If you are a military retiree and a parent of a special needs
child, a bill in Congress will make it easier for you to provide
for your special needs child after you die. The military allows
retirees with special needs children to participate in the
Survivor Benefit Plan, which permits monthly benefit stipends
up to 55% of the military retiree’s pension to be paid for the
benefit of a disabled child. Currently this survivor benefit
must be paid directly to the disabled child. The Disabled
Military Child Protection Act will allow the survivor benefit
to be paid directly to a d4A or d4C special needs trust. If the
benefits are distributed directly to the trust, the child will
remain eligible for needs-based benefits such as Supplemental
Security Income (“SSI”) or Medicaid.
On May 23, 2013, Senator Kay Hagan (D-NC) introduced
S.1076, which will provide for the payment of monthly
survivor annuities under the Survivor Benefit Plan to be
paid to a special needs trust for the benefit of a veteran’s
disabled dependent child. It is anticipated that Congressman
Jim Moran (D-VA) will introduce a similar bill on June 3rd
when the House returns from recess. A press conference with
Senator Hagan and Congressman Moran will be held on June
4th to promote the bill.
Currently, veterans are allowed to designate a certain
percentage (up to 55%) of their Survivor Benefit Plan to go to
a dependent disabled child upon the veteran parent’s death.
Because of the size of the pension benefits, in some cases,
this places the disabled child in a position that s/he has a
significant spend-down requirement each month in order
to receive Medicaid. This bill, if passed, will ensure that a
dependent disabled child will continue to qualify for Medicaid
without a spend-down. The disabled adult child will also
qualify for or remain eligible for other needs-based benefits
such as food stamps or Section VIII housing subsidy after
the veteran parent dies. It is important that you contact your
legislators to ask them to support and vote for this critically
needed legislation.
Note: There is a major distinction between a d4A or a d4C
special needs trust and the typical trust that a parent provides
in a will or living trust for a disabled child. The d4A or d4C
special needs trust is funded with money that belongs to the
disabled individual (called a first¬-party special needs trust).
The type of trust that parents create in their wills is funded
with an inheritance that never belonged to the disabled child
and is considered a “third-party-funded special needs trust.”
All first-party special needs trusts must contain a payback
clause indicating that state and federal funds under Medicaid
that are paid for the benefit of a disabled beneficiary be paid
back from the trust should there be funds remaining upon
the death of the beneficiary. If the first-party trust has been
spent down for the sole benefit of the beneficiary, no payback
is required. The state will require a detailed accounting to
confirm that all funds were spent down for the beneficiary and
that funds were not used for the benefit of others.
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