, off to the Internet they go. They look for explanations of the disability, how it might impact a client's life, and what programs and services are available to help support the individual. The result is often both better legal advice and better planning documents. Similarly, new clients often arrive at a special needs planning lawyer's office with a basic understanding of special needs trusts, guardianships, and government benefits, most of it also garnered from the Internet. With both client and counsel having done their preliminary research on the Internet, they can get right to a discussion of the client's needs and goals. As one commercial says, " An educated consumer is the best customer. " The same concept applies to special needs planning. There's another major use of the Internet for special needs planning lawyers. They use the Internet for legal research, to remain abreast of changes in the law, and to share questions and planning approaches with colleagues who practice in the same area. Finally, clients who are parents of children with special needs use the Internet to meet and get support from other parents, to find programs and services in their communities, and to follow developments in medication, treatment, and therapies. All in all, the Internet is a great resource for client and counsel alike. That is the good news. However, there is a down side as well. Much Internet information is superficial, biased, or only a part of the whole story. It can even be flat-out wrong. Without context and perspective, it can be difficult to determine the reliable from the unreliable, the useful from the useless. This article highlights a few ways that Internet information can become a hindrance rather than a help. Not All Special Needs Trusts Are Created Equal Readers of The Voice may be familiar with the concept of a " special needs trust. " To briefly review, this is a type of trust specifically designed to hold money or other assets for individuals with disabilities who receive government benefits when eligibility for those benefits depends on the individual having few assets and/or low income. Special needs trusts (SNTs) are then used to provide goods and services that supplement what is available through those programs without damaging the recipient's eligibility for benefits. Clients who want more information about SNTs are likely to turn first to the Internet - but should exercise caution as they review material there. One of the most common points of confusion for clients (and even many professionals) is the distinction between a " first party " SNT and a " third party " SNT. A first party SNT is funded with assets belonging to the person with the disability, while a third party SNT is funded with assets that belonged to someone else. If a visitor to an Internet website discussing special needs trusts does not know the difference between the two (or if the website does not draw a sufficient distinction in its explanation), the visitor is likely to draw conclusions that are not relevant to his or her situation. For example, a first party SNT must include a " payback " provision effective upon the death of the beneficiary that requires the SNT to pay back the state for all Medicaid benefits this beneficiary ever received. Third party SNTs do not need to include such a payback provision, and indeed should not have one. The funds remaining in a third party SNT can go wherever the creator of the trust chooses after the death of the beneficiary with a disability. Nevertheless, clients and professionals alike can often be heard to say that SNTs generally require a Medicaid payback at the end of a beneficiary's life, without distinguishing between the two types of SNTs. This error can have disastrous consequences. For example, if a mother wants to update her estate plan and incorrectly believes that any money she leaves for her child with a disability will be subject to Medicaid repayment after the child's death, she may choose to leave that child out of her estate plan altogether. Even worse, special needs planning attorneys sometimes see a payback provision in an otherwise well-drafted third party SNT. After the death of the " settlor " or creator of the SNT, it is usually too late to do anything about it. The SNT will end up making a big and unnecessary gift to the state after the death of the beneficiary with a disability solely because the trust included the inappropriate payback provision. Tip O'Neill Would Certainly Agree The second problem with Internet information is that it is often either national in scope, or specific to some other state. This can be very misleading because the rules governing special needs planning in general, and SNTs in particular, vary greatly from state to state, and in some cases even from region to region within an individual state. Former Speaker of the House of Representatives Tip O'Neill famously said, " All politics is local. " The same is true of special needs law and planning. Relying solely on general national rules can lead to major planning errors and missed opportunities. Consider an adult with mental illness who resides independently and receives services through a community-based, Medicaid-funded program. Assume that his only source of income is Social Security Disability Insurance (SSDI), and that he does not receive any Supplemental Security Income (SSI). Assume further that his brother is trustee of a discretionary SNT established by his parents before they died some years ago. Can the trustee use money from the SNT to make rent payments so his brother can move into a nicer apartment without disqualifying him from his Medicaid benefits? In New York, the answer is yes, because the New York Medicaid program does not (with a few limited exceptions) count payments to landlords as income for Medicaid eligibility purposes. The answer would be quite different in other states where the Medicaid