New Policy Affects Surviving Children with Special Needs

New legislation now allows eligible surviving children with disabilities and incapacitated adult dependents to have their Survivor Benefit Plan payment made to a Special Needs Trust. Previously, a Special Needs Trust did not qualify to receive payments from a survivor benefit plan.

What it means for survivors who receive payments from a Survivor Benefit Plan

Why is this important? Prior to this change, a disabled child or adult who receives Survivor Benefit Plan payments would potentially be ineligible for government benefits programs, such as Medicaid, Supplemental Security Income and housing programs because their income was too high. This change allows the Survivor Benefit Plan payment to be deferred into a trust, allowing them to access other income-based benefit programs.

What do I do now as a parent or guardian? Make sure you have a financial plan in place for your disabled or incapacitated child. If the child is already a beneficiary of the Survivor Benefit Plan payments, the surviving parent, grandparent or guardian may choose to have the annuity payments made to a Special Needs Trust that is established. If the surviving parent elected to choose spouse only as the Survivor Benefit Plan option and now wants to change it to child(ren) only, the parent can contact the relevant Service Board of Corrections to see if this can be done.

What is a Special Needs Trust? A Special Needs Trust is designed for the sole benefit of a person with a disability by providing a set of instructions for managing money set aside to help them. These trusts are governed by state law. This new legislation requires that the Special Needs Trust must also abide by federal statute and cannot be changed once created. Additionally, the trust must be a first-party or self-settled Special Needs Trust with payback to Medicaid upon the death of the disabled child.

Who is eligible for a Special Needs Trust? A "disabled child" is a child who, by medically determined physical or mental impairment, cannot engage in any substantial activity to support themselves. Incapacitation must have occurred prior to age 21 or 23 if enrolled in college. The Exceptional Family Member Program office at your local military installation or local government disability services office will be able to provide information about eligibility for a Special Needs Trust. Get more information on benefits for incapacitated children.

Special considerations: If you determine that your child requires a Special Needs Trust, you should consult an experienced special needs planning attorney to ensure the correct type of Special Needs Trust is set up. For more information on Special Needs Trusts, you can visit the Special Needs Alliance website. You may need to pay a large fee to set up this trust, and, typically, your military legal assistance office cannot do this. This should be part of an overall financial plan for the future care of your disabled child.

TAPS Casework is here to help. If you need help getting started, TAPS can point you to the proper agencies that can provide guidance. Contact TAPS Casework at 800-959-8277 or at casework@taps.org.