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July 2018 #HandsOff Blog: Medicaid and SSI Equal Independence

#HandsOff is a series on The Arc Blog. Each month, we feature a story from individuals and families across The Arc’s network about how some of today’s key policy issues impact their day to day lives.

Meet Samera! Samera is 27 years old, a poet, and likes to read books, go to concerts, and spend time with her friends and family. She lives in a home in her community, supported by The Arc of Baltimore.

This month America celebrates its independence, but for Samera and many people with disabilities across the country, programs like Medicaid and Supplemental Security Income (SSI) mean independence.

Samera says, “SSI and Medicaid help me to live in the community with independence. SSI helps to pay for my transportation to run daily errands, go to church, and cover the costs of medications and personal items that Medicaid doesn’t cover. Medicaid covers my wheelchair, and because it covers my wheelchair, I’m able to get around and go out, meet new friends, and do all of the things that everyone enjoys doing.”

Check out the video below to learn more about Samera:

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Why a Federal Balanced Budget Amendment Is Bad for People With Disabilities

Almost everyone agrees that they should have balanced budgets, that is, that they should not spend more money than they take in. It makes perfect sense for individuals, so why not for our federal government?

Actually, there are several reasons why requiring a balanced budget for the federal government would be a very bad idea. For starters, let’s consider the assumption about individuals having balanced budgets. If this were really the case, we would not be able to get home mortgages, student loans, or finance the purchase of a car. We would not be able to borrow money for such sound investments in our future.

Requiring a balanced budget makes no more sense for the federal government than it does for individuals. The federal government needs the flexibility to do things like respond to natural disasters, public health epidemics, military threats, demographic changes, and economic downturns, among other things. What appears to be a commonsense approach is actually very bad public policy.

What is a Balanced Budget Amendment (BBA)?

Balanced Budget ScaleA balanced budget amendment is a proposed federal constitutional rule requiring that the government not spend more than its income in a given year. Most state constitutions have balanced-budget provisions and most of these make an exception for times of war or national emergency, or allow the legislature to suspend the rule by a supermajority vote. The U.S. Constitution does not require a balanced budget. Some members of Congress are looking to change that by passing legislation to add an amendment to the U.S. Constitution.

Why is a BBA Harmful?

It will result in cuts to Medicaid, Medicare, Social Security, and other large programs. Programs like Medicaid, Medicare, Supplemental Security Income (SSI), and Social Security are a large part of the federal budget. They are projected to grow in the next several years primarily due to the aging of the population. Since these are very popular and critical programs, Congress has been unable to make direct cuts to them and some Members are now looking to try less direct methods, including a BBA. 

Social Security and Medicare are particularly vulnerable to cuts because a BBA prohibits spending from exceeding revenues collected in that year. These programs operate with trust funds that collect dedicated payroll taxes designated for specific programs which are partially paid out in future years to meet projected population needs. For example, in years when Social Security collects more than it pays in benefits and other expenses (which it has done every year since 1984), the Treasury invests the surplus in interest-bearing Treasury bonds and other Treasury securities. These bonds can be redeemed whenever needed to pay benefits. The trust fund balances allow benefits to be paid when the Social Security program’s current income is insufficient by itself. Under a BBA, the $2.9 trillion in Treasury securities held in the Social Security Trust Fund would not be available to help pay benefits to the baby boomers for retirement or disability since almost all of it was collected in prior years.

It would harm the economy. A BBA would likely cause significant harm to the economy, making recessions both deeper and longer. In an economic slowdown, revenues (mostly taxes) fall while spending for unemployment and other benefits increases. A BBA would force policymakers to cut federal programs, raise taxes, or both when the economy is weak or already in recession, the exact opposite of what good economic policy would advise, according to the Center on Budget and Policy Priorities.

It is extremely hard to change. An amendment to the Constitution is a dramatic step that takes a lot of time to enact. Unlike typical legislation, once a constitutional amendment has passed, it is extremely difficult to undo. 

What is Happening in Congress?

