By Rob Wrubel, CFP ®
Startling changes coming from Washington DC are on track to happen in 2025. How these impact families with special-needs members, benefits for individuals with a developmental disability and future planning remains to be seen.
Some headlines are positive. Senators Cortez Masto, Cassidy and Wyden introduced the SSI Savings Penalty Elimination Act in the Senate. A companion bill will be introduced by Representatives Davis and Fitzpatrick in the House.
The proposed legislation updates the allowable resource limit for an individual to qualify for SSI (and the Medicaid services that go along with SSI). The Act, if passed, raises the asset limit from $2,000 to $10,000 for an individual and to $20,000 for a couple. These limits have been in place since 1989 and were not indexed to inflation. The new Act adds an inflation element to the amounts so they keep pace over time.
$10,000 remains a low amount and more would be better. Still, the change takes away the most obvious problem present in today’s resource test system. A person receiving SSI today receives $967 per month (the Federal amount, some states add more funding). The person receiving funds becomes ineligible for the benefit programs quickly if those funds are retained. A bank account will grow by the $967 per month, totaling $1,934 in two months and then will be over the limit in the third month. Raising the limit to $10,000 buys time for planning to ensure funds are spent, moved to an ABLE account or put into a first-party or pooled trust without the ticking clock counting down every second.
The new limit allows for gifts and small inheritances to be received and kept. A large group of gifts for a significant from several families members could have added up to more than $2,000. A family member adding your son or daughter to their estate plan for even a small share could have lead to a loss in benefits. In the past, families set a frenzied pace to transfer funds or buy items that might not have been needed. A person can only have so many clothes, TV sets and couches and spending a few thousand dollars can take work.
The increased limit is great news. Negative news comes from changes to Medicaid that could have an impact on people with disabilities and their families. The proposed tax bill for 2025 calls for cuts of $880 billion from the part of the budget that impacts Medicare and Medicaid. As of this writing, we lack clarity on what programs are targeted in the those spending cuts. Will it be reductions in medical insurance for low-income people and so many people with developmental disabilities have low incomes? Will it reduce payments to states that fund services for community supports? Will it reduce health insurance and support living services for people with disabilities? Right now, there’s no way to know.
Advocate for your family now. Do not sit by and allow important benefits to be taken from our family members with a qualifying disability. Let your Senators and Representatives know where you stand on issues. Every Senator and Representative has a website and there is a spot to let them know how you think about issues. Hop on to their websites and let them know if you are in favor of reductions in benefits or wish to protect them. Advocate for the change in raising the resource limit from $2,000 to $10,000 to make them aware of the new legislation and how important it is to help your son or daughter maintain benefits. Share your knowledge with people in your social and professional circles and ask them to advocate as well.
Our family members did not choose their disabilities – they were born with conditions or had injuries that lead to their needing supports. The benefit programs can make the difference to a life lead with dignity, safety and integration and now is the time to be active to help.
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This article is not intended as investment advice or representative of any specific investment strategy. Consult with your legal, tax, benefits and investment team before taking any action.
