Disability in America – Second Article in Series Continues Biased, Flawed Reporting

by T.J. Sutcliffe, Director, Income & Housing Policy

In March, The Washington Post launched a new series, “Disabled, America,” to look at how disability “…is shaping the culture, economy and politics…” of rural communities. The first article in the series met with widespread criticism for multiple errors in its data and facts, and for leaving the public with negative, false impressions about Social Security’s disability programs and rural beneficiaries.

Unfortunately, the second article in the Post’s series only went further down the path of reporting by stereotype and anecdote. The article profiles a family in Pemiscot County, Missouri with several members who have disabilities, including a mother and her adult daughter who receive Social Security disability benefits.

Media Matters summed up the outrage at the article’s portrayal of the family as “…a ‘mean-spirited’ and ‘cartoonish’ illustration of the struggles of those living with poverty in rural America.” In Poynter, S.I. Rosenbaum noted that the article failed to provide even basic facts about Social Security’s disability programs, writing that “…without them, in my opinion, the story is incomplete and even misleading.” The Urban Institute pointed out many of those missing facts.

Notably, the second article failed to provide important context, such as the fact that Missouri has a relatively high statewide rate of residents with disabilities, particularly in many rural Missouri counties. In addition, record numbers of Americans today live in multigenerational households, and disability often runs in families for reasons that include genetics, common exposure to environmental hazards, and similar past and ongoing access to (or lack of) health care.

With President Trump having recently proposed over $72 billion in cuts over 10 years to Social Security and Supplemental Security Income disability benefits, reporting that focuses on anecdote, with little to no context, runs the risk of leading policymakers down a dangerous and harmful path. In letters responding the Post’s first article and second article, over 50 national organizations urged Congress to “…ensure that any discussions about how to strengthen the nation’s Social Security system are informed by facts—not well-debunked myths and offensive stereotypes.”

Here’s a round-up of analyses and responses to the second Post article – and if you missed it, be sure to read our round-up of responses to the first Post article, as well.

It’s Budget Season in Washington – So Far These are the 5 Worst Things for People with Disabilities

By Annie Acosta, Director of Fiscal and Family Support Policy

The President’s proposed Fiscal Year 2018 budget released last month would make unprecedented cuts to public education, health, transportation, housing, and countless other effective federal programs. These massive cuts would affect most Americans in one form or another, and would be particularly devastating to people with disabilities and their families. The budget is titled “The New Foundation for American Greatness” – but the reality couldn’t be more different. Here are five reasons the President’s proposed budget is anything but great for people with disabilities.

  1. More Cuts to Medicaid
    Under the President’s proposed budget, Medicaid, the primary health insurance and long term services and supports program for people with disabilities, would lose $610 billion over 10 years (on top of the over $830 billion in cuts in the American Health Care Act passed by the House of Representatives in March). The combined cuts roughly halve the program’s federal budget by 2027. Medicaid’s “optional” services, expected to take the brunt of such a drastic cut, include prescription drugs, physical therapy, and all home and community based services under state plan and “waiver” programs. Medicaid, including home and community based services, makes it possible for millions of people with disabilities to survive and to live and work in the community.
     
  2. Breaks the Promise on Social Security
    Despite President Trump’s promises to not cut Social Security, the budget also calls for over $72 billion in cuts to Social Security’s disability programs over the next 10 years, including cuts to Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Social Security and SSI benefits are modest, but absolutely essential for people with disabilities to put a roof over their head, food on the table, and to pay for their out-of-pocket medical expenses and disability related costs.
     
  3. Slashes Community Living Supports
    President Trump’s proposed budget would sharply reduce – or even eliminate – a wide variety of effective federal programs that help to make a life in the community possible for millions of people with disabilities. These include:

    • Supplemental Nutrition Assistance Program (SNAP), which provides essential nutrition assistance for millions of people with disabilities, would face a 29 percent cut over 10 years. By 2027, over 5 million households that include a person with a disability could lose their SNAP benefit under this cut.
    • Affordable housing programs at the Department of Housing and Urban Development would face a nearly 15 percent cut in 2018. The President’s budget targets the Section 811 Supportive Housing for Persons with Disabilities program for a proposed $25 million cut in 2018. This would leave the Section 811 program with insufficient funds to renew all existing project-based rental assistance contracts thereby placing current lease compliant tenants in 811 properties at imminent risk of homelessness.
    • Councils on Developmental Disabilities, independent living services, and traumatic brain injury services would see their funding to states eliminated and replaced with a new “innovation” program with less than half of the funding for the three programs.
       
