If you are a corporate trustee or a family member or friend serving as trustee, you should be aware of an important policy change taking effect this fall.
Many beneficiaries of special needs trusts receive Supplemental Security Income (SSI). SSI is a monthly cash benefit paid to financially eligible individuals with disabilities who do not have enough covered work quarters to be eligible for Social Security Disability Insurance or Social Security Retirement. SSI recipients are people with disabilities, including kids under 18, adults who have never been gainfully employed, and adults who worked but not enough to qualify for full benefits. In Ohio, SSI recipients are also automatically eligible for Medicaid.
SSI is intended to pay for food and shelter. Currently, if an SSI recipient receives free food or shelter from someone else, then the Social Security Administration will reduce the SSI benefit. In Kind Support and Maintenance, or ISM, is the Social Security Administration’s method to calculate the penalty for SSI recipients receiving free food or shelter. Unfortunately, there are very few who can keep their food, rent, and utility expenses below the current maximum SSI benefit of $943 per month no matter where they live. The result is many are unable to meet their basic needs but receiving extra help from a trust or a loved one can cause SSI to be reduced.
Beginning September 30, 2024, however, food is no longer included in the ISM. The last time the Social Security Administration updated ISM was almost twenty years ago when they removed clothing from the penalty calculation. The removal of food from the ISM calculation means that a trust, a family member, a friend, or anyone else can pay for groceries or the restaurant bill for an SSI recipient without concern that SSI will be reduced. It is more valuable than ever to use carefully drafted trusts to help supplement benefits received by the special needs beneficiary. Special needs trust trustees should review the trust agreement to confirm it does not prohibit purchases of food.
It is challenging to keep up with policy changes or to ensure your trust is properly drafted and compliant with current laws. If you are serving as trustee of a special needs trust, or if you are planning for a loved one with a disability, it is important to work with an experienced special needs attorney. Hickman Lowder Lidrbauch & Welch Co., L.P.A., has provided special needs planning legal services for decades and holds events such as “trustee school” to help their clients navigate policy changes and trust administration. Please contact us to schedule an appointment to answer your questions about special needs trusts. Our attorneys are committed to offering hope and delivering solutions.