Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) are both programs of the Social Security Administration (SSA). While these programs have some similarities, it is important to realize there is a difference between SSI and SSDI, especially if you are preparing your estate plans and Social Security is a possible factor.
In this six-part series of blogs on the topic of long-term care coverage in estate planning, we have discussed ways to pay for long-term care, long-term care insurance, considerations for spouses of Medicaid recipients in long-term care, and Medicaid asset protection myths and strategies. In this, the fifth installment of the series, we will examine Social Security and estate planning, as well as the important difference between SSI and SSDI.
Why Are Estate Plans and Social Security Related?
According to the Centers for Disease Control (CDC), 60 percent of American adults suffer from a chronic disease, and 40 percent suffer from two or more. The cost of care for these illnesses contributes significantly to our country's health care expenses and can be financially devastating to patients and families.
Individuals with chronic illnesses or disabilities are more likely to require long-term care at some point in life. Social Security and estate planning go hand in hand because many of the people who require long-term care are also eligible for some form of benefits through the SSA. Those potential payments need to be factored into your estate plan, which dictates how your financial resources will be distributed throughout the remainder of your life as well as upon your death.
Individuals and families living in West Virginia (WV), Kentucky (KY), and Ohio (OH) have ready access to an estate and retirement planning attorney in WV who can help with planning for the potential costs of long-term care in a way that preserves quality of life and hard-earned assets.
What Is the Difference Between SSI and SSDI?
SSI and SSDI are programs of the Social Security Administration that provide cash benefits for disabled individuals and, sometimes, to family members. The programs use the same factors to define a disability, but the eligibility requirements for SSI and SSDI are quite different as the two programs are designed to serve different segments of the population.
The primary difference between SSI and SSDI is that Supplemental Security Income, or SSI, is an assistance program available to low-income individuals who have not earned enough work credits within the Social Security system to qualify for SSDI. Social Security Disability Insurance, or SSDI, provides benefits to those who have paid Social Security taxes (FICA) and accumulated sufficient work credits to qualify.
Estate Plans and Social Security: What Is SSI?
SSI benefits are funded by general tax dollars rather than Social Security taxes. The program provides money to cover the cost of basic needs, such as food, shelter, and clothing.
The income requirements for SSI are somewhat stringent. If you qualify, your benefit is reduced by any countable income you receive. When an SSI recipient enters a long-term care facility, such as a nursing home, SSI benefits are typically reduced to $30 per month. This amount can be further reduced by any countable income you receive.
Several considerations and factors affect eligibility for SSI and the benefits a person can receive. An estate and retirement planning attorney in WV can help you understand these requirements and restrictions and can assist in determining if SSI benefits have a place in your long-term care plan.
SSDI in Estate and Retirement Planning
Determining your eligibility for SSDI is an important part of evaluating your Social Security and estate planning options. SSDI benefits are paid to individuals who meet the SSA definition of disabled and the additional eligibility requirements.
Once approved, the benefits to which you are entitled are determined by the credits you earn by working and paying Social Security taxes. Family members, such as a spouse or children, may also be eligible to receive a portion of your SSDI benefits.
Do You Need Help With Estate Plans and Social Security?
Understanding the difference between SSI and SSDI can help you determine which, if either, of these types of benefits should be incorporated into your long-term care and estate plan. In the next and final blog of this series, we will discuss the benefits available to U.S. military veterans and their families, and how those potential payments should be considered in estate planning as well.
Issues related to estate plans and Social Security can be complicated. Advance planning can make a big difference in your long-term quality of life as well as the assets you are able to pass on to your family upon your death. At Jenkins Fenstermaker, PLLC, Anna M. Price, a qualified and compassionate estate and retirement planning attorney in WV, can assist you in evaluating your options. To speak with Anna, call at (304) 521-2300 or toll-free at (866) 617-4736, or complete her online contact form.