  4. Click here to see a listing of discretionary programs and their proposed percentage cuts.

  5. Inadequate, Unworkable Paid Leave
    The President’s budget proposes a new paid leave program that would provide up to 6 weeks of paid leave for mothers and fathers to care for a newborn or newly adopted child. According to the Associated Press, “states would be required to provide leave payments through existing unemployment insurance programs and would have to identify cuts or tax hikes, as needed, to cover the costs.”The proposal has been widely criticized as both unworkable – creating an unfunded mandate to states that would burden and undermine already-fragile unemployment systemsand inadequate. It leaves out the 75% of people who take leave in the U.S. for family caregiving and medical reasons – including people with disabilities who need leave to address their own health, and people who need leave to care for a family member with a disability or illness. In addition, 6 weeks often simply isn’t enough – particularly if you have a disability, are caring for a family member, or have a newborn in intensive care. In comparison, the Family and Medical Leave Act provides 12 weeks of unpaid leave. Finally, benefits would likely be insufficient: on average, state unemployment insurance programs presently only cover one third of a worker’s wages.
     
  6. Uses Bad Math and Benefits the Most Prosperous
    President Trump’s proposed budget purports to cut $3.6 trillion in spending to balance the budget in 10 years, while also offering more than $5.5 trillion in tax reductions. The outsized tax cuts come primarily from reducing or eliminating taxes that are paid predominantly by wealthy households. These include the estate tax, the alternative minimum tax, and individual income tax on income earned through “pass-through” entities. The end result is that the budget would overwhelmingly benefit profitable corporations and wealthy individuals.In addition, the entire budget is based on bad math that virtually all independent economic analysts have dismissed.

    • It assumes massive amounts of new revenue from a 50% increase in economic growth resulting from tax cuts, renegotiated trade deals, and deregulation.
       
    • It claims there will be no deficit after 10 years as dramatic economic growth will allow the government to collect about $2 trillion more in tax revenue. However, the budget doesn’t include the cost of the proposed tax cuts, therefore relying on its tax cuts to both pay for themselves and add $2 trillion in additional tax revenue.

Next Steps in the House and Senate

Federal budgets are statement of our nation’s values – and it’s clear to The Arc that this budget simply doesn’t reflect what most Americans value. Fortunately, the President’s budget merely conveys the Administration’s priorities and is non-binding. The House and Senate must each develop their own budgets and reconcile any differences to implement their budget plans.

The House is presently developing its budget and may release it after the July 4 recess and the Senate could take the House’s budget shortly afterwards. The House budget may include many of the harmful provisions in the President’s Budget outlined above.

The Arc and numerous organizations representing civil rights, human services, and other communities are deeply committed to preventing the passage of harmful budgets. We’re working together to put a face on these proposed cuts and to urge Congress to reject the President’s proposed budget.

New Video: How President Trump’s Budget Breaks a Promise to Protect Social Security and the Families That Rely on It

Washington, DC – Today The Arc and the Center for American Progress released a video showcasing two personal stories about how Social Security is more than just retirement income. Social Security is a system that protects workers and families throughout their lives. If President Trump’s $72.4 billion in cuts to Social Security’s disability programs in his budget were to be implemented, the impact on families like those featured in this video would be dire.

“Social Security Disability Insurance and Supplemental Security Income are part of Social Security and the promise of that program must be honored for Katie, Will, Heather, and millions of people who need to access these basic but crucial benefits. Social Security is far too often the only thing keeping the lights on and food on the table for a person with a disability or a chronic condition.

“Heather, Katie, and Will are terrified by what this budget proposal could mean for them and for people who in the future need these benefits. This budget lays the cards on the table – and advocates across the country need to share their stories with elected officials and urge them to reject these cuts to Social Security,” said Peter Berns, CEO of The Arc.

