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In an article about substitute decision making, we discussed your goal of obtaining sufficient decision-making authority to advocate for your child while imposing the least restrictions on your child’s legal autonomy. Now, we will discuss your child’s long-term government benefits goals.
A quick caveat: Some parents don’t like the idea of government benefits. They may be thinking to themselves, but I want my child to work and not just get benefits and do nothing. I hope my child will someday become financially self-sufficient. I get it, especially if your child is “high functioning.” Of course, everyone needs meaningful activity of all types, including work.
However, you need to plan for both work and access to benefits for your child. If your child someday becomes financially independent and does not qualify for disability benefits, great. However, you must plan for the possibility your child may need benefits. In later chapters, you’ll learn the rules regarding how much your child can earn and ways to offset those earnings with what Social Security calls work incentives.
Understanding which government benefits your child may be eligible to receive is a daunting task. There are different benefits programs, each with countless pages of regulations. And to complicate matters further, the government benefits your child receives will likely change over time.
To simplify this massively complex area of the law, you must start by comprehending the big picture. Otherwise, you will be lost in a swamp of random details about different benefit programs. In law school, I used a big-picture, forest-and-trees approach to learn complicated subjects.
The first thing I always did when learning a course was to make a mental map of all the major concepts -- the "big trees in the forest" --, and then when I learned new details as the course progressed, I knew which "branches and leaves'' of detail attached to which "big trees." In other words, when learning a subject, I always tried to understand the subject matter context, the geography of the subject matter before I filled in the details.
This chapter explains the conceptual “big trees” of governmental benefits.
Four Primary Government Benefit Programs
The first big-picture concept you must understand is that your child will likely benefit from one or more of four primary government benefit programs. All four of these programs are part of the Social Security Act:
Title II and Title XVIII (Medicare) are based on work history. Title XVI (SSI) and Title XIX (Medicaid) are based on financial need.
Although Title II includes many different benefit programs, we will focus on only two:
This book does not discuss the SNAP Program (food stamps) or housing subsidies.
The Difference Between Title II Benefits and Title XVI (Supplemental Security Income or SSI)
The next big-picture concept is the difference between Title II benefits and Title XVI (Supplemental Security Income or SSI) benefits. I speak to many parents who know that their child receives benefits from the Social Security Administration but do not know which specific benefit or benefits their child receives. And if they don’t know which benefit their child receives, they will not know which rules apply. And if they don't know which rules apply, they do not know how to comply with those rules.
Title II benefits are based on work history. Do you remember getting your first paycheck? Were you surprised the amount you received was smaller than you expected? Those deductions from your paycheck were Federal Insurance Contribution Act (FICA) taxes. Paying FICA taxes is how you invest in Medicare and Social Security. For example, if you pay enough FICA taxes for long enough, you will be entitled to Social Security Retirement Benefits and Medicare.
The two Title II benefits your child will most commonly receive will be Social Security Disability Insurance (SSDI) and/or Childhood Disability Benefits (CDB). We will discuss the eligibility requirements for each benefit program in later chapters.
In contrast to these Title II benefits based on work history, Supplemental Security Income (SSI) is not based on work history. Your child can qualify for SSI even if they have never worked for pay a day in their life or paid a dollar of FICA taxes.
To qualify for SSI, your child must be blind or disabled and financially needy – as defined by Social Security. SSI is a "means-tested" program. For example, if your adult child is determined disabled by Social Security, they cannot own more than $2,000 of countable resources to qualify for SSI.
By contrast, the amount of resources your child owns for Title II eligibility is irrelevant. Why? Because to be eligible for a Title II benefit, someone (your child or you) paid FICA taxes, and paying FICA taxes is like paying an insurance premium. For Title II eligibility, all that matters is someone paid the proper amount of “insurance premiums.” One’s assets don’t matter for eligibility. For example, once you qualify for Social Security Retirement Benefits, you will be eligible to receive a monthly check regardless of how much money you have in your bank and investment accounts.
Another contrast between SSI and Title II benefits is that the SSI payment amount is fixed. For example, in 2023, the full federal benefit rate is $914 per month plus a small state supplement in some states. Your child will receive this fixed amount minus any countable income. In a later chapter, we’ll discuss how Social Security calculates the SSI amount.
