Several little-noticed provisions of the recently-enacted law that extended the Bush-era tax cuts fundamentally alter how the Supplemental Security Income (SSI) and Medicaid programs treat tax refunds and other tax credits, making it easier for people with special needs to maintain their benefits.

The Supplemental Security Income (SSI) program provides a small cash benefit to people with special needs who meet very stringent income and asset requirements – most SSI beneficiaries also receive Medicaid coverage. An SSI recipient’s monthly cash benefit is reduced by $1 for each dollar of unearned income a beneficiary receives and by $0.50 for each dollar of earned income that a beneficiary receives for working. Unearned income includes gifts, food and shelter, and other one time payments like inheritances and lottery winnings, and, until these changes took effect, unearned income also included tax refunds and some tax credits. This meant that a SSI beneficiary could lose his benefits if he received a large tax refund.

Under the new law, tax refunds are no longer considered countable income for SSI or Medicaid purposes. Furthermore, any money received through a tax refund will not be a countable resource for 12 months following receipt of the funds, and SSI and Medicaid recipients will be under no obligation to segregate the funds from their other resources (SSI recipients can only keep $2,000 of resources and still qualify for benefits). Because of the change in the law, an SSI beneficiary can now retain his tax refund, even if it puts him over the $2,000 resource limit, for up to one year from the date of receipt, which is welcome news for beneficiaries who usually have to count every penny in order to avoid a disruptive loss of benefits.

The new law also changes the treatment of several other important tax credits. Under previous rules, Making Work Pay, Earned Income, Advanced Earned Income, and Child Tax Credits were all excluded as countable income for SSI and Medicaid purposes, but if the income was retained, it had to be spent within nine months of receipt. Now, the 12-month rule applies to all of these tax credits and, furthermore, First-Time Home buyer Tax Credits that were previously countable as income and as a resource are now exempt and subject to the same countability rules as the other tax credits.

In one more piece of good news, the law applies to any refunds or credits received after December 31, 2009, which means that, in limited cases, applicants who were initially denied SSI or Medicaid benefits due to receipt of a tax refund or credit may actually be retroactively eligible for benefits. The Centers of Medicare and Medicaid Services have also indicated that seniors and other people seeking Medicaid coverage for long-term care will not be subject to transfer-of-asset penalties if they give away their tax refunds or credits during the 12-month grace period.

The Social Security Administration has just announced the amounts they will use to calculate various programs and eligibility, and the amount paid to SSI beneficiaries.

As you can see below, there have been no changes from the 2010 amounts except for an increase in the Medicare Part B premiums.

The Substantial Gainful Activity (SGA) amount for individuals with disabilities, other than blindness, is $1,000 for 2011. The amount is unchanged from 2010.

The SGA amount for individuals who are blind is $1,640 for 2011. The amount is unchanged from 2010.

The monthly earnings amount that we use to determine if a month counts for the Trial Work Period (TWP) is $720 for 2011. The amount is unchanged from 2010.

For 2011, the Supplemental Security Income (SSI) Federal Benefit Rates (FBR) are $674 for an eligible individual and $1,011 for an eligible couple. The amounts are unchanged from 2010.

For 2011, the monthly Medicare Part B premium increases to $114.50.

New Rules Will Further Speed Benefits to Tens of Thousands of Americans with Disabilities

Michael J. Astrue, Commissioner of Social Security, just announced that the agency has published final rules that will further reduce the time it takes to decide applications for disability benefits from those persons with the most severe disabilities—a process that currently takes less than two weeks on average. The new rules allow disability examiners to make fully favorable determinations for adult cases under the agency’s Quick Disability Determination (QDD) and Compassionate Allowance (CAL) processes without medical or psychological consultant approval. It also will help the agency process cases more efficiently as it will give medical and psychological consultants more time to work on complex cases where their expertise is most needed.

“The new rules . . . will help us get disability benefits to the most severely disabled Americans even faster,” Commissioner Astrue said. “This year, more than 100,000 people benefited from our fast-track disability processes and received decisions in a matter of days rather than the months and years it can sometimes take. I am pleased that our fast-track processes will now be even faster and help speed much needed benefits to our most vulnerable citizens.”