This video highlights the stories of Will, a child with a disability, and Heather, a woman with terminal cancer. Will and his family relied on Supplemental Security Income (SSI) to pay for medication to prevent his seizures. SSI is part of Social Security that supports children and adults with disabilities. Without SSI, Will’s family wouldn’t have been able to afford his medicine or medical expenses, or meet his basic needs.

Heather was working internationally promoting fair elections and democracy when she got sick. By the time she was diagnosed, her cancer had metastasized and she feared she would end up impoverished paying for her cancer treatments. Social Security Disability Insurance (SSDI) helps American workers like Heather if they are faced with a life-changing disability or illness. Once her cancer spread Heather was unable to continue working. Without SSDI, she wouldn’t be able to afford chemotherapy and the prescription drugs that she relies on to survive.

These stories highlight the value of SSI and SSDI for those families who find themselves in need of additional support.

Share this video with your network to help people understand all that Social Security does to support families across the country.

Join Our Fight – as new threats to the civil rights of people with intellectual and developmental disabilities arise, we want to keep you in the loop with the most up to date information.

Read more about The Arc’s position on President Trump’s proposed budget.

If you are a member of the media and interested interviewing the people in this video, contact Kristen McKiernan, mckiernan@thearc.org or Sarah Bal, bal@thearc.org.

 

The Arc advocates for and serves people with intellectual and developmental disabilities (I/DD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 650 chapters across the country promoting and protecting the human rights of people with I/DD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

Owning a Home with a Special Needs Trust

By Amy R. Tripp, Esq., Special Needs Alliance

To say that adequate housing options for persons with disabilities is a challenge is an understatement. As a result, in the process of future planning, housing is almost always one of the most important topics. Some people with disabilities would like to continue living in the family home, with appropriate supports, after Mom and Dad are gone, and parents often agree that would best serve their son or daughter’s interest. Other parents anticipate leaving funds that would allow their son or daughter to own appropriate alternate housing. In both cases, it must be determined if it makes sense for the house to be owned by a special needs trust (SNT) that is likely at the center of their plan. And as noted below, individuals and families must also weigh the benefits of home ownership versus renting to determine the best fit.

The short answer is that, in many cases, is does make sense for an SNT to own a home, but there are numerous considerations and caveats that come into play. This is an overview of the rules and issues that can arise when an SNT owns a home.

It is important first to identify what type of trust would own the home. We should distinguish between “first party” and “third party” trusts. A first party SNT is funded with the individual beneficiary’s assets and, after the death of the beneficiary, requires reimbursement to the state for Medicaid services. A third party SNT, which is funded with someone else’s assets, such as an inheritance from a parent or proceeds from a life insurance policy, is more flexible and does not require reimbursement to the state.

Options for Titling Homes

A threshold consideration in deciding whether a residence is better owned by an SNT or the individual is whether that person has legal capacity to hold title on their own and what decision-making supports the person might need. Minors simply cannot hold title and would require a guardian (in some states, a conservator) be appointed. Many adults may also need support to manage home ownership. If an adult is under guardianship or conservatorship, the guardian or conservator would likely have legal authority to manage the property. Many other adults with I/DD would benefit from using decision-making supporters to help them meet the obligations of home ownership.

For an adult with I/DD, home ownership can be empowering, as it is for all of us. The responsibilities of home ownership, as well as the status of a property owner, can have very positive impact. Families should take care to ensure that appropriate decision-making supports are in place.

If direct ownership isn’t practical, leaving a family home to a third party SNT, or buying one with trust assets, protects the property from creditors and leaves financial and maintenance issues in the hands of a trustee.

While a residence purchased by a first party SNT gains these advantages during the beneficiary’s lifetime, the home is subject to recovery by the state upon the beneficiary’s death to the extent of the costs paid by Medicaid.

Finally, it is important to look at who else might be living in the home. If the home is owned outright by a first party SNT, there may be complications if other family members also reside there. Distributions from first party SNTs are supposed to be for the sole benefit of the beneficiary, and this may be interpreted differently by various Social Security offices. Depending on the level of caregiving performed by family members, they may be required to pay rent in order to avoid affecting the beneficiary’s eligibility for government benefits. There may even be issues regarding what maintenance the trust should pay for.

