If you pay or receive child support for a child with special needs, there are facts you need to know to ensure that your child is protected:
For a Minor Child
A disabled person’s assets and income determine Medicaid eligibility. To receive Medicaid assistance, your child cannot have assets (such as money in a savings or checking account) of more than $2,000 as of July 1, 2016. If your child is under age 18, one-third of the child support is not counted, but the other two-thirds counts as unearned income. After the first $20, any countable unearned income you receive on your child’s behalf causes a dollar-for-dollar reduction in your child’s SSI benefit. This means that support payments may reduce or eliminate your child’s eligibility for Medicaid assistance and Social Security payments!
Also, child support that you do not spend in any given month will be counted as an asset the following month. Furthermore, two-thirds of what you receive in child support for your child count as income and may cause a reduction to the Medicaid benefits your child would otherwise receive.
For a Child Over the Age of 18
If your disabled child is over age 18, you can I still receive child support payments for him/her, if you are the guardian. Since your child is no longer a minor, the one-third exclusion does not apply. This means that all (100 percent) of the child support payment counts as unearned income. After the first $20, your child’s SSI benefits are reduced dollar-for-dollar by this unearned income.
A court can order child support payments for your child if the court finds that he/she is physically or mentally disabled and cannot support themselves, even though he/she is over age 18. However, not all courts in Pennsylvania will issue a new child support order for a disabled child over age 18.
Special Needs Trusts
The best way to protect your child's eligibility for governmental assistance while paying or receiving child support is to create a Special Needs Trust (SNT). This is because child support payments to a SNT cannot be counted as income to the special needs child. The Trust would allow your child to be the beneficiary but not the owner of the money.
A SNT is a specialized legal document designed to benefit an individual with a disability. The parents of someone with special needs can serve as “grantors” or “trustmakers” for the special needs trust. They can also act as trustees, meaning that they will be responsible for managing the trust and for making distributions from the trust for the sole benefit of their child (the disabled beneficiary of the trust).
The funds in a SNT may be used to supplement income from benefits for “quality of life” expenditures such as medical and dental care not paid by other sources, private rehabilitation training, services or devices, supplementary education assistance, entertainment and hobbies, vacations and transportation.
If you are divorced and your child has special needs, contact our office to discuss how to protect them, their assets and their governmental benefits to ensure that they have a better quality of life. Click here to schedule a consultation or call our office at (215) 809-3900.
Located in Merion Station, Pennsylvania, Sallen Law assists clients with estate planning matters throughout the Philadelphia, Main Line area including but not limited to Lower Merion Township, Montgomery County, Bucks County, Delaware County, and Chester County. Attorney Sallen is also licensed to practice in the state of NJ and serves Burlington County, Gloucester County, Camden County.