program rules treat payments for housing as income that reduces benefits, and where SNTs are therefore drafted to discourage the trustee from making distributions for such purposes. So the answer to the trustee's question will depend not only on the types of benefits the beneficiary receives (e.g., Medicaid, SSI, or Section 8), but also on the state where the SNT beneficiary lives (and sometimes where he or she lives in that state). Here's another issue that Internet websites often gloss over. How much money can the beneficiary of an SNT have in his name without prejudicing his or her benefits? Many websites use $2,000 as the resource limit for SNT beneficiaries. In many cases, such as when the beneficiary is a recipient of SSI, this figure is correct. In others, as in the case of the New York beneficiary with mental illness described above, the Medicaid program's resource limit will control instead of the $2,000 SSI limit. In New York in 2011, that limit is $13,800. In other states, the figure is different. Other deviations from the general rules typically found on the Internet abound. For example if an individual is married and receiving services through a community-based, Medicaid-funded program, can the nondisabled spouse work without prejudicing the benefits of the spouse with a disability? That additional household income would help take some of the pressure off the SNT being held for the disabled spouse. The answer depends on the particular type of Medicaid-funded program. Some programs count the income of the nondisabled spouse in determining Medicaid eligibility for the disabled spouse, and some don't. It should be clear from these examples that no website can provide detailed and current information to cover every possible situation. Instead, it is important for website readers to understand that the information on the Internet is just the beginning of a search for the right answers. The right answers will come only with a subsequent close analysis of the individual's circumstances: his or her existing and potential benefits, needs, desires, and residence. You Can't Judge a Book . . . Finally, there is the issue of website advertising. As most readers know, attorneys, financial planners, accountants, private care managers and others announce relevant experience and competence in this area. Everyone knows that he or she shouldn't draw conclusions - positive or negative - about a professional based solely on a website or yellow page advertisement. Most also know that no one monitors what a professional says on a website about her experience in a particular practice area or discipline. Nevertheless, most people do rely on these sources to help them filter out the seemingly endless number of options for professional services. In addition, it's hard not to be persuaded by a good presentation. Over the years, increased attention has been given to special needs planning and related disability issues. For example, many financial institutions are expanding their trust and other financial management services to meet the needs of a growing number of families having to deal with disability issues. Lawyers and accountants are dedicating time and resources to learning more about this area of practice. Case managers and other service providers who had previously concentrated solely on the elderly population are expanding their reach and offering privately paid advocacy and services to younger individuals with disabilities. In general, these are good developments because they increase the number of options available to consumers of these services. The Internet is a great way to locate such professionals in our communities. That said, anyone can claim to be an " expert " on the Internet. A general estate planning lawyer can magically become a " special needs planning expert " just by naming himself as one on his website. A financial planner who has always focused on tax planning can become " an experienced special needs estate planning professional " just by saying so on her website. There is little to limit such grandiose self-descriptions on the Internet. Obviously readers of websites need to go past the self-serving declarations of professionals seeking work. Readers should be particularly suspicious of professionals who claim a broad area of competence or offer charges that seem too good to be true. A lawyer who says he does everything probably does not have much experience in anything particular. In addition, careful consumers of legal services should look for biographies and publications to show that a lawyer has experience and training in special needs issues. Is the professional actively involved with the disability community, or does he or she have a family member with a disability? How long has he or she focused on this area of law? Are there any published articles that are available for review? Is the lawyer a member of, or have a position of responsibility with, relevant professional organizations and nonprofit advocacy groups? Finally, careful consumers should look for reliable references. They can talk to other, similarly situated families, check with service coordinators and staff from local disability organizations, and ask for help from other professionals who serve the disability community, such as doctors and other health care professionals. All this is clearly more work than simply accepting the promises of the flashiest website, but it will undoubtedly be worth the effort. About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted October 6, 2011 Report Share Posted October 6, 2011 " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter October, 2011 - Vol 5, Issue 17 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Barbara Isenhour, of the firm of Isenhour Bleck, PLLC in Seattle, Washington. The firm focuses on government benefits for individuals with disabilities and estate planning for families with special