There are two BBA bills that have been introduced in the House of Representatives by Representative Bob Goodlatte (R-VA) – H.J. Res 1 and H.J. Res 2 – that Congress may vote on. While both versions are very harmful, H. J. Res 1 is the most drastic one since it essentially prohibits tax increases (by requiring a three-fifths vote in the House and the Senate) and limits spending to 20 percent of the economy (gross domestic product(GDP)). The House may vote on one of these bills as soon as next week.

Key Points for Advocates 

People with disabilities, their families, and advocates can:

  • Speak concretely about how their lives will be upended if the dramatic spending cuts forced by a BBA were to happen. What would happen if Medicaid, Social Security, and other programs were severely cut?
  • Call out the contrast – Question how Members of Congress can call for such drastic action to reduce deficits when they recently voted to add over $1 trillion over 10 years to the nation’s deficits in the tax law enacted on December 20, 2017. See House votes here and Senate votes here.
  • Share what many leading economists believe – a BBA to the U.S. Constitution is very unsound economic policy. 

For more information, see:

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President Trump’s 2019 Budget Is Devastating for People With Disabilities

WASHINGTON, DC – Earlier this week, the Trump Administration released a budget proposal entitled “An American Budget”. The Arc released the following statement in response to the proposal:

“Yet again, the administration has laid out a plan that shows a complete disregard for people with intellectual and developmental disabilities and their families. This Budget confirms our worst fears about the Administration’s strategy of using drastic program cuts for people with disabilities to help to pay for the tax cuts for the wealthiest individuals and largest corporations, which were enacted through the Tax Cuts and Jobs Act last year.

“The President’s Budget would have a devastating impact on people with disabilities and their families with unprecedented cuts to Medicaid, Social Security, and many other programs that make community living possible for many people with disabilities.

“We spent the better part of last year fighting proposed cuts that could have dismantled decades of progress for people with disabilities in our nation. We remain vehemently opposed to proposals, like these from President Trump, that attack the systems of support that enable individuals with disabilities to live, work, and thrive in the community. The disability rights community will continue to rally our advocates to put a face on these issues. Last year we showed the force of our network and we will remain unified against future threats,” said Marty Ford, Senior Executive Officer, Public Policy, The Arc.

The Arc advocates for and serves people with intellectual and developmental disabilities (IDD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 650 chapters across the country promoting and protecting the human rights of people with IDD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

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Attack on SSI: House Approves Cutting Off Basic Income for Adults With Disabilities and Seniors

Washington, DC – Today, the U.S. House of Representatives voted 244 to 171 to revive a failed former policy that cuts off Supplemental Security Income (SSI) benefits for certain people with disabilities and seniors. The legislation targets SSI recipients with outstanding arrest warrants for alleged felonies or alleged violations of probation or parole. Federal law already prohibits payment of SSI benefits to people fleeing from law enforcement to avoid prosecution or imprisonment, and the Social Security Administration has a process in place to notify law enforcement of the whereabouts of such individuals. The original policy ended due to class action litigation.

“This bill is unjust, cruel, and unnecessary, and shows total disregard for the day to day economic struggles of most SSI beneficiaries. SSI benefits average $18 per day and are the only personal income for nearly three in five beneficiaries. Cutting off these modest SSI benefits will cause significant hardship and will only make it more difficult for people to resolve old, outstanding arrest warrants. The Senate should reject this tried and failed approach,” said T.J. Sutcliffe, Director, Income and Housing Policy.

Based on experience with the former policy, H.R. 2792 would not help law enforcement to secure arrests, but instead would target people whose cases are inactive and whom law enforcement is not pursuing. Most of the warrants in question are decades old and include warrants routinely issued when a person was unable to pay a fine or court fee, or a probation supervision fee. Many people are not even aware that a warrant was issued for them, as warrants are often not served on the individual. Some people will be swept up because of mistaken identity, or paperwork errors, which can take months or even years to resolve. Many people will face barriers to clearing their records based on the nature of their disabilities or their current circumstances, for example, an individual with Alzheimer’s in a nursing home.

Resolving an old arrest warrant can often involve significant time and expense, such as when a person has moved and lives far from the jurisdiction that issued, but never pursued, a decades-old warrant. Anecdotally, a very high percentage of people affected by the former policy were people with mental impairments, including people with intellectual disability.