In contrast, with Title II benefits such as SSDI or CDB, the amount of the monthly benefit depends on the Wage Earner’s Primary Insurance Amount (PIA). In other words, the size of your child’s SSDI monthly benefit depends on how much your child pays into Social Security over time. Similarly, if a child receives a Childhood Disability Benefit (CDB) based on a parent’s work record, the size of the CDB monthly payment is based on how much the parent paid into Social Security, the insured parent’s Primary Insurance Amount (PIA) (subject to the family maximum amount).
Another big-picture concept you must understand is where the money comes from for the government to pay these cash benefits: Title II benefits are paid from Social Security funds. SSI benefits are paid from general tax revenues. This distinction between the source of the money helps explain how Social Security awards benefits.
How Social Security Awards Benefits and Why Your Child’s Benefits Will Likely Change Over Time
The next big-picture concept you must understand is how Social Security awards benefits and why your child's government benefits will likely change over time. As your child’s circumstances change, your child may transition from one benefit to another.
You do not pick which benefits your child receives; Social Security awards benefits. When awarding benefits, Social Security always pays from Social Security funds first. That makes sense, doesn’t it? Suppose I have paid FICA taxes over my career and am old enough to receive retirement benefits. In that case, Social Security will award me Social Security Retirement Benefits rather than SSI benefits which are paid from general tax revenues.
Social Security also always pays the person the most they are entitled to receive.
If Social Security awards benefits from Social Security funds first, it follows, then SSI is a government benefit of last resort because a person can qualify for SSI without paying FICA taxes. Consequently, when awarding benefits, Social Security checks first to see if the individual has paid into Social Security by paying FICA taxes.
Here’s an abbreviated version of how Social Security prioritizes benefits:
Note: Social Security calls an individual claiming a disability a claimant.
Examples Showing How Benefits Change Over Time
Bill's Government Benefits Journey
Bill is an 18-year-old with Down Syndrome.
Bill cannot receive a Title II benefit because he has no work record. And Bill cannot receive a Title II Childhood Disability Benefit (CDB) based on his parents’ work records because 1) Neither of Bill’s parents is disabled and receiving SSDI, 2) Neither of Bill’s parents is receiving Social Security Retirement benefits, and 3) Bill’s parents have not died fully insured. (We’ll discuss CDB benefits in a later chapter.)
So, Bill starts his government benefits journey by qualifying for SSI. Once Bill qualifies for SSI, he receives three important benefits:
Bill starts working and slowly starts earning more money. Bill is paying FICA taxes. He is now paying into Social Security. Bill applies for SSDI before the quarter he turns age 24. He has six credits in the prior 12-quarter period. As a result, he qualifies for Social Security Disability Insurance (SSDI), a Title II benefit, based on his work record. Since Social Security always pays benefits out of Title II Social Security funds first, Bill transitions to SSDI.
Bill is entitled to monthly SSDI payments of $600. In 2023 the SSI federal monthly cash benefit is $914. Nonetheless, Social Security always pays from Social Security Funds first. So, Bill will start receiving the $600 monthly SSDI cash payment (there’s a 5-month waiting period before one receives the first SSDI benefits payment). That doesn’t seem right, does it? Bill received a $914 SSI monthly payment, and now he is receiving less –a $600 SSDI monthly payment.
Congress agrees that a “disabled” person should receive a minimum monthly amount to survive. So, Bill will first receive $600 of SSDI per month, and the remainder, up to $934, will be an adjusted SSI payment. Bill will receive both SSDI and SSI --concurrently.
Why does Bill receive a total of $934 rather than $914? It has to do with Social Security’s calculation of unearned income. When calculating how much SSI Bill should receive in addition to his SSDI monthly payment, Social Security starts with the $914 SSI federal benefit rate (for 2023) and subtracts Bill’s countable unearned income. Bill’s countable unearned income is $600 (his SSDI monthly amount) minus $20 (the General Unearned Income Exclusion) equals $580. $914 (the federal benefit rate for 2023) minus $580 (Bill’s unearned income) equals $334. Therefore, Bill concurrently receives $600 of SSDI monthly and $334 as an adjusted SSI monthly payment for a total of $934 a month.