Under Social Security’s QDD process, a predictive computer model analyzes specific data within the electronic disability file to identify cases where there is a high likelihood that the claimant is disabled and can quickly obtain medical evidence. The CAL process currently identifies 88 specific diseases and conditions that clearly qualify for Social Security and Supplemental Security Income disability benefits and can be fast-tracked.

The final rules, 20 CFR Parts 404 and 416, can be accessed through the Federal Register online at www.regulations.gov. They will be effective on November 12, 2010.

Additional information about Social Security’s Compassionate Allowances process is available at www.socialsecurity.gov/compassionateallowances.

The Social Security Administration (SSA) will send checks to anyone who is eligible for Social Security Disability benefits or Social Security Retirement Benefits and is living abroad. However, there are a few countries where the SSA is not allowed to send checks. If a person eligible for benefits moves to Cuba or North Korea they cannot receive any checks while they are in either country, but they can get any withheld checks if they go to a country where paychecks can be sent.

In addition, the SSA generally does not send Social Security checks to Cambodia, Vietnam, or areas that were in the former Soviet Union (other than Armenia, Estonia, Latvia, Lithuania, and Russia), but those eligible for benefits may be able to apply for an exception. In such cases, those eligible for benefits may have to agree to certain conditions, such as appearing in person at the U.S. embassy each month, to receive benefits.

The rules for receiving Social Security disability or retirement overseas do not apply to Supplemental Security Income (SSI) benefits. Most recipients of SSI are not entitled to benefits outside the United States. SSI benefits will stop if a recipient is outside the United States for more than 30 days, and benefits won’t start up again until the recipient is back in the country for at least 30 days. However, there are exceptions for dependent children of military personnel and students studying abroad.

Taxpayers with disabilities may qualify for a number of IRS tax credits and benefits. Parents of children with disabilities may also qualify. These seven tax credits and other benefits are available if you or someone else listed on your federal tax return is disabled:

1. Standard Deduction

Taxpayers who are legally blind may be entitled to a higher standard deduction on their tax return.

2. Gross Income

Certain disability-related payments, Veterans Administration disability benefits, and Supplemental Security Income are excluded from gross income.

3. Impairment-Related Work Expenses

Employees, who have a physical or mental disability limiting their employment, may be able to claim business expenses in connection with their workplace. The expenses must be necessary for the taxpayer to work.

4. Credit for the Elderly or Disabled

This credit is generally available to certain taxpayers who are 65 and older as well as to certain disabled taxpayers who are younger than 65 and are retired on permanent and total disability.

5. Medical Expenses

If you itemize your deductions using Form 1040 Schedule A, you may be able to deduct medical expenses. See IRS Publication 502, Medical and Dental Expenses.

6. Earned Income Tax Credit

Earned Income Tax Credit (EITC) is available to disabled taxpayers as well as to the parents of a child with a disability. If you retired on disability, taxable benefits you receive under your employer’s disability retirement plan are considered earned income until you reach minimum retirement age. The Earned Income Tax Credit is a tax credit that not only reduces a taxpayer’s tax liability but may also result in a refund. Many working individuals with a disability who have no qualifying children, but are older than 25 and younger than 65 do — in fact — qualify for EITC. Additionally, if the taxpayer’s child is disabled, the age limitation for the EITC is waived. The EITC has no effect on certain public benefits. Any refund you receive because of the EITC will not be considered income when determining whether you are eligible for benefit programs such as Supplemental Security Income and Medicaid.

7. Child or Dependent Care Credit

Taxpayers who pay someone to come to their home and care for their dependent or spouse may be entitled to claim this credit. There is no age limit if the taxpayer’s spouse or dependent is unable to care for themselves.

For more information on tax credits and benefits available to disabled taxpayers, see Publication 3966, Living and Working with Disabilities or Publication 907, Tax Highlights for Persons with Disabilities available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Michael J. Astrue, Commissioner of Social Security, announced that Starting March 1, 2010, Social Security is adding 38 more conditions to its list of Compassionate Allowances. This is the first expansion since the original list of 50 conditions – 25 rare diseases and 25 cancers – was announced in October 2008. The new conditions range from adult brain disorders, such as early-onset Alzheimer’s disease, and rare diseases that primarily affect children. The complete list of the new Compassionate Allowance conditions is available if you click here.

