Special Needs Planning Services

The main law behind special educations is The Individuals with Disabilities Education Act (IDEA).

It is arguably the most important federal law for children with special needs. The law mandates that all eligible children and youth ages 3 through 21 years old be provided with a “free and appropriate public education” in the “least restrictive environment.”

The Law’s Key Components

There are several key components to the IDEA that every parent hould know about. They are: a free and appropriate public education (FAPE), least restrictive environment (LRE), and individual education program (IEP).

FAPE: The IDEA guarantees every child a free and appropriate public education. States must offer special education and related services to children with disabilities at no cost to the families in a public school setting (whenever possible) that meets the state’s educational standards and conforms to the child’s individual education plan. If a public school cannot offer this, it will offer an alternative, such as the network of educational collaboratives or possibly a private institution, and the government will pay for it.

LRE: Least restrictive environment refers to the educational setting. The IDEA says that “to the maximum extent appropriate” children with disabilities must be educated in a typical classroom with typical peers. Children may be educated in a special or separate class (whether in a district school or in an out-of-district program or facility) only when the nature or severity of the child’s disability prevents the child from being successful in a traditional classroom, even with special accommodations and services.

IEP: An Individual Education Program is a plan that includes: a statement of the child’s present level of performance in academics and functional skills, a list of measurable goals in these areas, a schedule of progress reports, the type and frequency of additional therapies and services, transportation, and any necessary accommodations. The IEP is developed by a team of people including a parent, the child’s teacher, a school district representative, any therapists or other professional who works directly with the child, and sometimes the child as well. The team meets at least once a year to prepare the IEP, but parents may request a team meeting to discuss a particular issue at any time. Parents must also receive regular progress reports on their child.

*Source: https://planningacrossthespectrum.com/

Benefits Providing Money, SSI Verse SSDI

SSI Is a Means-Tested Program, SSDI Is an Entitlement Program

Although both SSI and SSDI are administered by the Social Security Administration, the two programs have vastly different financial requirements. SSI is designed to meet the basic needs of elderly, blind and disabled individuals who would otherwise have a hard time paying for food and shelter.

SSI, is narrowly tailored for this particular set of people, it has a very strict set of financial requirements, making it what is known as a "means-tested" benefit. You are eligible for a very low amount of monthly income that is the same for everyone, (unless it is lower for income or other reasons)

SSDI, by contrast, is an entitlement program that is typically available to any person who has paid into the Social Security system for at least ten years, regardless of his current income and assets.  (Younger beneficiaries and disabled adult children of retired or deceased workers may have to meet different requirements.)  In theory, all qualified workers are potential SSDI recipients, even high-income earners.

Benefits Providing Services, Medicare verse Medicaid.

SSI Beneficiaries Typically Receive Medicaid, SSDI Provides Access to Medicare

Medicare, which is run primarily by the federal government, offers three main types of coverage. Part A covers hospital visits and some follow-up care, Part B covers doctor visits and other outpatient care, and Part D provides prescription drug coverage. (Part C, also known as Medicare Advantage, is a managed care alternative to regular Medicare that is offered by private insurers working with the federal government.) Although Medicare covers a variety of treatments and physicians, it does not pay for long-term care in a skilled nursing facility other than for short rehabilitation stays, and it usually does not completely cover a beneficiary's hospital or doctor costs. To make up for these shortfalls, many Medicare recipients purchase private Medigap insurance plans that provide coverage for services or costs that Medicare does not cover.

Medicaid is a joint program between the states and the federal government, and each state is given much wider latitude to pick and choose the programs it offers residents. Some Medicaid programs are very comprehensive and cover everything a patient could need, while other Medicaid programs, especially so-called Medicaid waiver programs, target specific demographic groups, like people with developmental disabilities. Medicaid is, however, the primary federal insurer for long-term care.

If a person with special needs has assets -- perhaps from a lawsuit award or settlement or from a gift or inheritance – those assets can disqualify the person from receiving essential public benefits like Medicaid and Supplemental Security Income (SSI).  There are many options to protect these benefits and special needs trusts are just a tool, they are not a comprehensive financial plan.

Special needs trusts are intended to supplement, not replace, the kind of basic support that programs like Medicaid and SSI provide.

These trusts are in three main categories.

Pooled Trusts: Are usually run by non-profits and some states such as Connecticut only have one option. These trusts have largely, but not completed been less valuable as a resource since The ABLE act.

First Party Trusts: These are usually when an individual receives settlement from a lawsuit or an inheritance that was not probably set up to go into a third party special needs truss.

Third Party Trusts: Are usually set up after a family member passes away and are funded at death. These allow for the greatest flexibility in planning and should be desired when possible as there is not “payback” clause to the government or a pool unlike other options.

A special needs trust for pays for the kinds of things that a parent would just reach into his or her pocket to cover. These trusts typically pay for amenities beyond the simple necessities of life, things like education, recreation, counseling, and medical attention.

Private Advisor Group, Tenpath Financial Group and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.

What is the ABLE Act, and how does it effect me?

The ABLE Act is a provision of the 529 section of the IRS code, the section that previously established the framework for education savings plans to help families save for college. The ABLE Act allows money to be set aside for a person with special needs in a similar way. This money can grow tax- free over time and is used to pay for qualifying expenses toward the care and support of the special needs beneficiary. These accounts are administered by the individual states and accept contributions in the form of cash only (not bonds, securities, real estate, or other assets). Although these are state specific similar to 529 accounts you do not need to wait for your home state to have one, or even use the one your state sponsors.

What can ABLE accounts pay for?

Money in an ABLE account is intended for the care and support of the person with special needs. Qualifying expenses include housing, transportation, assistive technology, health care, and employment support. Any amount withdrawn for non-qualifying expenses incurs a 10 percent penalty payable to the IRS and is subject to taxation on any gains or investment returns.

What are the advantages ABLE accounts?

ABLE accounts provide advantages in two areas: taxation and access to government benefits. Through an ABLE account, a person with special needs can accumulate savings in a tax-advantaged way similar to 529 college savings plans. Like 529 plans, the funds in an ABLE account grow tax-free, and some states even offer account contributors a deduction from state income taxes.

A person with disabilities who has more than $2,000 ($1600 in Connecticut)* in assets would normally not qualify for federal government benefits such as Supplemental Security Income (SSI), but under the ABLE Act, families may establish ABLE accounts that will not affect the child’s eligibility for SSI (up to $100,000), Medicaid, and other public benefits. Such accounts are also easy and inexpensive to set up and do not require the services of a lawyer or special needs planner.

Are there any drawbacks or limits to ABLE accounts?

Due to certain restrictions, ABLE accounts may not be for everyone. Eligibility is limited to people who developed their disability before age 26, so anyone who becomes disabled later in life does not qualify. However if the individual becomes disabled from a disability that they only found later in life. For example, being diagnosed with autism later in life. (Since you are born with autism) Also, unlike 529 plans, total contributions to ABLE accounts are limited to $15,000 per year, although beneficiaries who work can make ABLE contributions above the $15,000 annual cap from their own income up to the Federal Poverty Level, which is $12,760 for a single individual in the lower 48 states (in 2020), provided they do not participate in their employer’s retirement plan.

If the value of the account exceeds $100,000, any SSI income is suspended until the account dips below that limit. Faced with saving for the lifetime needs of a loved one with disabilities, families realize that $100,000 may not be enough yet are wary of losing that government income even for a short period. Another drawback is that after the death of the ABLE account beneficiary states can claim reimbursements from funds remaining in the account for any Medicaid benefits paid during the beneficiary’s lifetime.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

*Source: https://planningacrossthespectrum.com/