It is easy to assume that similar sounding acronyms are actually referring to the same government program, but this is not always the case. SSDI and SSI would definitely fall into this category, and we will provide clarity in this post.
Social Security Disability Insurance (SSDI)
When you look at your pay receipts, you invariably see the FICA contributions that take a significant bite. The good news is that you get something in return for your tax payments.
You get one retirement credit for each $1470 in taxable income that you receive, and you can accrue up to four credits per year. After you have earned 40 credits, you will qualify for Medicare when you are 65, and you will be eligible for Social Security.
The trajectory would be interrupted if you become unable to work due to a disability, but you did make the tax payments over the years. Under these circumstances, you could potentially qualify for Social Security Disability Insurance.
In order to qualify, you would need the 40 credits, and 20 of them must be earned during the 10 years that immediately preceded the disabling event. This is the general rule of thumb, but younger people can potentially qualify with less than 40 credits.
You may have heard about disability benefits that are only available to individuals with limited financial resources. SSDI is not in this category. There are no income or asset limits as long as you meet the other eligibility requirements.
The exact amount that you would receive if you qualify would be based on your earning history. In 2021, the average benefit is about $1130 a month, and the max SSDI benefit right now is $3148.
The income is only part of the equation because people that cannot work are not in a position to get health insurance through their employers. A person that qualifies for SSDI will automatically be Medicare eligible, but they have to endure a two-year waiting period.
Supplemental Security Income (SSI)
Unlike SSDI, Supplemental Security Income is in fact a need-based program, so there is a $2000 limit on countable assets. The “countable” part is operable, because your home is a non-countable asset, and you can qualify if you own a motor vehicle.
This benefit is potentially available to people that are disabled along with individuals that are 65 and older that are not disabled. The minimum benefit is $577, and the maximum benefit for a single recipient is $794 a month.
People that qualify for SSI gain automatic Medicaid eligibility, and there is no waiting period at all.
Special Needs Planning
As estate planning attorneys, SSI is of interest to us because we help clients that want to provide inheritances to loved ones with disabilities that are relying on need-based benefits.
A supplemental needs trust can be established to respond to this type of situation. If you create and fund the trust, you would be the grantor, and the person that you are going to help would be the beneficiary of the trust.
When you are drawing up the trust, you would designate a trustee to serve as the administrator. There are professional fiduciaries that provide trustee services, and if you know someone personally that is willing and capable, you can go in that direction.
The beneficiary would have no direct access to the assets in the trust. However, the trustee could use the resources to provide many different goods and services for the beneficiary without impacting benefit eligibility.
Medicaid Estate Recovery
Medicaid can attach property that remains in the estate of the beneficiary after they pass away. If you establish the trust for the benefit of someone else, you can name a successor beneficiary to assume ownership of the remainder. Medicaid would not be able to touch the assets.
On the other hand, a person with a disability that receives a windfall could establish a first party or self-settled supplemental needs trust. The trustee would have the same latitude to make them more comfortable, but the assets would be available to Medicaid during the recovery phase.
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