Some trustees, seeking to avoid a first party trust payback, arrange for the SNT to purchase a life estate interest in the family residence. By paying a portion of the home’s value, the beneficiary has a right to live there, rent free, as long as he or she lives. In some states, however, this won’t avoid the Medicaid lien, and other family members residing in the home still may need to pay rent to avoid conflict with the sole benefit rule.

Running the Numbers

Of course, as attractive as the idea is, whether it is practical to plan to provide a house to an adult son or daughter with disabilities after you’re gone comes down to dollars.

Any time the purchase or transfer of ownership of a residence is begin considered, it is critical to prepare a detailed budget which takes into consideration things such as the cost of modifications needed for accessibility, long-term maintenance, utilities, taxes, insurance, and general upkeep. A common planning mistake is for people to create SNTs which purchase homes, only to have the housing costs consume such a large part of the available resources that other important purposes of the SNT are compromised, leading to deterioration of the property and forcing sale at a discounted price.

On occasion the solution may be as simple as finding a roommate. The trend today is for families to consolidate resources and purchase housing that provides for more than one adult. While there are some great examples of these types of arrangements, there are also many situations in which such plans simply don’t work. And many trustees are unwilling to deal with their complexity.

Beyond the numbers, persons with disabilities and their families should consider other pros and cons to homeownership, including whether the person may in the future want to live in a different neighborhood or area, the suitability of the home for future family configurations and the potential for aging in place.

Effect on Benefits

The ownership of property and the payment of housing expenses can impact the government benefits the individual may be receiving, including Supplemental Security Income (SSI) and Medicaid.

Notably, for persons who receive SSI, mortgage payments, property taxes, utilities and other housing costs paid on their behalf by an SNT are considered in-kind support and maintenance (ISM) and will reduce SSI. Good planning can often reduce the impact of these rules, but not always.

Likewise, depending on how a home is titled, the purchase or sale of a home can trigger interruptions or reductions in benefits in the months in which these events occur. While the home is an exempt asset for SSI and Medicaid benefits, the sale of the home in the future, if titled to the individual, will result in converting an exempt asset into countable resources. If the home is titled to the SNT, then the sale of the home would have no impact on eligibility.

Medicaid liens and other estate recovery claims are potential pitfalls when persons receiving benefits own their own homes, or have homes held in some SNTs. When a first party SNT owns the home, extra attention needs to be provided if other family members are living in the home and providing support to the beneficiary. When the beneficiary dies, Medicaid is reimbursed from the remaining assets in the first party SNT. If the Medicaid lien exceeds the balance of the assets in the first party SNT and the house is owned by the SNT, then the house may be lost. This can be a great hardship for some families who provide support and services to the beneficiary.

Conclusion

Housing is always a challenge in future planning for persons with disabilities. Arranging for a stable living environment is a high priority, but the considerations are many and complex, and families and their counselors are becoming increasingly creative as they struggle with the housing shortage. Whether an SNT can or should own a house involves a number of considerations, and families should seek advice from a qualified attorney to ensure that their objectives are met.

Amy Tripp is a member of the Special Needs Alliance, a national nonprofit dedicated to assisting individuals with disabilities, their families and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness and advocate for policies on behalf of people with intellectual/developmental disabilities and their families.

 

Trump Budget and Health Care Cuts are Devastating for People with Disabilities, Including Soojung’s Family

WASHINGTON, DC – Today the Trump Administration released its first ten year budget proposal, and the numbers are devastating for people with intellectual and developmental disabilities (I/DD) and their families. On top of the more than $800 billion in Medicaid cuts already approved by the House of Representatives, the Trump Administration is planning for $610 billion in cuts to Medicaid; $72.4 billion in cuts to Social Security’s disability programs; and hundreds of billions more in cuts to other effective federal programs that are vital to people with I/DD.

“Where we invest our federal dollars is a measure of our values as a nation. Today the Trump Administration showed its cards, and coupled with the devastating Medicaid cuts already approved by the House of Representatives in the health care bill, the deck is stacked against people with disabilities.