The proposal uses savings from cuts to SSI under H.R. 2792 to pay for legislation to reauthorize the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program.

“Home visiting helps to improve maternal and child health and increases access to screening and early intervention for children with disabilities. Reauthorization of this valuable program should not be paid for by cutting off SSI for people with disabilities, seniors, and their families,” said Sutcliffe.

As highlighted in a fact sheet by the Consortium for Citizens with Disabilities, here are two stories of people harmed by Social Security’s former failed policy: Rosa Martinez, the lead plaintiff in one of several class action law suits brought against the policy, and a juvenile survivor of childhood abuse:

  • Mistaken Identity: Rosa Martinez, the lead plaintiff in Martinez v. Astruewas, in 2008, a 52-year old woman who received notice from SSA that she was losing her disability benefits because of a 1980 arrest warrant for a drug offense in Miami, FL. Ms. Martinez had never been to Miami, never been arrested, never used illegal drugs, and is eight inches shorter than the person identified in the warrant. Despite an obvious case of mistaken identity, Ms. Martinez was left without her sole source of income while she cleared up the error on her own, without any help from SSA. It was only after filing a lawsuit that Ms. Martinez was able to receive her benefits.
  • Juvenile Survivor of Childhood Abuse: A young man in California with intellectual disability and other mental impairments had his SSI benefits stopped because of an Ohio warrant issued when he was 12 years old and running away to escape an abusive stepfather. The 4’7” tall, 85-pound boy was charged with assault for kicking a staff member at the detention center where he was being held until his mother could pick him up. Many years later, he had no recollection of the incident.

More stories of people harmed by SSA’s former failed policy are available from Justice in Aging.

The Arc advocates for and serves people wit­­h intellectual and developmental disabilities (IDD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 650 chapters across the country promoting and protecting the human rights of people with IDD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

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SSI Makes Allowances for Student Finances

By Mary L. Waltari, Esq., Special Needs Alliance

Students with disabilities and their families sometimes worry that the very process of becoming educated—with an important goal being increased economic independence—can reduce SSI (Supplemental Security Income). Probably not. The Social Security Administration wants to encourage self-sufficiency and has guidelines that, in many cases, will enable individuals receiving SSI to continue their education without diminishing monthly payments.

SSI is a monthly cash payment made to eligible individuals with disabilities and, in many cases, it’s fundamental to their financial security. It’s a means-tested benefit, and until a child reaches the age of 18, parental income and assets are evaluated when determining qualification. Since an individual may not have more than $2,000 in “countable assets,” most minors are ineligible. However, once they reach 18, family assets are no longer considered, and many individuals with disabilities begin receiving SSI at that point. At the same time, many of them continue with high school education until the age of 21. Upon graduation, they may attend vocational training or college. While doing so, they may work a part-time job or receive financial aid, including room and board.

Protected Savings

Special needs trusts (SNTs), ABLE accounts and Social Security’s PASS (Plan to Achieve Self-Support) are several ways to set aside money for education, among other things. While these savings tools are regulated differently from one another, they enable funds for eligible individuals with disabilities to be accumulated without affecting means-tested government programs.

Monthly Earnings

Student Earned Income Exclusions (SEIE) take summer or part-time jobs into account by disregarding more income for students than for non-students. To be eligible, individuals must be under 22 and “regularly attending school,” which generally means going to classes for at least one month during the quarter to which SEIE applies for at least:

  • 12 hours weekly for high school students;
  • 12 hours weekly for vocational training;
  • eight hours weekly for college students

There are exceptions for illness, and different rules apply to home schooling and “homebound” students.

It’s useful to compare SSI guidelines for students with those applied to others:

  • Non-Students: SSI doesn’t count the first $65 of monthly earnings and half of the remainder, along with a $20 general income exclusion. What’s left reduces SSI dollar-for-dollar.
  • Students: SSI disregards the first $1,790 of monthly earnings, up to an annual total of $7,200. Earnings over $1,790 per month will then receive the same earned income exclusion and general income exclusion available for non-students, after which earnings reduce SSI dollar-for-dollar.

