Listen to Lawrence…Answering a Client Question Regarding Income When on SSI

September 22, 2020
Dear clients and friends,
My son is disabled and receiving SSI and Medicaid. He recently had some damage in his apartment and subsequently received a check from the insurance company covering the loss. Can he deposit this money in his account without losing his government benefits?
The quick answer is yes. Typically, a windfall of money will be considered income in the month of receipt and an asset thereafter.
Let’s suppose your son inherited $50,000 from a relative; the inherited money would knock him off his benefits because he would have $50,000 of income, but only for that month. The next month, the $50,000 would be considered an asset, again throwing him over the asset limits of the government programs he is on. The plan then would be to find a way to shelter that money before the end of the month in which it was received. One example of this would be, if your son is under the age of 65, to contribute the money to a first party special needs trust. If you do this, the money will not be counted against him but can still be used for his benefit.
Nevertheless, the good news is that monies received for the purpose of replacing an excluded resource (for example, a house) that is lost, damaged, or stolen, is not counted for 9 months. Therefore, your son can deposit the insurance proceeds and then spend down the money over a nine-month period. If the money is not spent, then by the end of the 9 months, the money can be sheltered in a first party special needs trust (or a pooled trust or even an ABLE account).
I hope this helps.
Please forward this information to your friends and relatives.
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
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Stay safe!