Will an inheritance to my disabled child receiving SSI and Medicaid interfere with their benefits?
Here is a situation. You have a disabled child and she is receiving SSI. Note that this is Supplemental Security Income (SSI), not Social Security Disability Income (SSDI). SSI is a means-based or means-tested benefit. This means that certain requirements for income and assets musts be met in order to qualify. Medicaid works the same way.
What if your child is to receive an inheritance from a relative? Will this interfere with their SSI and Medicaid benefits?
Yes, the inheritance will probably jeopardize the child’s benefits. Usually, a requirement for these means-based benefits is that the child can have no more than $2,000 in assets. Unless the inheritance is very small, it will push the child’s assets over the $2,000 limit. Exceeding this limit will cause problems in qualifying for both SSI and Medicaid. The child may be dependent on these benefits.
So, what can we do to make sure the child retains their benefits?
Usually, we address this issue by setting up a “Special Needs Trust.” This is like putting the inheritance into a box. Once the money is placed in the box, it is not considered the child’s money. It is owned by the box, the Special Needs Trust.
There are very specific rules for how we reach into that box and pull out money to benefit your daughter. Normally, we cannot replace benefits that are already provided by SSI or Medicaid, but we can do things to supplement.
For example, maybe eyeglasses are not covered or maybe certain dental work is not covered by these government benefits. Then we may be allowed to reach into that box, pull out money to take care of this medical expense.
Remember, there are very specific rules on how one can reach into this type of trust.
This is the quick answer the question. Yes, an inheritance to your child can very well interfere with their SSI and Medicaid benefits. You need to sit down with a lawyer and find out your options. Does it make sense for you to set up a Special Needs Trust? If so, how do you begin the process? These are questions you can have answered when you meet with your lawyer.
If we can help you, feel free to call us at 205-879-2447 or fill out our contact form and we’ll get right back with you.
John G. Watts