Financial Aid

Any financial assistance covered by Title IV of the Higher Education Act of 1965 or Bureau of Indian Affairs programs isn’t counted as income, regardless of use. Interest and dividends from unspent funds are also exempt. Pell Grants, Federal Work-Study and Direct Loans are just a few of the covered programs.

But it does matter when and how financial aid and gifts from other sources are spent:

  • There’s no effect on SSI so long as funds are spent on education-related needs within nine months of receipt.
  • Funds set aside for education purposes but ultimately used differently are counted as income at the earlier of two points: in the month they’re spent or the month the individual no longer intends to use the funds for educational purposes
  • Funds that are neither set aside for education nor immediately spent for that purpose are counted as income during the month of receipt and counted as a resource the next month.

Student Housing

Since SSI is intended to pay for food and shelter, non-students have their payments reduced when they receive such in-kind support and maintenance (ISM) from other sources. In such cases, SSI may be cut back by up to one-third of the maximum federal SSI monthly benefit, plus $20.

But if a student receiving SSI resides on campus, with room and board covered by parents or financial aid, other rules apply. The school living arrangements will be considered temporary and not categorized as ISM if:

  • the individual is over 18;
  • will return to their permanent address during holidays, vacations or following graduation;
  • and lived at their permanent address for at least one calendar month prior to attending school.

On the other hand, if the student receives free housing and meals at their permanent residence, ISM applies and SSI will be reduced.

The Social Security Administration recognizes that education can be a gateway to independence for individuals with disabilities. Paying attention to these guidelines can ensure that students aren’t financially penalized for their ambitions.

Mary L. Waltari is a member of the Special Needs Alliance, a national nonprofit dedicated to assisting individuals with disabilities, their families and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness and advocate for policies on behalf of people with intellectual/developmental disabilities and their families.

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Disability in America: Second Article in Series Continues Biased, Flawed Reporting

by T.J. Sutcliffe, Director, Income & Housing Policy

In March, The Washington Post launched a new series, “Disabled, America,” to look at how disability “…is shaping the culture, economy and politics…” of rural communities. The first article in the series met with widespread criticism for multiple errors in its data and facts, and for leaving the public with negative, false impressions about Social Security’s disability programs and rural beneficiaries.

Unfortunately, the second article in the Post’s series only went further down the path of reporting by stereotype and anecdote. The article profiles a family in Pemiscot County, Missouri with several members who have disabilities, including a mother and her adult daughter who receive Social Security disability benefits.

Media Matters summed up the outrage at the article’s portrayal of the family as “…a ‘mean-spirited’ and ‘cartoonish’ illustration of the struggles of those living with poverty in rural America.” In Poynter, S.I. Rosenbaum noted that the article failed to provide even basic facts about Social Security’s disability programs, writing that “…without them, in my opinion, the story is incomplete and even misleading.” The Urban Institute pointed out many of those missing facts.

Notably, the second article failed to provide important context, such as the fact that Missouri has a relatively high statewide rate of residents with disabilities, particularly in many rural Missouri counties. In addition, record numbers of Americans today live in multigenerational households, and disability often runs in families for reasons that include genetics, common exposure to environmental hazards, and similar past and ongoing access to (or lack of) health care.

With President Trump having recently proposed over $72 billion in cuts over 10 years to Social Security and Supplemental Security Income disability benefits, reporting that focuses on anecdote, with little to no context, runs the risk of leading policymakers down a dangerous and harmful path. In letters responding the Post’s first article and second article, over 50 national organizations urged Congress to “…ensure that any discussions about how to strengthen the nation’s Social Security system are informed by facts—not well-debunked myths and offensive stereotypes.”

Here’s a round-up of analyses and responses to the second Post article – and if you missed it, be sure to read our round-up of responses to the first Post article, as well.

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It’s Budget Season in Washington; So Far These Are the Five Worst Things for People With Disabilities

By Annie Acosta, Director of Fiscal and Family Support Policy

The President’s proposed Fiscal Year 2018 budget released last month would make unprecedented cuts to public education, health, transportation, housing, and countless other effective federal programs. These massive cuts would affect most Americans in one form or another, and would be particularly devastating to people with disabilities and their families. The budget is titled “The New Foundation for American Greatness” – but the reality couldn’t be more different. Here are five reasons the President’s proposed budget is anything but great for people with disabilities.