After Bill is on SSDI, a Title II disability benefit, for 24 months, he will also qualify for Medicare because when Bill paid FICA taxes, he was also paying into Medicare.
Sally’s Government Benefits Journey
Sally is on the autism spectrum and is nonverbal. Sally lacks total capacity to make her own decisions. Her parents are plenary guardians of the person for her. Sally does not work.
When Sally turns 18, she qualifies for SSI. She also qualifies for Medicaid. Years go by, and then Sally’s mother retires. Sally’s mother starts to receive Social Security Retirement benefits. Since Sally’s disability (as defined by Social Security) began before age 22 and she has not performed substantial gainful activity (SGA), and she is over age 18 and unmarried, Sally transitions from SSI to Childhood Disability Benefits (CDB) based on her mother’s work record.
Sally’s mother receives a monthly Social Security Retirement benefit of $2,000. Since Sally is the only child drawing off her mother’s work record, she will receive the equivalent of 50 percent of her mother’s retirement benefit: $1,000. Because the CDB monthly benefit of $1,000, considered unearned income by Social Security, is greater than $914 (2023 SSI Federal Benefit Rate), Sally loses her SSI. However, according to a special rule, since Sally was forced off of her SSI onto CDB based on her parent’s work record, Sally is permitted to keep her Medicaid eligibility, assuming she keeps her resources below the Medicaid resource limit. After Sally’s mother dies, Sally will receive the equivalent of 75 percent of her mother’s Social Security Retirement Benefit: $1,500, cost-of-living adjusted.
Of course, your child’s government benefits journey may be different. Everyone’s circumstances are different. For example, suppose you have a child with mental illness whose symptoms and treatment did not occur until their mid-twenties. In that case, it’s hard to prove your child was disabled pursuant to Social Social Security’s definition of disability before age 22. If your child is not considered to be “disabled” prior to the age of 22, your child will unfortunately not be eligible for Childhood Disability Benefits (CDB) based on your work record.
Regardless of your child’s circumstances, I hope you find the above examples instructive in understanding the differences between the benefit programs and how and why an adult child with a disability often transitions from one benefit to another.
Your Child’s Long-Term Government Benefits Goal
Of course, the ultimate goal would be for your child to become financially independent. If that’s not attainable, your long-term government benefits goal will likely be for your child to receive the following three government benefits programs:
Eventually, your child may also receive Retirement Benefits.
However, the above goal may not be possible, depending on the circumstances. And, remember, it’s a long-term goal. It will likely take years to play out.
Combining those three government benefits with a special needs trust (see Part III of the book) will safeguard your child's future significantly.
Did you notice that SSI is not part of your child’s long-term government benefit goal? Although SSI will not be your child’s long-term goal, your child will likely start their government benefits journey by receiving SSI.
Do you remember the three-part decision-making process in Part I? Those three steps were 1) Define your goal, 2) Consider the relevant factors, and 3) Act. The following chapters will discuss the many factors about SSI, Title II (SSDI and CDB), Medicare, and Medicaid so that you can act confidently to obtain benefits for your child.
In an article about substitute decision making, we discussed your goal of obtaining sufficient decision-making authority to advocate for your child while imposing the least restrictions on your child’s legal autonomy. Now, we will discuss your child’s long-term government benefits goals.
A quick caveat: Some parents don’t like the idea of government benefits. They may be thinking to themselves, but I want my child to work and not just get benefits and do nothing. I hope my child will someday become financially self-sufficient. I get it, especially if your child is “high functioning.” Of course, everyone needs meaningful activity of all types, including work.
However, you need to plan for both work and access to benefits for your child. If your child someday becomes financially independent and does not qualify for disability benefits, great. However, you must plan for the possibility your child may need benefits. In later chapters, you’ll learn the rules regarding how much your child can earn and ways to offset those earnings with what Social Security calls work incentives.
Understanding which government benefits your child may be eligible to receive is a daunting task. There are different benefits programs, each with countless pages of regulations. And to complicate matters further, the government benefits your child receives will likely change over time.
