Who May Open an ABLE Account?

ABLE accounts are a great new savings tool for individuals with disabilities, but not all people with disabilities are eligible to open these accounts. The rules for determining eligibility are for the most part uncomplicated, although one requirement is proving controversial.

Created by Congress via the passage of the Achieving a Better Life Experience (ABLE) Act in 2014 and modeled after popular 529 college savings accounts, ABLE accounts allow people with disabilities and their families to save up to $100,00.00 for disability related expenses without jeopardizing their eligibility for Medicaid, Supplemental Security Income (SSI), and other government benefits.

Under the ABLE Act, two categories of people are eligible to set up accounts. The first category is straightforward: If you are a recipient of SSI and Social Security Disability Insurance (SSDI), you are automatically eligible because you have already been determined to to be “disabled.”

The second category is for people ineligible for these programs, either because they have too much income or assets, in the case of SSI, or they lack a work history, in the case of SSDI. These individuals must obtain a certification, from a licensed physician, attesting that they meet the Social Security Act’s disability definition, which is as follows:

“The individual has a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, or is blind . . .”

The actual legislation provides almost no further guidance concerning these disability certifications. However, in subsequent proposed regulations released in June 2015, the Internal Revenue Service (IRS) elaborated that certifications must state the person’s diagnosis, detail the limitations on the person’s daily living activities, and certify that the disability began before the person turned 26. So, to be clear, ABLE account holders can be older than age 26, but they must have first experienced their disability before their 26th birthday.

This latter requirement — which also applies for SSI and SSDI beneficiaries who wish to open ABLE accounts — is perhaps the law’s most controversial element. For many disability advocates, reforming this provision has become a top legislative priority. Versions of the ABLE Age Adjustment Act, a bill to raise the age from 26 to 46, have been introduced in both the Senate and House each of the past two legislative sessions.

After the Senate Finance Committee passed two unrelated ABLE reform bills in October 2016, a coalition of 82 disability rights groups wrote a letter to senators opposing the bills’ passage if the ABLE Age Adjustment Act wasn’t included in the package. As a result, none of the three ABLE reform bills has yet passed.

The IRS regulations also provide further guidance on situations where a person’s eligibility changes, such as when the person’s disability no longer exists, or disappears but later resurfaces. These regulations have not been finalized and thus are not legally binding, although the IRS has stated that “[u]ntil the issuance of final regulations, taxpayers and qualified ABLE programs may rely on these proposed regulations.”

SSI’s Thorny Rules for “Deeming” a Parent’s Income to a Child

Supplemental Security Income (SSI) is a federal program that helps people with disabilities and very low incomes pay for food, clothing and shelter. But even more valuable than the SSI benefit itself is that, in most states, a beneficiary who receives even $1 from the program also qualifies for Medicaid health coverage.

To qualify for SSI benefits, the beneficiary’s income and assets cannot exceed certain limits. But the Social Security Administration (SSA) doesn’t look at just the child’s income and assets, but also may consider a portion of the parent’s income and assets as if they were available to the child. This is called “deeming.”

The logic behind the deeming rule is that parents have a legal duty to support their child, and because parents’ income and assets would be legally available to support that minor child, their income and assets may be factored in the determination of the child’s needs for purposes of SSI eligibility.

Unmarried children under the age of 18 seeking SSI benefits may be deemed with the income and assets of any parent with whom the child lives, and even a stepparent if the stepparent and parent live together. If the parents are divorced and the child lives with only one parent, the child is not deemed with the income or assets of the parent living in another household. If a parent receives her own SSI benefits, or if the child does not live with either parent — for example, a child lives with a stepparent or grandparents and no parent lives in the home — there is no parental deeming. The amount of deeming to the child is reduced if the child is living in a household with other children under the age of 21. Once a child reaches the age of 18, even if she is living with a parent, deeming of parental income ceases and only the child’s own income and assets are counted in determining SSI eligibility.