  1. More Cuts to Medicaid
    Under the President’s proposed budget, Medicaid, the primary health insurance and long term services and supports program for people with disabilities, would lose $610 billion over 10 years (on top of the over $830 billion in cuts in the American Health Care Act passed by the House of Representatives in March). The combined cuts roughly halve the program’s federal budget by 2027. Medicaid’s “optional” services, expected to take the brunt of such a drastic cut, include prescription drugs, physical therapy, and all home and community based services under state plan and “waiver” programs. Medicaid, including home and community based services, makes it possible for millions of people with disabilities to survive and to live and work in the community.
  2. Breaks the Promise on Social Security
    Despite President Trump’s promises to not cut Social Security, the budget also calls for over $72 billion in cuts to Social Security’s disability programs over the next 10 years, including cuts to Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Social Security and SSI benefits are modest, but absolutely essential for people with disabilities to put a roof over their head, food on the table, and to pay for their out-of-pocket medical expenses and disability related costs.
  3. Slashes Community Living Supports
    President Trump’s proposed budget would sharply reduce – or even eliminate – a wide variety of effective federal programs that help to make a life in the community possible for millions of people with disabilities. These include:

    • Supplemental Nutrition Assistance Program (SNAP), which provides essential nutrition assistance for millions of people with disabilities, would face a 29 percent cut over 10 years. By 2027, over 5 million households that include a person with a disability could lose their SNAP benefit under this cut.
    • Affordable housing programs at the Department of Housing and Urban Development would face a nearly 15 percent cut in 2018. The President’s budget targets the Section 811 Supportive Housing for Persons with Disabilities program for a proposed $25 million cut in 2018. This would leave the Section 811 program with insufficient funds to renew all existing project-based rental assistance contracts thereby placing current lease compliant tenants in 811 properties at imminent risk of homelessness.
    • Councils on Developmental Disabilities, independent living services, and traumatic brain injury services would see their funding to states eliminated and replaced with a new “innovation” program with less than half of the funding for the three programs. Click here to see a listing of discretionary programs and their proposed percentage cuts.
  4. Inadequate, Unworkable Paid Leave
    The President’s budget proposes a new paid leave program that would provide up to 6 weeks of paid leave for mothers and fathers to care for a newborn or newly adopted child. According to the Associated Press, “states would be required to provide leave payments through existing unemployment insurance programs and would have to identify cuts or tax hikes, as needed, to cover the costs.”The proposal has been widely criticized as both unworkable – creating an unfunded mandate to states that would burden and undermine already-fragile unemployment systemsand inadequate. It leaves out the 75% of people who take leave in the U.S. for family caregiving and medical reasons – including people with disabilities who need leave to address their own health, and people who need leave to care for a family member with a disability or illness. In addition, 6 weeks often simply isn’t enough – particularly if you have a disability, are caring for a family member, or have a newborn in intensive care. In comparison, the Family and Medical Leave Act provides 12 weeks of unpaid leave. Finally, benefits would likely be insufficient: on average, state unemployment insurance programs presently only cover one third of a worker’s wages.
  5. Uses Bad Math and Benefits the Most Prosperous
    President Trump’s proposed budget purports to cut $3.6 trillion in spending to balance the budget in 10 years, while also offering more than $5.5 trillion in tax reductions. The outsized tax cuts come primarily from reducing or eliminating taxes that are paid predominantly by wealthy households. These include the estate tax, the alternative minimum tax, and individual income tax on income earned through “pass-through” entities. The end result is that the budget would overwhelmingly benefit profitable corporations and wealthy individuals.In addition, the entire budget is based on bad math that virtually all independent economic analysts have dismissed.

    • It assumes massive amounts of new revenue from a 50% increase in economic growth resulting from tax cuts, renegotiated trade deals, and deregulation.
    • It claims there will be no deficit after 10 years as dramatic economic growth will allow the government to collect about $2 trillion more in tax revenue. However, the budget doesn’t include the cost of the proposed tax cuts, therefore relying on its tax cuts to both pay for themselves and add $2 trillion in additional tax revenue.