needs children. A board member of NAMI Eastside in Redmond, Washington, and Full Life Care in Seattle, Barbara frequently lectures around the state of Washington on issues involving special needs trusts and government benefits for the elderly and disabled. Title II Disability Work Rules Part I: Will I Lose My Disability Benefits if I Try to Work? Sometimes a person receiving disability benefits has an opportunity to work. The individual still has a medical disability but would like to have a job and earn a wage. A job may mean more monthly income than the disability benefit, and the job can provide a sense of purpose and personal growth. Even with these potential benefits, there is often anxiety about trying to work: " What if my work attempt is unsuccessful? " " Will I end up with less net income than the SSDI cash benefit if I try to work? " And for many individuals attempting work, the biggest worry is what will happen to their health benefits from Medicare or Medicaid. Title II Disability Benefits This article discusses how work can affect a person's eligibility for Title II disability benefits, commonly referred to as " Social Security Disability. " The next Voice article will discuss preserving Medicare and Medicaid benefits when a Title II disability recipient begins to work. Title II of the Social Security Act provides three types of insurance benefits for individuals with disabilities. Some people receive Title II disability benefits on their own work history (Social Security Disability Income or SSDI). Others receive Title II disability insurance on the account of a deceased spouse or former spouse (Disabled Widow(er)s Benefits or DWB). Some adult children receive Title II disability benefits on the account of a disabled, retired or deceased parent (Childhood Disability Benefits or CDB). In order for a worker, spouse, or child to qualify for Title II disability benefits, the worker on whose account benefits are paid must have paid Social Security taxes on earnings and must have earned the requisite number of work credits. (An upcoming Voice article will cover the work history requirements in order to qualify for Title II disability benefits.) Title II disability benefits are a type of insurance and are not affected by a person's assets or unearned income. For simplicity this article refers to SSDI benefits for the disabled worker, but the rules discussed below also apply to CDB and DWB beneficiaries. This article does not cover the work rules for recipients of Supplemental Security Income or SSI, a needs-based benefit available to qualifying elderly, blind or disabled individuals. SSI work rules are different from Title II work rules, and they will be covered in an upcoming Voice article. There are a couple of preliminary concepts to keep in mind whenever discussing how work affects SSDI benefits. First, wages do not reduce or offset SSDI benefits. Either a person is eligible for SSDI in spite of the wages, or the wages will show the person isn't disabled and thus not qualified to receive SSDI. It is an " all or nothing " system for SSDI. Second, wages are counted in the month the work is performed, not the month in which the wages are paid. There are several separate components of the SSDI work rules that must be pieced together to understand how a job and wages can affect a person's cash benefits. These components include trial work period, substantial gainful activity, extended period of eligibility and expedited reinstatement of benefits. For this discussion, assume that the disabling medical condition still exists but that the SSDI recipient is going to try to work in spite of the medical condition. Also, remember that the financial figures referenced below are likely to change annually - check the Social Security website for the latest figures. Trial Work Period Keep in mind that in order to qualify for SSDI, in most cases a person must show an inability to engage in substantial gainful activity (SGA) described in more detail below. Social Security will monitor the SSDI recipient's earnings as a way to find out if the individual is again able to engage in SGA and therefore is no longer disabled. After SSDI benefits begin, Social Security will first count every month when the individual's gross wages equal or exceed $720 toward a " trial work period " (TWP). (Work deductions discussed below are not counted.) For self-employed individuals, months where net income equals or exceeds $720 or where the hours worked exceed 80 hours per month will be counted as a trial work period month. Months when earnings equal or exceed $720 are referred to as service months. An individual is entitled to have 9 service months treated as the TWP. The months do not have to be consecutive months but must be within a five-year period. An individual is only entitled to one TWP. While individuals are in a TWP it does not matter how much they earn in wages. The Substantial Gainful Activity limit does not apply during the TWP. During the TWP, SSDI recipients will receive their wages, no matter how high, as well as their SSDI benefit. Example: is 28 years old and was severely injured in an auto accident when she was 24. worked prior to her accident and was eligible for an SSDI benefit of $800 per month based upon her earnings before she was injured. A year after 's accident, she was offered a part time job with Kmart as a stocking clerk. In June through November of 2008 earned $800 per month (6 months). In March, August and September of 2009 earned $1,500 per month (3 months). Since earned more than $720 in each of these months, as of the end of September 2009 had completed a TWP of nine months. Until the end of her TWP, it did not matter how much earned in wages. She could have earned $3,000 per month and she still would have received her SSDI benefit of $800 per month in addition to her wages for those nine TWP months. On the other hand, if her