The SSA defines “income” as both “earned” income, like wages, and “unearned” income, like retirement and investment income, unemployment benefits, and gifts. Importantly, Social Security benefits are counted as unearned income. For example, in 2017 a child with special needs living with one parent earning less than $3,065 a month in earned income would qualify for SSI. If all the parent’s income is unearned, the monthly income limit would be $1,510. “Income” also includes non-cash items such as the value of food and housing one receives from others. These are more commonly known as “in-kind” items of income, and are considered unearned income.

Assets, or what SSA refers to as “resources,” include things like bank accounts, cash on hand, and investments. However, not all assets are counted. For example, a parent’s home, automobile, and most retirement accounts are excluded from counting. But while a retirement account itself may not be counted, any payment from the account to the parent is countable income and thus subject to being deemed to the child.

The calculation of the deeming of income is complex. The living arrangement of the child makes all the difference and it is not one-size-fits-all. SSA provides an annually updated Deeming Chart to help families make this calculation. However, there are many exceptions that would cause the chart not to apply to a particular family’s situation, one exception being if the family has a mix of earned and unearned income, which many do. A family’s best resource is the procedure, or formula, that SSA uses in the deeming calculation, and this can be found on SSA’s website.

If you have a minor child with special needs, SSI benefits – and by extension, Medicaid coverage — may be available to your child. It may be worth crunching numbers and reviewing SSA’s charts and formulas to see if your child may qualify. And if your child is already receiving SSI benefits, it is important to understand the basic workings of these deeming rules so that you do not inadvertently jeopardize those benefits.

But, as you now realize if you have read through the above, the rules are complicated. Your special needs planner can help you sort through them and determine if your child might qualify for SSI.

Can the Beneficiary of a Special Needs Trust Change the Trustee?

The beneficiary of a special needs trust can never control or access trust funds – that is the job of the trustee. A common fear among beneficiaries or their families is that the trustee may not do what’s in the beneficiary’s best interests and that, if this happens, the beneficiary may not be able to do anything about it.

Choosing the right person to serve as trustee is one of the most important and difficult issues in creating a special needs trust. If you haven’t chosen wisely, problems can emerge. The trustee might be incompetent in administering the trust and thus jeopardize the beneficiary’s public benefits, be unresponsive to the beneficiary’s needs, or even take improper fees from the trust. Or, the beneficiary and the trustee simply might not get along. Can the beneficiary of a special needs trust do anything about the actions, or inactions, of the trustee?

The short answer is “yes.” First, the law generally charges a trustee of a special needs trust with the usual duties of any trustee, plus other specific obligations. Usually, the trustee has an affirmative duty to inquire into the needs and welfare of the beneficiary, to communicate with the beneficiary and other involved individuals, and to make certain that the beneficiary maintains eligibility for public benefit programs.

If the beneficiary has grounds to believe that the trustee is not acting according to the law, the beneficiary generally has the right to petition a court to remove the trustee and bring related actions to address the trustee’s conduct. Some states allow out-of-court ways to initiate a change of trustee. For example, in Pennsylvania, the beneficiary, or his or her representative, can draft a settlement agreement with the trustee to replace that trustee. As long as the change in trustee does not violate the essential purpose of the trust, the document is binding without going to court. However, these procedures, whether in or out of court, can be time-consuming and costly, and in some cases, merely “not getting along” with the trustee may not be enough to justify removal. Moreover, the beneficiary may not have the wherewithal to initiate the action or the legal capacity to do so. Generally, in court proceedings, the beneficiary must be able to understand what’s going on and assist in the legal representation.

To avoid these types of obstacles, a special needs planner may draft the trust document to include mechanisms for removing a trustee (including defining reasons for trustee removal). The trust can also include provisions for trustee resignation, the appointment of successor trustees, and the appointment of a “trust protector.” The trust protector is a person or entity chosen by the person setting up the trust to keep an eye on the trustee’s performance, usually with the right to remove the trustee and appoint a new one. Even though there is no need to anticipate trustee misconduct, appointing a trust protector is a recommended way to provide an extra level of protection to the beneficiary. However, the rights and procedures for changing trustees vary from state to state. Therefore, the best way to build in protections that allow for the replacement of a trustee gone bad is to consult with a qualified special needs planner.