Next Steps in the House and Senate

Federal budgets are statement of our nation’s values – and it’s clear to The Arc that this budget simply doesn’t reflect what most Americans value. Fortunately, the President’s budget merely conveys the Administration’s priorities and is non-binding. The House and Senate must each develop their own budgets and reconcile any differences to implement their budget plans.

The House is presently developing its budget and may release it after the July 4 recess and the Senate could take the House’s budget shortly afterwards. The House budget may include many of the harmful provisions in the President’s Budget outlined above.

The Arc and numerous organizations representing civil rights, human services, and other communities are deeply committed to preventing the passage of harmful budgets. We’re working together to put a face on these proposed cuts and to urge Congress to reject the President’s proposed budget.

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New Video: How President Trump’s Budget Breaks a Promise to Protect Social Security and the Families That Rely on It

Washington, DC – Today The Arc and the Center for American Progress released a video showcasing two personal stories about how Social Security is more than just retirement income. Social Security is a system that protects workers and families throughout their lives. If President Trump’s $72.4 billion in cuts to Social Security’s disability programs in his budget were to be implemented, the impact on families like those featured in this video would be dire.

“Social Security Disability Insurance and Supplemental Security Income are part of Social Security and the promise of that program must be honored for Katie, Will, Heather, and millions of people who need to access these basic but crucial benefits. Social Security is far too often the only thing keeping the lights on and food on the table for a person with a disability or a chronic condition.

“Heather, Katie, and Will are terrified by what this budget proposal could mean for them and for people who in the future need these benefits. This budget lays the cards on the table – and advocates across the country need to share their stories with elected officials and urge them to reject these cuts to Social Security,” said Peter Berns, CEO of The Arc.

This video highlights the stories of Will, a child with a disability, and Heather, a woman with terminal cancer. Will and his family relied on Supplemental Security Income (SSI) to pay for medication to prevent his seizures. SSI is part of Social Security that supports children and adults with disabilities. Without SSI, Will’s family wouldn’t have been able to afford his medicine or medical expenses, or meet his basic needs.

Heather was working internationally promoting fair elections and democracy when she got sick. By the time she was diagnosed, her cancer had metastasized and she feared she would end up impoverished paying for her cancer treatments. Social Security Disability Insurance (SSDI) helps American workers like Heather if they are faced with a life-changing disability or illness. Once her cancer spread Heather was unable to continue working. Without SSDI, she wouldn’t be able to afford chemotherapy and the prescription drugs that she relies on to survive.

These stories highlight the value of SSI and SSDI for those families who find themselves in need of additional support.

Share this video with your network to help people understand all that Social Security does to support families across the country.

Join Our Fight – as new threats to the civil rights of people with intellectual and developmental disabilities arise, we want to keep you in the loop with the most up to date information.

Read more about The Arc’s position on President Trump’s proposed budget.

If you are a member of the media and interested interviewing the people in this video, contact Kristen McKiernan, mckiernan@thearc.org or Sarah Bal, bal@thearc.org.

 

The Arc advocates for and serves people with intellectual and developmental disabilities (IDD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 650 chapters across the country promoting and protecting the human rights of people with IDD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

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Owning a Home With a Special Needs Trust

By Amy R. Tripp, Esq., Special Needs Alliance

To say that adequate housing options for persons with disabilities is a challenge is an understatement. As a result, in the process of future planning, housing is almost always one of the most important topics. Some people with disabilities would like to continue living in the family home, with appropriate supports, after Mom and Dad are gone, and parents often agree that would best serve their son or daughter’s interest. Other parents anticipate leaving funds that would allow their son or daughter to own appropriate alternate housing. In both cases, it must be determined if it makes sense for the house to be owned by a special needs trust (SNT) that is likely at the center of their plan. And as noted below, individuals and families must also weigh the benefits of home ownership versus renting to determine the best fit.

The short answer is that, in many cases, is does make sense for an SNT to own a home, but there are numerous considerations and caveats that come into play. This is an overview of the rules and issues that can arise when an SNT owns a home.

It is important first to identify what type of trust would own the home. We should distinguish between “first party” and “third party” trusts. A first party SNT is funded with the individual beneficiary’s assets and, after the death of the beneficiary, requires reimbursement to the state for Medicaid services. A third party SNT, which is funded with someone else’s assets, such as an inheritance from a parent or proceeds from a life insurance policy, is more flexible and does not require reimbursement to the state.

