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As an Orange County special needs lawyer, I often receive questions about whether a disabled individual can continue to receive benefits after receiving an inheritance. The answer is that it really depends on the type of benefit that is being collected.

Social Security Disability Insurance (SSDI)

SSDI is a government benefit that helps those with disabilities. Individuals are eligible to receive SSDI if they are completely unable to work due to their disability and if they have paid into Social Security for a specific amount of time depending on their age (or, if the individual is under 22, a parent has paid into social security for a number of years and is disabled, receiving Social Security payments, or deceased).  If the individual can earn money through substantial gainful employment, then he or she may not be able to receive the SSDI benefit. However, the individual is still allowed to receive income from other sources, and will not be disqualified from receiving the SSDI benefit if an inheritance is left to the person collecting benefits.

Supplemental Security Income (SSI)

While SSI is often confused with SSDI, as they both provide benefits to individuals with special needs, they are in fact two very different programs. The main difference lies in the fact that there are very strict income requirements placed on SSI recipients, and income above the threshold will disqualify the individual from receiving benefits. An inheritance also falls into this category and can stop benefits instantly. Orange County special needs attorneys advise that any possible inheritance that might be left to a person with special needs should instead be left to a Special Needs Trust, which allows the funds to be used on the individual’s behalf without jeopardizing benefits.

Medi-Cal

Medi-Cal is a federal health insurance program (administered by the State of California) designed to help those with little to no income, including people with disabilities. Once again, this is a need-based program with very strict financial limits placed on the beneficiaries. Not only must the beneficiaries have little to no income, but they also must meet a financial limit, which is scrutinized over a look back period of five years. Again, because of the need-based nature of this program, Orange County special needs lawyers urge anyone that anticipates receiving an inheritance while on Medi-Cal to seek help setting up a trust to ensure that any government benefits stay intact.

Exceptions Under New ABLE Act Legislation

Thanks to recent legislation passed by congress known as the Achieving a Better Life Experience (ABLE) Act, some disabled individuals can now accumulate up to $100,000 in assets without forfeiting their important government benefits.  This may include funds from an inheritance if the distribution of such falls within the ABLE Act guidelines.
The purpose of the law is to give certain disabled individuals the opportunity to begin saving their own money toward future health-care costs, housing expenses, transportation, education, and other needs. An ABLE Account combined with solid planning tools such as Special Needs Trusts affords families with even more protection and flexibility when saving for the future.
If you have any questions regarding special needs trusts and government benefits, please call us at (949) 260-1400 to set up a consultation.