“In the last few weeks, I’ve traveled to chapters of The Arc in Maryland, North Carolina, Wisconsin, and even Alaska. Chapters of The Arc sprang up in these communities and across the country decades ago because people with disabilities and their families were appalled by the segregation of people with disabilities in inhumane institutions, and they were determined to make progress. And we have fought for rights, closed institutions, opened up the community and classroom, and paved the way to employment. Two effective programs built on bipartisan policy over the years – Medicaid and Social Security – have been essential to this progress. Medicaid provides health care and long term supports that help make a life in the community possible for many people with disabilities, and Social Security is far too often the only thing keeping the lights on and food on the table for a person with a disability.

“That these proposed cuts come in the very same package that is proposing the largest tax cuts in our nation’s history is simply obscene. Giving $5 trillion in tax cuts that primarily benefit wealthy individuals and corporations while simultaneously threatening the lives of everyday people defies comprehension.

“This budget – this Trump card – along with the health care cards being played in Congress as we speak, will dismantle decades of progress for people with disabilities and their families. So I’m calling on all advocates to do what they have done for decades, band together to put a face on these cuts. Share your story in your community and with your elected officials, and tell them to reject these cuts, before we go back in time to an era of discrimination and isolation,” said Peter Berns, CEO, The Arc.

In tandem with this budget news, The Arc is releasing a video which shares the story of a Maryland family which risks losing access to critical care for one of their children due to impending cuts to federal Medicaid funding. The video features Soojung, whose 11-year old daughter Alice, has Rett Syndrome and relies on overnight nursing services to be able to live at home with her family. Soojung speaks about the challenges she and her husband faced accessing these services, including having their requests turned down by private insurers. After years of waiting and uncertainty, Alice was finally accepted to a Medicaid program that provides her with nightly nursing services. These services have led to a great improvement in Alice’s health, making 2016 the first year of her life without a hospital stay.

For many families like Soojung’s, their health and lives could dramatically worsen if the Trump Administration’s proposed Medicaid cuts became a reality or if the over $800 billion in cuts over 10 years to federal Medicaid funding, proposed in the House-approved American Health Care Act (AHCA), go into effect. These cuts would not only force states to cut eligibility for their Medicaid programs, but would also diminish the quality and quantity of services that are provided to people who are already enrolled in these programs.

This video is the fifth in a series of videos The Arc is releasing, sharing the personal stories of people with disabilities and their families, and the impact of the Affordable Care Act (ACA) and Medicaid on their lives.

o   Meet Bryan

o   Meet Thelma

o   Calvin’s Story

o   If I could say one thing

 

The Arc advocates for and serves people with intellectual and developmental disabilities (I/DD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 650 chapters across the country promoting and protecting the human rights of people with I/DD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

A New Series Starts Off by Getting Disability Wrong

Over the years, we’ve seen flawed, misleading reporting on Social Security’s disability programs from National Public Radio, 60 Minutes, and the New York Times. Unfortunately, with the recent launch of a new, widely-criticized series, “Disabled America,” The Washington Post has joined the ranks of news media leaving the public with false impressions about Social Security disability benefits — and even, getting the facts plain wrong.

The Post’s new series will focus on how disability “…is shaping the culture, economy and politics…” of rural communities. The first article featured Desmond Spencer of Beaverton, Alabama as he made the difficult decision to call the Social Security Administration to ask about applying for disability benefits. The article relates that Mr. Spencer acquired painful, ongoing injuries during many years working as a roofer, welder, ranch hand, and garbage collector – including falling off a roof and being unable to get treatment due to his lack of health insurance. Readers do not learn whether Mr. Spencer ever applies for benefits, and do not know if he will qualify.

The Center for American Progress (CAP) summed up the first article’s many flaws:

“…the article cherry-picks one of the counties with the highest rates of disability benefit receipt, to create a dystopian portrait where Social Security disability benefits represent out-of-control government spending riddled with rampant abuse.

Reality looks quite a bit different.”