Options for Titling Homes

A threshold consideration in deciding whether a residence is better owned by an SNT or the individual is whether that person has legal capacity to hold title on their own and what decision-making supports the person might need. Minors simply cannot hold title and would require a guardian (in some states, a conservator) be appointed. Many adults may also need support to manage home ownership. If an adult is under guardianship or conservatorship, the guardian or conservator would likely have legal authority to manage the property. Many other adults with IDD would benefit from using decision-making supporters to help them meet the obligations of home ownership.

For an adult with IDD, home ownership can be empowering, as it is for all of us. The responsibilities of home ownership, as well as the status of a property owner, can have very positive impact. Families should take care to ensure that appropriate decision-making supports are in place.

If direct ownership isn’t practical, leaving a family home to a third party SNT, or buying one with trust assets, protects the property from creditors and leaves financial and maintenance issues in the hands of a trustee.

While a residence purchased by a first party SNT gains these advantages during the beneficiary’s lifetime, the home is subject to recovery by the state upon the beneficiary’s death to the extent of the costs paid by Medicaid.

Finally, it is important to look at who else might be living in the home. If the home is owned outright by a first party SNT, there may be complications if other family members also reside there. Distributions from first party SNTs are supposed to be for the sole benefit of the beneficiary, and this may be interpreted differently by various Social Security offices. Depending on the level of caregiving performed by family members, they may be required to pay rent in order to avoid affecting the beneficiary’s eligibility for government benefits. There may even be issues regarding what maintenance the trust should pay for.

Some trustees, seeking to avoid a first party trust payback, arrange for the SNT to purchase a life estate interest in the family residence. By paying a portion of the home’s value, the beneficiary has a right to live there, rent free, as long as he or she lives. In some states, however, this won’t avoid the Medicaid lien, and other family members residing in the home still may need to pay rent to avoid conflict with the sole benefit rule.

Running the Numbers

Of course, as attractive as the idea is, whether it is practical to plan to provide a house to an adult son or daughter with disabilities after you’re gone comes down to dollars.

Any time the purchase or transfer of ownership of a residence is begin considered, it is critical to prepare a detailed budget which takes into consideration things such as the cost of modifications needed for accessibility, long-term maintenance, utilities, taxes, insurance, and general upkeep. A common planning mistake is for people to create SNTs which purchase homes, only to have the housing costs consume such a large part of the available resources that other important purposes of the SNT are compromised, leading to deterioration of the property and forcing sale at a discounted price.

On occasion the solution may be as simple as finding a roommate. The trend today is for families to consolidate resources and purchase housing that provides for more than one adult. While there are some great examples of these types of arrangements, there are also many situations in which such plans simply don’t work. And many trustees are unwilling to deal with their complexity.

Beyond the numbers, persons with disabilities and their families should consider other pros and cons to homeownership, including whether the person may in the future want to live in a different neighborhood or area, the suitability of the home for future family configurations and the potential for aging in place.

Effect on Benefits

The ownership of property and the payment of housing expenses can impact the government benefits the individual may be receiving, including Supplemental Security Income (SSI) and Medicaid.

Notably, for persons who receive SSI, mortgage payments, property taxes, utilities and other housing costs paid on their behalf by an SNT are considered in-kind support and maintenance (ISM) and will reduce SSI. Good planning can often reduce the impact of these rules, but not always.

Likewise, depending on how a home is titled, the purchase or sale of a home can trigger interruptions or reductions in benefits in the months in which these events occur. While the home is an exempt asset for SSI and Medicaid benefits, the sale of the home in the future, if titled to the individual, will result in converting an exempt asset into countable resources. If the home is titled to the SNT, then the sale of the home would have no impact on eligibility.

Medicaid liens and other estate recovery claims are potential pitfalls when persons receiving benefits own their own homes, or have homes held in some SNTs. When a first party SNT owns the home, extra attention needs to be provided if other family members are living in the home and providing support to the beneficiary. When the beneficiary dies, Medicaid is reimbursed from the remaining assets in the first party SNT. If the Medicaid lien exceeds the balance of the assets in the first party SNT and the house is owned by the SNT, then the house may be lost. This can be a great hardship for some families who provide support and services to the beneficiary.