“The addition of these new conditions expands the scope of Compassionate Allowances to a broader subgroup of conditions like early-onset Alzheimer’s disease,” Commissioner Astrue said. “The expansion we are announcing today means tens of thousands of Americans with devastating disabilities will now get approved for benefits in a matter of days rather than months and years.”

Compassionate Allowances are a way of quickly identifying diseases and other medical conditions that clearly qualify for Social Security and Supplemental Security Income disability benefits. It allows Social Security to electronically target and make speedy decisions for the most obviously disabled individuals. In developing the expanded list of conditions, Social Security held public hearings and worked closely with the National Institutes of Health, the Alzheimer’s Association, the National Organization for Rare Disorders, and other groups.

“The diagnosis of Alzheimer’s indicates significant cognitive impairment that interferes with daily living activities, including the ability to work,” said Harry Johns, President and CEO of the Alzheimer’s Association. “Now, individuals who are dealing with the enormous challenges of Alzheimer’s won’t also have to endure the financial and emotional toll of a long disability decision process.”

“We will continue to hold hearings and look for other diseases and conditions that can be added to our list of Compassionate Allowances,” Commissioner Astrue said. “There can be no higher priority than getting disability benefits quickly to those Americans with these severe and life-threatening conditions.”

Data from the U.S. Census is used to assign congressional seats to states, and it directly affects how more than $400 billion per year in federal funding is distributed to state, local and tribal governments. Accurate counts impact several important programs and services that are critical to the disabled community.

Here is what the census means for people with a disability:

* Helps state and county agencies plan for eligible recipients under the Medicare, Medicaid,and Supplemental Security Income (SSI) programs.

* Distributes funds and develops programs for people with disabilities and the elderly under the Rehabilitation Act.

* Distributes funds for housing for people with disabilities under the Housing and Urban Development Act.

* Allocates funds for mass transit systems to provide facilities for people with disabilities under the Federal Transit Act.

* Awards federal grants, under the Older Americans Act, based on the number of elderly people with physical and mental disabilities.

* Allocates funds to states and local areas for employment and job training programs for veterans and disabled veterans under the Job Training Partnership Act, Disabled Veterans Outreach Program.

* Ensures that comparable public transportation services are available for all segments of the population under the Americans with Disabilities Act.

Supplemental Security Income (SSI) is a federal program that helps people with disabilities and very low incomes pay for food, clothing and shelter. SSI is often confused with Social Security Disability Insurance (SSDI). One of the main differences between the two programs is that SSDI is available to people with disabilities no matter how much money they earn or have, while SSI places very strict limits on a recipient’s income and assets. However, in most states, an SSI beneficiary who receives even $1 from the program also qualifies for Medicaid health coverage, which can be far more valuable than SSI’s benefit itself.

How to Qualify for SSI:

This first requirement is often the hardest for SSI applicants to meet, in large part because the federal government’s definition of “disabled” is so narrow. In essence, adult SSI applicants who are seeking benefits based on a disability must show that they are almost completely unable to work at any job whatsoever. The applicant must have a physical or mental impairment that makes it impossible for him to engage in any “substantial gainful activity,” and this impairment must be expected to last for longer than one year or to result in death. If an applicant is able to engage in substantial gainful activity, then he will typically not be eligible for SSI. A child applicant must have a physical or mental impairment that results in marked and severe functional limitations and can be expected to last for longer than one year or result in death.

An SSI Beneficiary Must Have Very Limited Resources:

Once an SSI applicant has shown that she is disabled, she must also prove that she has less than $2,000 to her name. If the applicant can use or liquidate an asset to pay for food or shelter, the asset will probably count as a “resource” against this limit. A resource would include any funds held in the applicant’s bank accounts, retirement accounts, or in cash. If the applicant has set up a trust that does not meet specific requirements, the trust funds are also counted against the $2,000 limit. The applicant’s own home will not be considered an available resource, and her car is also exempt. The $2,000 resource limit does not disappear once a person qualifies for SSI. If an SSI beneficiary ends a month with more than $2,000 in her name, she will lose her benefits in the following month.

Income Is Key:

SSI recipients get only a modest monthly benefit, and this sum is reduced by any income they may have. In 2009, the maximum federal SSI benefit was $674 a month, although many states add a small supplement to this. In addition, SSI benefits are reduced by $1 for each dollar of unearned income a beneficiary receives (such as interest or dividends), and by $0.50 for each dollar of earned income (such as wages). SSI benefits are also reduced if an adult beneficiary lives in someone else’s home without paying rent, or if he receives free meals. Finally, the income of the people living with the beneficiary can count against the beneficiary. If the beneficiary’s combined income reduces his SSI benefit to zero, he loses SSI, along with any Medicaid benefits that may come with it.