To simplify this massively complex area of the law, you must start by comprehending the big picture. Otherwise, you will be lost in a swamp of random details about different benefit programs. In law school, I used a big-picture, forest-and-trees approach to learn complicated subjects.
The first thing I always did when learning a course was to make a mental map of all the major concepts -- the "big trees in the forest" --, and then when I learned new details as the course progressed, I knew which "branches and leaves'' of detail attached to which "big trees." In other words, when learning a subject, I always tried to understand the subject matter context, the geography of the subject matter before I filled in the details.
This chapter explains the conceptual “big trees” of governmental benefits.
Four Primary Government Benefit Programs
The first big-picture concept you must understand is that your child will likely benefit from one or more of four primary government benefit programs. All four of these programs are part of the Social Security Act:
- Title II Benefits (Old-Age, Survivors and Disability Insurance or OASDI);
- Title XVI (Supplemental Security Income or SSI);
- Title XVIII (Medicare); and
- Title XIX (Medicaid).
Title II and Title XVIII (Medicare) are based on work history. Title XVI (SSI) and Title XIX (Medicaid) are based on financial need.
Although Title II includes many different benefit programs, we will focus on only two:
- Social Security Disability Insurance (SSDI); and
- Childhood Disability Benefits (CDB).
This book does not discuss the SNAP Program (food stamps) or housing subsidies.
The Difference Between Title II Benefits and Title XVI (Supplemental Security Income or SSI)
The next big-picture concept is the difference between Title II benefits and Title XVI (Supplemental Security Income or SSI) benefits. I speak to many parents who know that their child receives benefits from the Social Security Administration but do not know which specific benefit or benefits their child receives. And if they don’t know which benefit their child receives, they will not know which rules apply. And if they don't know which rules apply, they do not know how to comply with those rules.
Title II benefits are based on work history. Do you remember getting your first paycheck? Were you surprised the amount you received was smaller than you expected? Those deductions from your paycheck were Federal Insurance Contribution Act (FICA) taxes. Paying FICA taxes is how you invest in Medicare and Social Security. For example, if you pay enough FICA taxes for long enough, you will be entitled to Social Security Retirement Benefits and Medicare.
The two Title II benefits your child will most commonly receive will be Social Security Disability Insurance (SSDI) and/or Childhood Disability Benefits (CDB). We will discuss the eligibility requirements for each benefit program in later chapters.
In contrast to these Title II benefits based on work history, Supplemental Security Income (SSI) is not based on work history. Your child can qualify for SSI even if they have never worked for pay a day in their life or paid a dollar of FICA taxes.
To qualify for SSI, your child must be blind or disabled and financially needy – as defined by Social Security. SSI is a "means-tested" program. For example, if your adult child is determined disabled by Social Security, they cannot own more than $2,000 of countable resources to qualify for SSI.
By contrast, the amount of resources your child owns for Title II eligibility is irrelevant. Why? Because to be eligible for a Title II benefit, someone (your child or you) paid FICA taxes, and paying FICA taxes is like paying an insurance premium. For Title II eligibility, all that matters is someone paid the proper amount of “insurance premiums.” One’s assets don’t matter for eligibility. For example, once you qualify for Social Security Retirement Benefits, you will be eligible to receive a monthly check regardless of how much money you have in your bank and investment accounts.
Another contrast between SSI and Title II benefits is that the SSI payment amount is fixed. For example, in 2023, the full federal benefit rate is $914 per month plus a small state supplement in some states. Your child will receive this fixed amount minus any countable income. In a later chapter, we’ll discuss how Social Security calculates the SSI amount.
In contrast, with Title II benefits such as SSDI or CDB, the amount of the monthly benefit depends on the Wage Earner’s Primary Insurance Amount (PIA). In other words, the size of your child’s SSDI monthly benefit depends on how much your child pays into Social Security over time. Similarly, if a child receives a Childhood Disability Benefit (CDB) based on a parent’s work record, the size of the CDB monthly payment is based on how much the parent paid into Social Security, the insured parent’s Primary Insurance Amount (PIA) (subject to the family maximum amount).
Another big-picture concept you must understand is where the money comes from for the government to pay these cash benefits: Title II benefits are paid from Social Security funds. SSI benefits are paid from general tax revenues. This distinction between the source of the money helps explain how Social Security awards benefits.