earnings had been only $710 per month during her first six months, she would not have used up her nine-month TWP, but only three months of it, and would still have received her SSDI benefit even if earning $1,500 per month for the remaining six months of the TWP after September 2009. Substantial Gainful Activity After the TWP is over, Social Security will determine if a person's wages are considered by Social Security to amount to " substantial gainful activity " (SGA). If the gross monthly wages, minus reductions for work related expenses or work subsidies, are $1,000 per month or more, Social Security may determine that there is SGA. (The SGA amount for a person who meets the Social Security definition of blindness is $1,640 per month.) The SGA amount is calculated based upon when the work was performed, not when the wages were paid. Obviously it is helpful if the SSDI recipient can keep countable earned income below the SGA limit in order to receive the SSDI benefit amount and the earned income. There are two work deductions that can apply: impairment related work expenses (IRWE) and work subsidies. IRWE include goods or services the individual must purchase in order to work. These expenses cannot be reimbursed and must be paid out of pocket by the SSDI recipient after starting work. Examples of IRWE include purchasing durable medical equipment, transportation to and from work (but not public transportation) or medications required to work. A large out-of-pocket purchase can be amortized over a 12 month period. IRWE are reported as item #7 on the Social Security Administration Work Activity Report (SSA-821 BK). The second deduction from gross wages to reduce countable wages for SGA purposes is supported or subsidized working conditions. In some cases a person requires special work conditions or support in order to work. If so, the value of this support can reduce the gross wages when computing her countable wages. Unlike IRWE, work subsidies are not paid out of pocket by the SSDI recipient. Example: Suppose that while works for Kmart she requires 25% more supervision than her co-workers in order to perform her duties. If her gross wages are $1,200 per month, Social Security should reduce the value of her wages by 25% in calculating whether her countable wages show SGA, even though does not pay for this support out of her pocket. With this work subsidy, can continue to receive her SSDI check of $800 per month and her wages of $1,200 because her countable earnings will come below the SGA limit. If is paid the same as other stock clerks but she is 20% less productive because of her impairments, she could also request that her countable wages be determined by reducing her gross wages by 20%. Another example of a work subsidy is if 's group home arranges to get her to and from her job. The home estimates the market value of this transportation is $200 per month. In that case Social Security should reduce the value of her wages by $200 even though she does not pay for the transportation herself. Work supports and subsidies are claimed as item #5 on the Work Activity Report SSA-821 BK. The idea behind reducing the dollar value of 's wages is that the SGA limits supposedly measure 's true earning capacity - ability to earn - not what she actually earns. If she is getting extra help, requires special equipment to perform her job, or is allowed to be less productive, her true earning capacity is less than what she takes home. Extended Period of Eligibility So how does SGA affect a person's eligibility to continue receiving his or her SSDI check? After the individual has accumulated 9 months of a TWP, he or she then has a 36- month period referred to as an " extended period of eligibility " (EPE). During the EPE, Social Security looks at whether earnings in any given month exceed the applicable SGA amount, after taking into account any gross wage reductions for IRWE or work subsidies. If adjusted net earnings exceed the applicable SGA amount, Social Security will make a determination of cessation of disability. The SSDI benefit amount will be terminated after the third month from the cessation of disability month. If wages drop below the SGA amount in any given month during the 36-month EPE, the SSDI benefit amount will be reinstated. Example: Again, let's look at . She completed her TWP in September of 2009. Beginning in October of 2009 through September of 2012 has a 36 month EPE. In October of 2009 's adjusted earned income, after taking into account work subsidies and IRWE, comes to $1,100 per month. These wages are above the SGA amount so Social Security will give a cessation of disability notice effective for October of 2009. will still get her SSDI check for a three-month grace period (October, November and December), but her SSDI check of $800 per month will end after December of 2009. In June through August of 2011 's adjusted earned income dropped to $900 per month. Because her countable earnings are below the SGA amount for those months, will receive her $800 SSDI check for June, July and August of 2011 because she is still in the EPE. If 's countable earnings exceed $1,000 in September, 2011 and subsequent months, she will not get another 3 month grace period and her SSDI check of $800 will be terminated beginning in September. If 's countable earnings again drop below $1,000 in subsequent months while she is in the EPE her SSDI benefit amount will be reinstated. The importance of the EPE is that an individual can again receive the SSDI benefit amount in any month during the 36-month period when countable earnings fall below the SGA amount. Expedited Reinstatement of Benefits At the end of the EPE there is an additional five year period called " expedited reinstatement of benefits. " If the original impairment flairs up within five years of the end of the 36-month EPE, preventing the individual from earning SGA, Social Security can