Supplemental Needs Trusts Can Help:

Although SSI’s income and asset rules are highly restrictive, several types of trusts, called “Special Needs” or “Supplemental Needs” trusts, can protect an SSI beneficiary’s assets while allowing her to maintain SSI eligibility. Relatives and friends of the SSI recipient can also set up a trust for the recipient and fund it with their own money. If properly structured, these trusts also will allow an SSI recipient to continue receiving benefits. Unfortunately, a poorly drafted special needs trust can destroy any hopes an applicant has of ever qualifying for SSI.

Quality Advice Is Necessary:

SSI is a very complicated program with rules that most attorneys who do not focus on this practice area have trouble understanding. Therefore, it is essential to seek out a qualified special needs planner, such as the Attorneys at the Law Firm of Needham Mitnick & Pollack, who can guide you or your family through the complicated process of obtaining and maintaining SSI benefits.

By June 4, 2009 more than 52 million stimulus payments of $250 each should have been received by eligible Social Security and Supplement Security Income (SSI) recipients.

If you feel you should have received a payment, and did not, call 1-800-772-1213 (TTY 1-800-325-0778) or contact your local Social Security office.

Not everyone receiving Social Security and SSI payments is entitled to the stimulus payment. The following is a list of individuals not entitled to this payment:

Anyone living outside of the United States or its territories;

Individuals who are no longer lawfully present in the United States;

Individuals whose benefits have been suspended under the law for giving false or misleading statements;

Social Security beneficiaries who are minor children (disabled adult children receiving Social Security or children receiving SSI payments will receive the one-time payment);

SSI beneficiaries who receive benefits at a reduced rate of $30 because they live in a medical treatment facility (such as a nursing home or hospital) and Medicaid pays over 50 percent of the cost of their care;

Individuals only entitled to Medicare and not to Social Security or SSI benefits; and

Prisoners, fugitive felons, and probation and parole violators.

As part of the American Recovery and Reinvestment Act (aka the stimulus bill), Congress has authorized one-time $250 payments to most Social Security, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) beneficiaries. Checks to those who were eligible for benefits under the programs during November or December 2008 or January 2009 will begin hitting the mail in early May and continue through the month.

According to the Social Security Administration (SSA), the payments will be distributed to beneficiaries in the same manner that they currently receive their benefit (either by check, debit card, or direct deposit) but the payments will not be included in the same transaction as a beneficiary’s regular monthly payment. This means that beneficiaries should be on the lookout for two separate payments during May.

People with special needs who receive both SSDI and SSI benefits will receive only one $250 payment, and SSDI beneficiaries under age 18 (or 19 if they are still in school) will not receive any payments at all. However, anyone receiving a payment does not have to worry about the additional income affecting his government benefits — the stimulus payments do not count as “income” for either program, and will not count as an available resource for nine months following receipt of the funds.

Social Security benefits for 50 million people will go up 5.8% next year, the largest increase in more than a quarter century. The increase, which will start in January, was announced October 16, 2008 by the Social Security Administration.

It’s the largest increase since a 7.4% jump in 1982 and is more than double the 2.3% rise that people getting Social Security got in their monthly checks this year.

The 5.8% rise in the cost of living adjustment is a sharp departure from recent years. The COLA increases have been below 3 percent for all but three of the past 15 years.

The biggest cost of living benefit on record was a 14.3% increase in 1980. Social Security benefits have been adjusted every year since 1975.

In more good news, the cost of living increase will not be eaten up by higher monthly premiums for the part of Medicare that pays for physician services. Because of gains in the Medicare Part B trust fund, that premium will hold steady at $96.40 a month, although higher-income people including couples making more than $170,000 annually will see their premiums increase.

The average retired couple, both getting Social Security benefits, will see their monthly check go up by $103 a month to $1,876.

The standard Supplemental Security Income payment for a couple will go from $956 per month to $1,011. The SSI payment for an individual will go from $637 per month to $674 per month.

The average monthly check for a disabled worker will go from $1,006 to $1,064.