By Karen Mariscal
Financial Planning for Your Special Needs Child: SSI and SSDI
Parents of children with special needs should understand the U.S. government’s two different income support programs: SSI (Supplemental Security Income) and SSDI (Social Security Disability Insurance). These programs both provide cash to disabled people who cannot be gainfully employed, via monthly checks. There is a lot of confusion about the difference between the two programs. Although SSI and SSDI both provide supplemental income to disabled people, and have similar names, they are completely different programs.
What Is the Same
SSI and SSDI are both administered by the Social Security Agency, and use the same criteria to determine whether a person is disabled. A child is considered disabled if he has a medically determinable physical or mental impairment that results in marked and severe functional limitations, and that has lasted (or is expected to last) for at least one year or result in death. An adult is considered to be disabled if she is not capable of substantial gainful employment. Ordinarily a disabled adult recipient must earn less than $1,080 a month to be considered disabled.
Everything Else is Different
SSI is needs-based, SSDI is not: SSI is only for those who have little or no money; SSDI operates more like insurance proceeds, payable regardless of your wealth or income. SSI is a monthly stipend provided to elderly, blind, or disabled persons based on financial need. It is only available to disabled individuals who have very limited income and assets (the recipient can have no more than $2,000 -- $3,000, if married -- in countable assets).
SSDI, on the other hand, has no income or asset limits – it is based on what you (or sometimes your adult child) paid into the system. Your adult child can receive SSDI based on your work record if you are older and collecting Social Security benefits. Your disabled child will receive half of whatever your monthly payment is as of your full retirement age, over and above what you receive. For example, if you are collecting $2000/month in Social Security, your disabled child will receive an additional $1000/month. Some disabled adult children can also receive SSDI based on their own work record, if they have sufficient work credits.
The Benefits: Another main difference between the two programs is the size of the benefit received and the way that benefit is calculated. The SSI benefit is a fixed amount. For 2016, the federal benefit for an individual who is living with parents is $488.67 per month, and in Massachusetts there is an additional state supplement of $87.58/month, for a total of $576.25 per month. The SSI benefit is reduced dollar for dollar (with some exceptions) for any other income the individual may receive after the first $20 (cash, SSDI, dividends, etc.). This means that once an SSI recipient's income reaches a certain level, his SSI benefit will come to an end. An SSDI benefit, on the other hand, is not affected by the recipient’s other income.
Both SSI and SSDI recipients may receive government-funded health care based on their disability. SSI recipients automatically get health care coverage through MassHealth (no need to apply separately). SSDI recipients obtain health care through the Medicare program, which does not offer the same range of services as MassHealth. SSDI recipients are automatically covered by Medicare after two years of receiving SSDI. SSDI recipients whose incomes are below the SSI benefit amount can also qualify for SSI and receive both Medicare and MassHealth. This is called dual eligibility.
For SSI, a parent’s income and assets are considered the child’s income and assets until the child turns 18, and therefore the parents’ wealth affects the child’s eligibility for SSI. Upon reaching age 18, a disabled person is only considered to own what is in her own name – even if she is still living with her parents – and at that time may qualify for SSI based on her own resources and income.
For SSDI, adults with disabilities may begin to receive SSDI payments (paid on a parent's Social Security earnings record) when their parent is deceased or begins to collect Social Security retirement or disability benefits. If they are already receiving SSI, it should convert to SSDI automatically. Also, if the disabled person is able to work and earn the requisite credits, they can collect SSDI based on their own earnings. Although the amount of the SSDI payment may be small (less than SSI), it is sometimes worth doing this in order to obtain coverage from Medicare (after receiving SSDI for two years).
To learn more about SSI and SSDI for your child with special needs, contact Karen B. Mariscal at KBM@Margolis.com.