After digging in, CAP researchers revealed that the Post’s numbers are “flat-out wrong,” including its assertion that up to one-third of working-age adults in many rural counties receive disability benefits. CAP explained in detail the errors in the Post’s analysis and why that conclusion simply cannot be substantiated. The Post issued a correction – and CAP and others quickly pointed out ongoing major problems with the Post’s data, even after the correction.

Thirty-one national disability organizations subsequently called on the Post to correct and clarify the skewed and misleading numbers that remain in the article. Numerous groups have called out a host of additional problems with the story and data. And the Huffington Post and Des Moines Gazette have reported on the article’s flaws.

With the President’s budget director signaling that cuts to Social Security disability benefits may be under consideration, it’s vital that reporters get the facts right. Here’s a round-up of analyses and responses.

Nuts & Bolts of Income Tax for Individuals with Disabilities and Their Families

By Elizabeth L. Gray, CELA, Special Needs Alliance®

As we approach tax season, it is important to understand the different tax credits, deductions, and liabilities affecting individuals with disabilities and their families.  This is a complicated subject. This article provides general information.  If you would like to get advice for your situation, you should consult a professional with knowledge of both taxation and special needs planning.

Claiming a Dependent

The IRS defines an individual with disabilities as someone with a permanent and total disability that results in the inability of that individual to engage in any substantial gainful activity. A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. Substantial gainful activity is considered the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Full-time work (or part-time work done at the employer’s convenience) in a competitive work situation for at least the minimum wage conclusively shows that the individual is able to engage in substantial gainful activity.

You can claim an individual with disabilities as a dependent when:

  • they have lived with you for more than half of the tax year;
  • you have provided at least  half of their support for the tax year; and
  • they are your child, stepchild, foster child, or a descendant of these; or
  • your brother, sister, step-sibling, father, mother, grandparent or other direct ancestor of yours.
  • they are not filing a tax return of their own.

Tax Credits and Exemptions

  • Child tax credit – For each “qualifying child” who will be under the age of 17 at the end of the year, you may take up to a $1,000 credit, based on a sliding income scale.
  • Child and dependent care tax credit – This helps to defray the cost of care services needed in order for you and (if you’re married) your spouse to work. Married persons must both work, or one must work while the other is a full-time student, has a disability, or is looking for work (provided that the spouse looking for work has earnings during the year).  There is no income ceiling on this credit, which can equal 20-35 percent of expenses incurred, up to $3,000 for one qualifying individual, and $6,000 for two or more qualifying individuals. People with higher incomes get a smaller credit than those with more modest incomes.
  • Earned income credit – This is available for people who work and have a child meeting the dependent qualifications previously described. The child must be under 19, a full-time student under 24, or have a permanent and total disability
  • Personal exemption for dependent – The maximum allowable for tax year 2016 is $4,050.The dependent’s gross income for the tax year must be less than $4,000.  Gross income does not include income from services the person performs at a sheltered workshop.

Medical Deductions

The following deductions should be considered both by adults claiming a dependent and by individuals with disabilities who are filing for themselves. For most individuals, these medical expenses are deductible only when they exceed 10 percent of the taxpayer’s adjusted gross income. Until tax year 2017, a 7.5 percent threshold applies to filers who are 65 and older. Typical examples include:

  • Unreimbursed health care expense – Must total more than 7.5 percent of adjusted gross income. Remember to include travel expenses to and from medical treatments, certain insurance payments from already-taxed income (i.e., long-term care insurance), uninsured medical treatments (eyeglasses, contact lenses, false teeth, hearing aids), laser vision corrective surgery, and most medically necessary costs prescribed by a doctor. For example, if the doctor prescribes a humidifier for the home to help with chronic breathing problems, the device and the additional electricity costs to operate it, could be partially deductible.  Remember to keep all receipts for any special medical needs.
  • Special schooling, training, or therapy, including medically recommended exercise programs.  This includes amounts paid for meals and transportation.
  • Aides required for the dependent to benefit from his or her education.
  • Diagnostic evaluations.
  • Certain home improvements and/or modifications required as a result of your dependent’s condition.
  • Special medically recommended diets.
  • Conferences and seminars that are medically recommended and that deal specifically with the medical condition the child has, and not just general health and well-being. Unfortunately, this does not include deductions for meals and lodging incurred while attending the conference or seminar.