What Expenses Can ABLE Accounts Pay For?

In passing the Achieving a Better Life Experience (ABLE) Act in 2014, Congress created a new way for potentially millions of people with special needs to save for disability related expenses without jeopardizing their eligibility for federal public benefit programs.

In fact, these savings plans, popularly known as ABLE accounts, may be used for an even broader array of products and services than many beneficiaries may realize – including housing expenses, bus fare, financial management services or even, potentially, a smart phone.

The ABLE Act itself defines “qualified disability expenses” as “expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary.” It then goes on to list a range of categories of potential uses for funds set aside in ABLE accounts, including:

“Education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary under regulations and consistent with the purposes of this section.”

In subsequent proposed regulations released in June 2015, the Treasury Department and Internal Revenue Service (IRS) reiterated that the term “qualifying disability expenses” should be “broadly construed” to include any benefit related to the designated beneficiary “in maintaining or improving his or her health, independence, or quality of life.”

This means that there is no requirement that the benefit be medically necessary, such as is the case when determining health care services covered by Medicaid, or that it benefit no one but the designated individual. As an example, the regulations specify that a smart phone could qualify as a covered expenses, provided that it serves as “effective and safe communication or navigation aid for a child with autism.”

Originally, the proposed regulations would have also required states to establish safeguards for ensuring that ABLE funds are only used for qualifying expenses, presumably by requiring beneficiaries to obtain pre-approval before distributing funds. In response to a backlash from disability advocates, many who feared that such requirements would be unduly burdensome, the Treasury Department and IRS rescinded this requirement in a notice issued November 2015 So as things stand now, you don’t need to get approval to withdraw funds and pay for a qualified disability expense.

The Obama administration, however, never issued final regulations, although the IRS has stated that “[u]ntil the issuance of final regulations, taxpayers and qualified ABLE programs may rely on these proposed regulations.”

To protect against future inquiries from the IRS, the ABLE National Resource Center recommends that beneficiaries maintain detailed records of expenses paid for by ABLE account assets, as well as how these expenses relate to their disabilities in case the expenditures are ever questioned by the IRS. Misuse of ABLE account funds could result in tax penalties and possible loss of public benefits.

For help in setting up an ABLE account or to find out whether something you want to use the account for is a qualified disability expense, contact your special needs planner.

Can I Apply For Disability With Spinal Stenosis?

Spinal stenosis is a narrowing of the open spaces within your spine, which can put pressure on your spinal cord and the nerves that travel through the spine to your arms and legs. Spinal stenosis occurs most often in the lower back and the neck.

Spinal stenosis symptoms are often characterized as:

  • Developing slowly over time, or slow onset
  • Coming and going, as opposed to continuous pain
  • Occurring during certain activities (such as walking for lumbar stenosis, or biking while holding the head upright) and/or positions (such as standing upright for lumbar stenosis)
  • Feeling relieved by rest (sitting or lying down) and/or any flexed forward position.

The goals of treatment for spinal stenosis are to relieve pain, numbness, and weakness in the legs, to make it easier for you to move around, and to improve your quality of life.

Treatments include:

  • Home treatment, such as exercising, using over-the-counter pain medicines, and losing extra weight.
  • Prescription medication.
  • Physical Therapy;
  • Epidural steroid injections;
  • Surgery, although most cases don’t need this treatment.

You may meet the criteria for disability if you meet the requirements of one of Social Security’s official disability listings.  Social Security publishes the criteria for a number of common illnesses to qualify for disability, and if you meet the criteria for your particular condition, you automatically qualify for benefits.