How Social Security Awards Benefits and Why Your Child’s Benefits Will Likely Change Over Time
The next big-picture concept you must understand is how Social Security awards benefits and why your child's government benefits will likely change over time. As your child’s circumstances change, your child may transition from one benefit to another.
You do not pick which benefits your child receives; Social Security awards benefits. When awarding benefits, Social Security always pays from Social Security funds first. That makes sense, doesn’t it? Suppose I have paid FICA taxes over my career and am old enough to receive retirement benefits. In that case, Social Security will award me Social Security Retirement Benefits rather than SSI benefits which are paid from general tax revenues.
Social Security also always pays the person the most they are entitled to receive.
If Social Security awards benefits from Social Security funds first, it follows, then SSI is a government benefit of last resort because a person can qualify for SSI without paying FICA taxes. Consequently, when awarding benefits, Social Security checks first to see if the individual has paid into Social Security by paying FICA taxes.
Here’s an abbreviated version of how Social Security prioritizes benefits:
- Social Security will first look at the individual’s age. Is the individual old enough (age 62 or older) to receive Social Security Retirement benefits? If yes, then the individual will receive retirement benefits. If no, Social Security will move on to question number two below.
- Is the individual “disabled” according to Social Security’s definition of disability? If yes, can the individual receive a Title II benefit? Can the individual receive Social Security Disability Insurance (SSDI) based on their work record? Can the individual receive a Childhood Disability Benefit (CDB) based on a parent's work record? (People who qualify for a Title II benefit will also be eligible for Medicare after a two-year wait. Two exceptions exist to the two-year delay: People with ALS or end-stage renal disease on dialysis.)
- Finally, suppose the individual is ineligible for any benefits funded by Social Security funds. In that case, Social Security will determine whether the individual can receive SSI, financed by general tax revenues. In some states, individuals will receive a small state SSI supplement once they qualify for federal SSI. In most states, once individuals qualify for SSI, they will also be eligible for Medicaid.
Note: Social Security calls an individual claiming a disability a claimant.
Examples Showing How Benefits Change Over Time
Bill's Government Benefits Journey
Bill is an 18-year-old with Down Syndrome.
Bill cannot receive a Title II benefit because he has no work record. And Bill cannot receive a Title II Childhood Disability Benefit (CDB) based on his parents’ work records because 1) Neither of Bill’s parents is disabled and receiving SSDI, 2) Neither of Bill’s parents is receiving Social Security Retirement benefits, and 3) Bill’s parents have not died fully insured. (We’ll discuss CDB benefits in a later chapter.)
So, Bill starts his government benefits journey by qualifying for SSI. Once Bill qualifies for SSI, he receives three important benefits:
- Bill receives a monthly SSI cash payment. In some states, Bill will also receive a state supplemental SSI payment;
- In most states, if Bill qualifies for SSI, he will also qualify for Medicaid. Medicaid is essential. It pays for medical benefits, services, and programs; and
- Once Bill qualifies for SSI, he has proven he is “disabled” according to Social Security’s definition of disability. Why is that such a big deal? Because it may set up potential future benefits. For example, for Bill to qualify in the future for Childhood Disability Benefits (CDB) under his mother’s or father’s work record, Bill must be considered disabled according to Social Security’s definition of disability before age 22. (We’ll discuss CDB benefits in a later chapter.)
Bill starts working and slowly starts earning more money. Bill is paying FICA taxes. He is now paying into Social Security. Bill applies for SSDI before the quarter he turns age 24. He has six credits in the prior 12-quarter period. As a result, he qualifies for Social Security Disability Insurance (SSDI), a Title II benefit, based on his work record. Since Social Security always pays benefits out of Title II Social Security funds first, Bill transitions to SSDI.
Bill is entitled to monthly SSDI payments of $600. In 2023 the SSI federal monthly cash benefit is $914. Nonetheless, Social Security always pays from Social Security Funds first. So, Bill will start receiving the $600 monthly SSDI cash payment (there’s a 5-month waiting period before one receives the first SSDI benefits payment). That doesn’t seem right, does it? Bill received a $914 SSI monthly payment, and now he is receiving less –a $600 SSDI monthly payment.