reinstate the SSDI benefits provisionally while a medical review is completed. If the medical review confirms the disability condition or blindness, then the provisional SSDI benefits will be made permanent. If the medical review concludes that there is not a medical disability, SSDI benefits will be immediately terminated but with no overpayment for benefits paid provisionally. Conclusion Between the TWP, the EPE and the five-year expedited reinstatement of benefits, there are safeguards to protect Title II beneficiaries who want to try to work. It is important for advocates to be sure that appropriate earnings reductions are requested if needed to bring wages below the SGA limit in order to preserve the SSDI benefit. The next Voice article will discuss three additional work incentives for Title II beneficiaries: Ticket to Work Program, extended Medicare benefits and extended Medicaid benefits. -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
Guest guest Posted October 19, 2011 Report Share Posted October 19, 2011 FYI Ellen Ellen Garber Bronfeld egskb@... [voice] The Voice - Special Needs Alliance newsletter October, 2011 - Vol 5, Issue 18 The Voice®, the Official Newsletter of SNA Quick Links > How we help families > How we help professionals > Related topics > More about us > Unsubscribe > Subscribe to the Capitol Connection Join Our Mailing List > The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Barbara Isenhour, of the firm of Isenhour Bleck, PLLC in Seattle, Washington. The firm focuses on government benefits for individuals with disabilities and estate planning for families with special needs children. A board member of NAMI Eastside in Redmond, Washington, and Full Life Care in Seattle, Barbara frequently lectures around the state of Washington on issues involving special needs trusts and government benefits for the elderly and disabled. How Work Can Affect Title II Disability Benefits Part II: Ticket to Work and Extension of Medicare and Medicaid Benefits This article is a continuation of a previous Voice article, addressing the effect of employment on a person's eligibility for Title II disability benefits (Social Security Disability Income, Child Disability Benefits and Disabled Widow(er)s Benefits). The article addresses three work incentives when a recipient of Title II disability benefits attempts to work: Ticket to Work, extension of Medicare benefits, and extension of Medicaid benefits. This article also addresses the reporting requirements when a Title II disability recipient starts earning a wage. Ticket to Work Social Security has a work incentive program called " Ticket to Work, " designed to help individuals with a disability transition into a job and employment. The Ticket to Work program actually applies both to disabled Title II beneficiaries and to disabled (Supplemental Security Income or SSI) recipients, but this article only addresses its impact on Title II beneficiaries. The purpose of the Ticket to Work program is to help disabled individuals achieve their employment goals by working with an authorized vocational program. The program may include vocational training, job referrals and other employment support. Social Security has a list of vocational providers in every state. The providers include private employment networks and government vocational agencies. Authorized programs also include public or private school programs for students between the ages of 18 and 21 who have a vocational program as part of their Individual Education Program (IEP). Every person between the ages of 18 and 64 who is receiving cash disability benefits and has not medically improved has a " ticket. " These individuals can assign their ticket to an authorized vocational provider to provide job training, job referrals and related employment support. What are the benefits of enrolling in the Ticket to Work program, aside from the vocational assistance in finding and keeping a job? First, Social Security will not conduct any continuing disability reviews during the term of the enrollment in Ticket to Work. Otherwise, when Social Security first determines that a person meets the agency's definition of disabled or blindness, the individual is given a medical review date to determine whether the disabling medical condition has improved. The review date can be anywhere between six months and seven years depending upon the medical condition and expected improvement over time. The medical review can be a source of anxiety to a recipient of disability benefits. Another benefit from participation in the Ticket to Work program is continuation of cash disability benefits even if the medically disabling condition ends, provided the person is currently enrolled in a Ticket to Work program. Social Security will still pay the cash disability benefits until the vocational program has ended or as long as Social Security determines that the vocational program will help the individual to stay off of the disability rolls in the future. Extending Medicare Benefits Recipients of Title II disability benefits will qualify for Medicare health insurance in the 25th month after their cash benefit begins. If a recipient begins receiving Medicare, then completes a Trial Work Period (discussed in the prior article in this series), and then has disability cash benefits terminated because of substantial gainful activity (SGA) , Medicare benefits will be extended for up to 93 months following the last month of the Trial Work Period. After the 93 months, these former Title II recipients can purchase Part A and Part B Medicare coverage if they wish. This can be a significant benefit for individuals with disabling medical conditions because of the relatively low cost of Medicare premiums and the ability to avoid pre-existing condition exclusions that may be imposed by a privately-purchased health insurance policy. In some states, benefits known as