The listing for Spinal Stenosis is 1.04:

1.04 Disorders of the spine (e.g., herniated nucleus pulposus, spinal arachnoiditis, spinal stenosis, osteoarthritis, degenerative disc disease, facet arthritis, vertebral fracture), resulting in compromise of a nerve root (including the cauda equina) or the spinal cord. With:

A. Evidence of nerve root compression characterized by neuro-anatomic distribution of pain, limitation of motion of the spine, motor loss (atrophy with associated muscle weakness or muscle weakness) accompanied by sensory or reflex loss and, if there is involvement of the lower back, positive straight-leg raising test (sitting and supine);

OR

B. Spinal arachnoiditis, confirmed by an operative note or pathology report of tissue biopsy, or by appropriate medically acceptable imaging, manifested by severe burning or painful dysesthesia, resulting in the need for changes in position or posture more than once every 2 hours;

or

C. Lumbar spinal stenosis resulting in pseudoclaudication, established by findings on appropriate medically acceptable imaging, manifested by chronic nonradicular pain and weakness, and resulting in inability to ambulate effectively, as defined in 1.00B2b.

If you do not meet or equal the above listing, you can still qualify for disability benefits if the impairment prevents you from doing your past relevant work or other work based on your residual functional capacity that exists in significant numbers in the national economy.

Please call our office at (508) 421-4610 if you have any questions about applying for disability with spinal stenosis or the application process in general.

Am I Eligible For Disability With Sciatica?

What is sciatica?  Sciatica is a symptom that consists of pain caused by irritation of the sciatic nerve.  You might feel weakness, numbness, or a burning or tingling (“pins and needles”) sensation down your leg, possibly even in your toes.  Sciatica might be a symptom of a “pinched nerve” affecting one or more of the lower spinal nerves.

What Causes Sciatic Nerve Compression?

Several spinal disorders can cause spinal nerve compression and sciatica or lumbar radiculopathy. The 6 most common are:

  • a bulging or herniated disc
  • lumbar spinal stenosis
  • spondylolisthesis
  • trauma
  • piriformis syndrome
  • spinal tumors

Although it may be difficult to qualify for disability benefits with sciatica alone, most times the sciatica is caused by a condition listed above and an application is filed due to a combination of several conditions.  In addition, claimants will want to document their pain and any other limitations caused by these back injuries when applying for benefits.

You may qualify for disability benefits if you are not performing substantial gainful activity and if the impairment prevents you from doing your past relevant work or other work that exists in significant numbers in the national economy.

Why Life Insurance Is Important For Families With Special Needs

Although financial planning is important for every family, families with special needs family members may require more attention than the average family to maintain a stable lifestyle.  Planning for a family with a disabled child or other member with special needs requires traditional planning plus additional strategies to ensure your family member is financially secure and their needs are met.

Planning is critical to ensure your child is financially secure for their lifetime, especially after a parent is gone.  Life insurance is commonly used to provide the necessary funds to ensure these goals are met.  Care must be taken to make sure the appropriate type of policy is used.  Second-to-die policies are often used during this planning.  Care must also be taken to ensure beneficiary designations are appropriate and special needs trusts are established especially if eligibility for government benefits must be maintained.

Can I Qualify For Disability With Meniere’s Disease?

Eligibility for disability due to Meniere’s disease is possible if the symptoms are severe enough to impact your ability to do work related activities. According to the American Academy of Otolaryngology-Head and Neck Surgery, Ménière’s disease describes a set of episodic symptoms including vertigo (attacks of a spinning sensation), hearing loss, tinnitus (a roaring, buzzing, or ringing sound in the ear), and a sensation of fullness in the affected ear. Episodes typically last from 20 minutes up to 4 hours.  As the symptoms can affect all types of work, even sedentary work, Social Security Administration (SSA) lists Meniere’s Disease as a listing to qualify for benefits.  Listing 2.07 applies to Meniere’s Disease:

2.07      Disturbance of labyrinthine-vestibular function (Including Ménière’s disease), characterized by a history of frequent attacks of balance disturbance, tinnitus, and progressive loss of hearing.  With both A and B:

A.  Disturbed function of vestibular labyrinth demonstrated by caloric or other vestibular tests; and

B.  Hearing loss established by audiometry.

If you do not meet or equal the above listing, you can still qualify for disability benefits if you are not performing substantial gainful activity and if the impairment prevents you from doing your past relevant work or other work that exists in significant numbers in the national economy.