Congress agrees that a “disabled” person should receive a minimum monthly amount to survive. So, Bill will first receive $600 of SSDI per month, and the remainder, up to $934, will be an adjusted SSI payment. Bill will receive both SSDI and SSI --concurrently.
Why does Bill receive a total of $934 rather than $914? It has to do with Social Security’s calculation of unearned income. When calculating how much SSI Bill should receive in addition to his SSDI monthly payment, Social Security starts with the $914 SSI federal benefit rate (for 2023) and subtracts Bill’s countable unearned income. Bill’s countable unearned income is $600 (his SSDI monthly amount) minus $20 (the General Unearned Income Exclusion) equals $580. $914 (the federal benefit rate for 2023) minus $580 (Bill’s unearned income) equals $334. Therefore, Bill concurrently receives $600 of SSDI monthly and $334 as an adjusted SSI monthly payment for a total of $934 a month.
After Bill is on SSDI, a Title II disability benefit, for 24 months, he will also qualify for Medicare because when Bill paid FICA taxes, he was also paying into Medicare.
Sally’s Government Benefits Journey
Sally is on the autism spectrum and is nonverbal. Sally lacks total capacity to make her own decisions. Her parents are plenary guardians of the person for her. Sally does not work.
When Sally turns 18, she qualifies for SSI. She also qualifies for Medicaid. Years go by, and then Sally’s mother retires. Sally’s mother starts to receive Social Security Retirement benefits. Since Sally’s disability (as defined by Social Security) began before age 22 and she has not performed substantial gainful activity (SGA), and she is over age 18 and unmarried, Sally transitions from SSI to Childhood Disability Benefits (CDB) based on her mother’s work record.
Sally’s mother receives a monthly Social Security Retirement benefit of $2,000. Since Sally is the only child drawing off her mother’s work record, she will receive the equivalent of 50 percent of her mother’s retirement benefit: $1,000. Because the CDB monthly benefit of $1,000, considered unearned income by Social Security, is greater than $914 (2023 SSI Federal Benefit Rate), Sally loses her SSI. However, according to a special rule, since Sally was forced off of her SSI onto CDB based on her parent’s work record, Sally is permitted to keep her Medicaid eligibility, assuming she keeps her resources below the Medicaid resource limit. After Sally’s mother dies, Sally will receive the equivalent of 75 percent of her mother’s Social Security Retirement Benefit: $1,500, cost-of-living adjusted.
Of course, your child’s government benefits journey may be different. Everyone’s circumstances are different. For example, suppose you have a child with mental illness whose symptoms and treatment did not occur until their mid-twenties. In that case, it’s hard to prove your child was disabled pursuant to Social Social Security’s definition of disability before age 22. If your child is not considered to be “disabled” prior to the age of 22, your child will unfortunately not be eligible for Childhood Disability Benefits (CDB) based on your work record.
Regardless of your child’s circumstances, I hope you find the above examples instructive in understanding the differences between the benefit programs and how and why an adult child with a disability often transitions from one benefit to another.
Your Child’s Long-Term Government Benefits Goal
Of course, the ultimate goal would be for your child to become financially independent. If that’s not attainable, your long-term government benefits goal will likely be for your child to receive the following three government benefits programs:
- Title II - Social Security Disability Insurance (SSDI) or Childhood Disability Benefit (CDB) or some combination;
- Medicare; and
- Medicaid.
Eventually, your child may also receive Retirement Benefits.
However, the above goal may not be possible, depending on the circumstances. And, remember, it’s a long-term goal. It will likely take years to play out.
Combining those three government benefits with a special needs trust (see Part III of the book) will safeguard your child's future significantly.
Did you notice that SSI is not part of your child’s long-term government benefit goal? Although SSI will not be your child’s long-term goal, your child will likely start their government benefits journey by receiving SSI.
Do you remember the three-part decision-making process in Part I? Those three steps were 1) Define your goal, 2) Consider the relevant factors, and 3) Act. The following chapters will discuss the many factors about SSI, Title II (SSDI and CDB), Medicare, and Medicaid so that you can act confidently to obtain benefits for your child.