Considerations When Filing for Yourself

If you receive Supplemental Security Income (SSI) payments, those benefits are not taxable. In addition, the SSI payments do not get included in Social Security benefits.

What about regular Social Security or Railroad Retirement benefits? Part of the amount received may be taxable. Generally, if the only income received during the year was Social Security or Railroad Retirement, then the amount would not be taxable. However, if an individual received income during the year in addition to Social Security or Railroad Retirement, then half of the Social Security benefits plus the other income may be taxable, depending on your filing status (individual, head of household, etc.) and the total.

If you are receiving disability benefits under a disability retirement plan that was funded by your employer, those benefits are considered earned income until you reach your minimum retirement age. However, payments received from a disability insurance policy under which you have paid the premiums are not earned income.

Other considerations include:

  • Impairment-Related Work Expenses deduction – This is for attendant care services necessary for you to maintain employment. Such services qualify as a trade or business expense. This is available only if the you have a physical or mental disability that is a functional limitation to employment or that substantially limits one or more major life activities (i.e., walking, speaking, performing manual tasks, breathing, learning, or working).
  • Elderly and disabled tax credit – Available to every U.S. citizen, who is 65 or older at any time during the tax year. Tax payers who are under 65 may claim the tax credit if they are retired on permanent and total disability under an employer’s plan, or if they receive taxable disability income during the year and do not reach mandatory retirement age by the first day of the tax year.

Special Needs Trusts and ABLE Accounts

Special needs trusts (SNTs) and ABLE accounts are two important financial planning tools that can significantly contribute to an individual’s quality of life. It is important to understand tax liability for each.

Special Needs Trusts

Income generated by a SNT is taxable and trust expenditures are eligible for deductions, but who is liable depends upon the type of trust involved:

  • A third party trust is set up by an individual for the benefit of someone else (for instance, a parent may establish a trust for a child). When the trust is revocable, meaning that the person who created it can make changes, it is considered a grantor trust and taxes are paid by the person who established it. Once the trust becomes irrevocable, it must report any taxable income or gross income of $600 or more in a given tax year. The trust may either pay the tax itself or issue a form facilitating payment by the beneficiary. Issuing the form to the beneficiary may not be a bad thing because trust tax rates are high, while the beneficiary may be in a low-income tax bracket. Given the personal exemption and, in many instances, the standard deduction, no tax payment may be due. Distributions that represent trust income become a tax liability for the beneficiary.
  • First party trusts, created with funds belonging to the beneficiary with disabilities, are automatically considered grantor trusts in most states (in some locations, it may be necessary to add appropriate language to the trust document), so the beneficiary is responsible for taxes.
  • If an SNT is structured as a qualified disability trust, it may be eligible for larger exemptions. In addition to other requirements, the trust must be irrevocable, and the beneficiary must be under 65 when the trust is created.

ABLE Accounts

As a quick reminder, ABLE (Achieving a Better Life Experience Act of 2014) accounts are modeled after the Section 529 savings accounts and enable certain individuals with disabilities to save funds without endangering their eligibility for means-tested government benefits. Contributions to an ABLE account are not tax-deductible and are made with after-tax dollars. However, ABLE account earnings grow tax-free unless distributions in a given tax year are not made for the designated beneficiary’s qualified disability expenses. Qualified disability expenses consist of a wide range of expenditures: education, housing, transportation, employment training and support, assistive technology and personal support services, health prevention and wellness, and more. In addition, distributions for qualified disability expenses are not considered income.

This overview is not intended as tax advice. Individuals with disabilities and their families should consult a tax professional about their specific circumstances.

 

The Special Needs Alliance (SNA)® is a national non-profit comprised of attorneys who assist individuals with special needs, their families, and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness, and advocate for policies on behalf of people with intellectual/developmental disabilities and their families.

Happy 80th Birthday Social Security!

This week, The Arc celebrates the 80th anniversary of our nation’s Social Security system.

Signed into law by President Franklin Delano Roosevelt on August 14, 1935, Social Security improves our lives in so many ways. It provides basic economic security for workers and their families – including children and spouses with disabilities – when a worker retires, dies, or acquires a significant, qualifying disability. It helps people with disabilities who work to enjoy a secure retirement. And it provides access to health insurance through Medicare, enabling many people with disabilities to get the health care they need.

