Posts Tagged ‘Supplemental Security Income’

New Law Penalizes Gifts By SSI Applicants But Permits Trusts


On December 14, 1999, President Clinton signed the Foster Care Independence Act of 1999. While most of the new federal legislation deals with foster care programs, it also changes the law and practice regarding so-called “Special Needs” trusts.

The Supplemental Security Income (SSI) program, administered by but separate from Social Security, helps guarantee a minimum income for disabled Americans. SSI provides a maximum of $512 per month (beginning in January, 2000) to disabled individuals who do not qualify for Social Security Disability Insurance. Because SSI is a welfare program, however, it requires that the recipient not have significant assets or income available from other sources.

Under prior law it was possible for most disabled persons to qualify for SSI fairly easily, however. For many years the SSI program did not impose a penalty on asset transfers by applicants; in other words, a disabled individual could satisfy the asset eligibility limitations by simply giving away most of his or her property.

In practice, this opportunity was usually exercised in one of two common ways—either the prospective SSI recipient gave assets to family members (who could be counted on to use the money for the original owner’s benefit), or the recipient established a trust for his or her own benefit and transferred the assets into that trust. These trusts—usually called “Special Needs” or “Supplemental Benefits” trusts—could be used to pay for the SSI recipient’s needs other than necessities. In other words, the trust could take care of everything but food, clothing and shelter, while SSI income could be used to pay for those items.

Because SSI recipients automatically qualify for Medicaid coverage, even a fairly wealthy disabled individual could secure medical care from the federal welfare system by use of a Special Needs trust or an outright gift of assets. The new law changes the rules permitting such a transfer. Beginning immediately, a gift of assets by an SSI applicant will disqualify the applicant from receiving benefits for a period of time based on the size of the gift. Transfers into most trusts will simply be ignored—if there is any circumstance in which the trust assets or income can be used for the benefit of the SSI applicant, it will be treated as an available resource (or income, as the case may be).

This does not end the usefulness of Special Needs Trusts, however. An exception in the new law expressly permits transfers of assets into such a trust—but only if the trust includes a provision reimbursing the government for any benefits received by the beneficiary upon the beneficiary’s death. Only trusts established after January 1, 2000, must include such “pay-back” provisions, so pre-existing trusts should not be affected by the new law.

New Figures Released For 1996 ALTCS Eligibility


In 1996, nursing home residents will be permitted to earn up to $1410 per month and still qualify for subsidized care through the Arizona Long Term Care System. That is the most significant of a collection of new eligibility and program numbers now available for next calendar year.

Some of the new numbers, and the significance of each:

Income Cap–the income eligibility cap for ALTCS will increase from 1995’s $1,374 to $1,410 per month. This figure is three times the maximum Supplemental Security Income (SSI) benefit available from the federal government; that benefit increases to $470 with January benefit checks.

The importance of the Income Cap has diminished in the past two years with the advent of “Miller” Trusts. Anyone with income in excess of the eligibility amount can be made eligible by the simple expedient of creating such a trust (but see the discussion below for those with even higher incomes).

Average Cost of Care–the calculation of the average cost of nursing home care in Pima, Maricopa and Pinal Counties increases to $2,651.42. Gifts made by ALTCS applicants within the three years before application must be divided by this figure to determine the number of months of ineligibility caused by the transfer. In addition, under current ALTCS rules, individuals with income over this amount will be unable to establish “Miller” Trusts to secure eligibility.

In counties outside the urban center of Arizona, the Average Cost of Care will increase to $2,530.67. Both new numbers are increases of more than $100 per month. Neither new number should be confused with the real cost of nursing home care in the community.

CSRD–both the maximum and minimum “Community Spouse Resource Deduction” will increase as well. Couples with less than $15,348 in available assets will be allowed to keep all their resources and still qualify for ALTCS eligibility. Couples with more than $76,740 will be permitted to keep only half of that (or $38,370). The bottom number is an increase of about $400; the cap reflects an increase of almost $2,000.

Other figures, including the Minimum Monthly Maintenance Needs Allowance of $1,254 and the Maximum Monthly Maintenance Needs Allowance of $1,919 will be updated on July 1.

1996 ALTCS Eligibility Figures

Income Cap $1,410
Asset Limitation* $2,000
Personal Needs Allowance $70.50/mo.
Minimum CSRD $15,348
Maximum CSRD $76,740
Minimum MMNA* $1,254
Maximum MMNA* $1,919
Average Cost of Care (Pima, Maricopa, Pinal) $2,651.42
Average Cost of Care (All other Counties) $2,530.67
Burial Limitation* $1,500
Lookback Period 36 months (Until 8/10/96 30 mos)
Lookback (Trusts) 60 months

Arizona White House Conference on Aging


As mentioned in previous Elder Law Issues, the Arizona White House Conference on Aging held in Phoenix last month dealt with issues facing the full White House Conference on Aging when it meets in May. Arizona’s delegation dealt with several issues expected to dominate the national aging agenda.

Financial Security

A person nearing age 65 in this last decade of the twentieth century has a life expectancy of 85. The life expectancy for the average adult at the end of the nineteenth century was 47. Improvements in health, disease control and lifestyles have made it possible for today’s elderly to expect much longer and more productive lives.

In 1950, the average Social Security benefit was $43.86. By the 1993, the average monthly benefit for workers was $656. For widows and widowers, the average benefit was $624 in 1993.

Although Social Security was originally intended as a supplement to private retirement sources rather than as the principal source of retirement income, the result has been the opposite. Half of today’s retirees receive no pension benefits other than Social Security, and of those with second pensions nearly 60% get less than $100 per month from those sources.

Nationally, Social Security benefits provide about 40% of retiree income. Accumulated assets provide 25%, earnings 18%, and private pensions just 14%. Americans have never been good savers, and sixty years of Social Security seem to have discouraged our already low rates of saving.

As annual federal spending nears $1.5 trillion in 1995, concern mounts about the rising share of the national budget dedicated to Social Security and other “entitlements.” Unless changes are made in the way we fund Social Security, the entire budget will be required just to make the payments on Social Security and the national debt by 2011.

Some changes have already begun. The usual retirement age will raise from 65 to 67 in three decades. Some taxes are now collected on Social Security benefits for the wealthiest recipients, with the proceeds going into the Social Security system. But further changes will be required to prevent bankruptcy of the fund by the year 2029.

Meanwhile, the poorest recipients of federal largesse remain at levels inadequate to provide even basic needs. Over 1.5 million persons age 65 and above qualify for Supplemental Security Income because they receive total income (from all sources) of $458 or less.

In an era of budget constraints and shortages, the need to redesign Social Security benefits and taxes seems inevitable. The obvious challenge will be to do so in a fashion that preserves the value of the program.

[Next issue: Long Term Care]

©2020 Fleming & Curti, PLC