 

 

Social Security Benefits For A Surviving Spouse

If you are receiving disability under the Social Security Disability Insurance (SSDI) program, your surviving spouse may be entitled to receive benefits on your record if you pass away.  The monthly benefit would be a percentage of the decedents Social Security benefit.  According to the Social Security Administration (SSA), the percentages allowed for the decedent’s dependents are as follow:

  • Widow or widower, full retirement age or older — 100 percent of the deceased worker’s benefit amount;
  • Widow or widower, age 60 to full retirement age — 71½ to 99 percent of the deceased worker’s basic amount;
  • Disabled widow or widower aged 50 through 59 — 71½ percent;
  • Widow or widower, any age, caring for a child under age 16 — 75 percent.
  • A child under age 18 (19 if still in elementary or secondary school) or disabled — 75 percent.
  • Dependent parent(s) of the deceased worker, age 62 or older:
    • One surviving parent — 82½ percent.
    • Two surviving parents — 75 percent to each parent.

If you are the divorced spouse of a worker who dies, you could get benefits just the same as a widow or widower, provided that your marriage lasted 10 years or more.  Also, note that if you remarry after you reach age 60 (age 50 if disabled), the remarriage will not affect your eligibility for survivors benefits.

In addition to the above benefits, a surviving spouse may receive a special lump-sum death payment of $255 if they were living in the same household or:

  • were already receiving benefits on the worker’s record; or
  • became eligible for benefits upon the workers death.

 

How Failing To Seek or Continue With Treatment Could Hurt Your Disability Case

Disability benefits are available for workers with impairments that preclude substantial gainful activity (SGA) for at least twelve months.  To qualify, an applicant for benefits must prove that they have a severe impairment that impairs their ability to work.  During the evaluation process, Social Security Administration (SSA) will review medical records, treatment notes and any other evidence that may assist with making a determination in regards to the ability or inability to work.  For obvious reasons, a claimant’s lack of treatment may cast doubt on the severity of injuries or limitations affecting work capacity.  Similarly, failing to follow prescribed treatment could negatively affect a claimant’s disability decision.

According to SSA, a failure to follow prescribed treatment determination may be made only where all of the following conditions are met:

  1. The evidence establishes that the individual’s impairment precludes substantial gainful activity (SGA) (or, age-appropriate activities for SSI children).
  2. The impairment has lasted or is expected to last for 12 continuous months from onset of disability or is expected to result in death;
  3. Prescribed treatment is clearly expected to restore capacity to engage in SGA (or gainful activity, as appropriate).
  4. The evidence of record discloses that there has been refusal to follow prescribed treatment.

There are certain circumstances where failing to follow prescribed treatment may be excused.  Acceptable justifications for failing to follow prescribed treatment include, but are not limited to the following:

  1. The specific medical treatment is contrary to the established teaching and tenets of the individual’s religion.
  2. The individual is unable to afford prescribed treatment, which he or she is willing to accept, but for which free community resources are unavailable.
  3. An individual’s fear of surgery is so intense that it is a contraindication for surgery.
  4. The prescribed treatment is cataract surgery for one eye, when there is severe visual impairment of the other eye that cannot be improved through treatment.
  5. Major surgery was previously performed with unsuccessful results and additional major surgery is prescribed for the same impairment.
  6. The treatment because of its magnitude (e.g., open heart surgery), unusual nature (e.g., organ transplant), or for some other reason is very risky.
  7. The treatment involves amputation of an extremity, or a major part of an extremity.
  8. An individual with a severe mental impairment is clearly unable to understand the consequences of failing to follow prescribed treatment.
  9. A treating source advises against the treatment prescribed for the currently disabling condition.