Social Security insures nearly all Americans, or an estimated 165 million workers. Its protections are hard to come by anywhere else: roughly 7 in 10 civilian workers have no long-term disability insurance, half have no private pension, and one in three has no savings set aside for retirement.

It’s hard to imagine what life would be like without Social Security. Benefits average just over $40 per day, but lift about 22 million Americans out of poverty. For most beneficiaries, that $40 per day is most or all of what they have to get by. Many people with disabilities tell us that even a small cut in their Social Security benefits would mean facing terrible choices, like whether to take a prescribed medication or buy groceries.

Social Security has never missed a payment since 1935. Workers pay for Social Security, and count on it being there when they and their families need it. The Arc knows how important it is to sustain Social Security’s record of success, and keep our nation’s promise to today’s workers and beneficiaries, and for generations to come.

Over the last year, The Arc has been on the front lines, defending our Social Security lifeline against shocking attacks and speaking out against harmful benefit cuts. We’re fighting to prevent a devastating 20% across-the-board cut in Social Security disability benefits at the end of 2016. And we offer many recommendations for strengthening Social Security so that the system works better for people with disabilities and stays financially strong for decades to come.

Please join us in making sure this vital system is there for people with I/DD and their families!

The Arc Urges Congress to Protect our Social Security Lifeline

Washington, DC – The Arc released the following statement from Marty Ford, Senior Executive Officer, Public Policy, in response to several important developments in Washington affecting Social Security, including Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI):

“The Arc applauds the Senate, which yesterday listened to the voices of people with disabilities and seniors, and removed a harmful proposal from legislation to reauthorize our nation’s highways, bridges, and public transportation system. The proposal would have partially funded the bill with cuts to Social Security, SSDI, and SSI. Social Security must not become a piggybank to pay for unrelated programs, no matter how important, and beneficiaries cannot afford any cuts to these modest but vital benefits. The Arc will remain vigilant and ready to fight back if any similar proposals arise as Congress continues to debate reauthorization of surface transportation legislation.

“Earlier this week, the Social Security Trustees released their 2015 report on the current and projected financial status of our nation’s Social Security system. The Trustees continue to find that Social Security’s overall health is strong, but that if Congress fails to act before the end of 2016, nearly 11 million Americans who rely on SSDI will face a 20 percent across the board cut in benefits.

“The Arc calls on Congress to act promptly to prevent this catastrophic cut to our SSDI lifeline. A minor, commonsense financial adjustment can ensure that both of Social Security’s Trust Funds will be able to pay full scheduled benefits through 2034, without any cuts to Social Security disability, retirement, or survivors benefits. We applaud legislation introduced yesterday to do precisely that, by paying all Social Security benefits out of a single Social Security Trust Fund: the One Social Security Act of 2015, sponsored by Rep. Xavier Beccera (D-TX) with 22 original cosponsors.

“The Arc urges Congress to ensure that Social Security will be there for all Americans — including people with disabilities and their families — for generations to come, and to reject any cuts to our Social Security lifeline,” said Ford.

The Arc advocates for and serves people with intellectual and developmental disabilities (I/DD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of more than 665 chapters across the country promoting and protecting the human rights of people with I/DD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

Editor’s Note: The Arc is not an acronym; always refer to us as The Arc, not The ARC and never ARC. The Arc should be considered as a title or a phrase.

SSDI: Time for Action!

A lifeline of financial security for millions of Americans with disabilities, Social Security Disability Insurance (SSDI), is currently under attack. Congress must adjust SSDI’s finances by the end of 2016 to prevent a devastating one-fifth across-the-board cut in benefits. Writing in the Journal of Health and Social Work, The Arc’s T.J. Sutcliffe makes the case for how social workers and other professionals in the field can and should support necessary action to strengthen and preserve this vital support for people with disabilities and their families.

Sign up for The Arc’s Capitol Insider weekly e-news and periodic Action Alerts to stay informed on the latest developments and take action to support the SSDI lifeline.