Medicare savings plans may even pay these premiums if the individual meets the applicable income and asset limits for the plan. The extension of Medicare for 93 months and the option to purchase Medicare after 93 months only applies to Title II recipients whose cash benefit ended because they had SGA. If the cash benefits were terminated because the individual's medical condition improved, the Medicare extension provisions would not apply. Extending Medicaid Benefits Some recipients of Title II disability benefits receive both Medicare and Medicaid health coverage. These individuals are often referred to as concurrent beneficiaries or dual eligibles. Forty-two states have Medicaid programs for disabled individuals who are working, even if they have lost all their Title II cash benefits due to SGA. Most of these Medicaid programs have no asset limits in order to qualify; where asset limits apply, they may be more generous than the limits for ordinary Medicaid benefits. Most programs will require that income is below a specified limit adopted by the state, but this limit may be generous to take into account work-related expenses. Most states have a premium for the Medicaid coverage based on a small percentage of countable income, and so these programs are sometimes called Medicaid buy-in programs. Benefits covered by the Medicaid program vary with each state program. Some states' Medicaid programs cover attendant care for severely disabled individuals, so that they can get to and from their job site or reside in a community setting. This type of care would not be covered by Medicare. Reporting Earnings Social Security requires that individuals who are working and also receiving cash disability benefits must report their earnings by the 10th day of the following month. Because the Title II disability programs count wages in the month the wages were earned, not the month of payment, it is important that reported earnings make it clear when the wages were earned. This can make a difference when determining whether wages exceed SGA in any given month. As discussed in the last Voice article, beneficiaries need to know if they are still in a Trial Work Period (TWP) and when the TWP ends. When their TWP ends, they need to know whether their countable wages exceed SGA, and what work-related expenses can be used to reduce their countable wages. For many individuals trying to work, wages may fluctuate on a monthly basis. Earnings may be above SGA in some months and below SGA in other months because of changes in health, changes in impairment-related work expenses or subsidies that reduce countable earnings for SGA, or changes in availability of hours of work from the employer. Even when individuals report their earnings promptly, there may be overpayments assessed for months when countable earnings exceed SGA. Workers with disabilities and their families or other advocates need to track wages carefully and to understand how SGA affects the ability to qualify for the Title II disability benefit in any given month. To help track a working individual's continued eligibility for Title II benefits, the Social Security Administration provides a useful form, the " Benefits Planning Query " (SSA-2459). This document will show the individual's Social Security benefit amount and the specific program(s) paying the benefits (SSI, SSDI, CDB, DWB). The form shows the disability onset date, whether or not any overpayments have been assessed, whether or not the individual is receiving Medicare and/or Medicaid, and whether or not the individual has completed a TWP. The form will also show prior reported earnings and whether the earnings are verified or only estimated. This form also indicates when the next medical review is scheduled with Social Security. Reporting earnings is a requirement, not an option-but there is an additional benefit when individuals with disabilities report their wages to Social Security. Most workers pay into the Social Security system with each paycheck through withheld payroll taxes; self-employed individuals who report earnings pay into the Social Security system through self-employment tax. These individuals are gradually building up their own work history of Social Security contributions, which will be used to calculate the amount of their disability benefits and their eventual retirement benefits. Conclusion The Social Security disability programs are not designed to punish individuals who want to try to work despite their medical conditions. There are incentives to help transition individuals from disability benefits to full employment with Ticket to Work and Medicare and Medicaid extended benefits. There are also ways for many individuals to keep both their full Title II disability benefits and their wages, depending upon the amount of their countable earnings. The work rules for Title II disability benefits are complicated, but with good advocacy and a good understanding of trial work periods, substantial gainful activity, impairment-related work expenses and subsidies, the Ticket to Work program, and continuing coverage from the Medicare and Medicaid programs, individuals with disabilities can gain employment that will enhance, not jeopardize, their financial security. -------------------------------------------------------- About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online. -------------------------------------------------------- Requirements for Reprinting this Article: The above article may be reprinted only if it appears unmodified, including both the author description above the title and the " About this Newsletter " paragraph immediately following the article, accompanied by the following statement: " Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org. " © 2011 Special Needs Alliance. . Quote Link to comment Share on other sites More sharing options...
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