Conclusion

Housing is always a challenge in future planning for persons with disabilities. Arranging for a stable living environment is a high priority, but the considerations are many and complex, and families and their counselors are becoming increasingly creative as they struggle with the housing shortage. Whether an SNT can or should own a house involves a number of considerations, and families should seek advice from a qualified attorney to ensure that their objectives are met.

Amy Tripp is a member of the Special Needs Alliance, a national nonprofit dedicated to assisting individuals with disabilities, their families and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness and advocate for policies on behalf of people with intellectual/developmental disabilities and their families.

 

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Trump Budget and Health Care Cuts Devastating for People With Disabilities, Including Soojung’s Family

WASHINGTON, DC – Today the Trump Administration released its first ten year budget proposal, and the numbers are devastating for people with intellectual and developmental disabilities (IDD) and their families. On top of the more than $800 billion in Medicaid cuts already approved by the House of Representatives, the Trump Administration is planning for $610 billion in cuts to Medicaid; $72.4 billion in cuts to Social Security’s disability programs; and hundreds of billions more in cuts to other effective federal programs that are vital to people with IDD.

“Where we invest our federal dollars is a measure of our values as a nation. Today the Trump Administration showed its cards, and coupled with the devastating Medicaid cuts already approved by the House of Representatives in the health care bill, the deck is stacked against people with disabilities.

“In the last few weeks, I’ve traveled to chapters of The Arc in Maryland, North Carolina, Wisconsin, and even Alaska. Chapters of The Arc sprang up in these communities and across the country decades ago because people with disabilities and their families were appalled by the segregation of people with disabilities in inhumane institutions, and they were determined to make progress. And we have fought for rights, closed institutions, opened up the community and classroom, and paved the way to employment. Two effective programs built on bipartisan policy over the years – Medicaid and Social Security – have been essential to this progress. Medicaid provides health care and long term supports that help make a life in the community possible for many people with disabilities, and Social Security is far too often the only thing keeping the lights on and food on the table for a person with a disability.

“That these proposed cuts come in the very same package that is proposing the largest tax cuts in our nation’s history is simply obscene. Giving $5 trillion in tax cuts that primarily benefit wealthy individuals and corporations while simultaneously threatening the lives of everyday people defies comprehension.

“This budget – this Trump card – along with the health care cards being played in Congress as we speak, will dismantle decades of progress for people with disabilities and their families. So I’m calling on all advocates to do what they have done for decades, band together to put a face on these cuts. Share your story in your community and with your elected officials, and tell them to reject these cuts, before we go back in time to an era of discrimination and isolation,” said Peter Berns, CEO, The Arc.

In tandem with this budget news, The Arc is releasing a video which shares the story of a Maryland family which risks losing access to critical care for one of their children due to impending cuts to federal Medicaid funding. The video features Soojung, whose 11-year old daughter Alice, has Rett Syndrome and relies on overnight nursing services to be able to live at home with her family. Soojung speaks about the challenges she and her husband faced accessing these services, including having their requests turned down by private insurers. After years of waiting and uncertainty, Alice was finally accepted to a Medicaid program that provides her with nightly nursing services. These services have led to a great improvement in Alice’s health, making 2016 the first year of her life without a hospital stay.

For many families like Soojung’s, their health and lives could dramatically worsen if the Trump Administration’s proposed Medicaid cuts became a reality or if the over $800 billion in cuts over 10 years to federal Medicaid funding, proposed in the House-approved American Health Care Act (AHCA), go into effect. These cuts would not only force states to cut eligibility for their Medicaid programs, but would also diminish the quality and quantity of services that are provided to people who are already enrolled in these programs.

This video is the fifth in a series of videos The Arc is releasing, sharing the personal stories of people with disabilities and their families, and the impact of the Affordable Care Act (ACA) and Medicaid on their lives.

The Arc advocates for and serves people with intellectual and developmental disabilities (IDD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 650 chapters across the country promoting and protecting the human rights of people with IDD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.