My Services: SSI

Reducing Assets to Qualify for the SSI Program

To qualify for SSI benefits at age 18, your child cannot have more than $2,000 in assets in his own name.

Maybe you have been diligently saving for your child and accumulating money in UTMA accounts, 529 plans, joint accounts, or even your child's own name. Generous grandparents might have been buying Savings Bonds or setting up bank accounts under your child's Social Security number.

While it's good for your child to have a nest egg, these savings strategies can cause problems when your child turns 18 and you want him to qualify for SSI. To get SSI, a person can't have more than $2,000 in resources. Except for 529 plans (which the SSI program excludes) and UTMA accounts (which are not considered to be your child's asset until age 21), all  assets under an applicant's Social Security number are counted toward his eligibility.

So how can your child qualify if he has more than $2,000?

Closing the accounts and putting the assets in your own name won't work. There is a waiting period of up to 36 months to get benefits, depending on the amount transferred.  But these three strategies may work:

  • Spend the resources. If the amount is relatively small (say, $10,000 or less), you can spend the money on items your child could use and enjoy, such as summer camp, recreation programs, a club membership, lessons, and special therapies. Of course, the money can only benefit your child. You can't pay for a Florida vacation for the entire family. And there is another caveat:  If your child is under age 18, Social Security says you can't use the money to pay for basic support items like food, shelter, and medical care. According to Social Security, you—the parent—are legally responsible to provide these items for your minor child.
  • Buy "non-countable" resources. You can purchase items that Social Security does not count toward the $2,000 resource limit, such as a computer, software, furniture, TV, clothes, bicycle, skis, and recreational items. A person can own these kinds of personal items, regardless of their aggregate value, and receive SSI.
  • Put the money in a special needs "payback" trust. If your child has more money than he can comfortably spend, you can put the money in a special needs trust. But you can't use the special needs trust that your attorney prepared as part of your estate plan. To satisfy Social Security, you need a "payback" trust (also called a "d4A" trust or "OBRA '93" trust). "Payback" means that when your child dies, the state can claim any money that is left in the trust to offset the Medicaid services your child received while he was alive. By contrast, the special needs trust that your estate planning attorney prepared probably says that your children without disabilities or other family members can receive the remaining money.

If you are considering using a special needs "payback" trust, be sure to work closely with an attorney who specializes in this area. Social Security has some highly technical rules about setting up the bank account—so even if the wording in your trust is flawless, your child's application could get kicked out because you did not set up the bank account properly.

When you are dealing with a large government agency, you need to follow their rules to the letter. Your don't want to make a mistake and cost your child any benefits.

 

 

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