By Andrea K. Kovar, Attorney, Generation Law
The Centers for Disease Control and Prevention (CDC) define a Traumatic Brain Injury (TBI) as a disruption in the normal function of the brain that can be caused by a bump, blow, or jolt to the head, or penetrating head injury. The injury can affect a person physically, emotionally, or behaviorally. TBIs can happen at birth or may arise later from trauma or an illness. Traumatic brain injuries do not always include an open head wound, skull fracture or even loss of consciousness. Motor vehicle accidents, falls, violence or gunshot wounds, sports and recreational activities, and military attack or bomb blasts are the most common causes of TBI.
According to the CDC, TBIs are a major cause of death and disability. At the very least, TBIs can be life changing for the injured individual and his or her family/loved ones. Based on the severity of symptoms associated with some form of TBI, it is important for the disabled individual (and/or his or her loves ones) to understand the government benefits that may be available to him or her and to the extent possible, engage in estate planning to provide and protect the disabled individual in the future. This article reviews the government benefits programs that may be available to individuals with TBIs. It also briefly addresses the legal documents that we recommend to assist with the planning for long-term care and financial needs.
Government Benefits for Individuals with TBIs
Government financial and health care programs can play an integral role in planning for individuals with TBIs. The requirements for eligibility can be somewhat complicated. A person may be eligible for one or more of these benefits at the same time. Federal government programs that provide benefits to people with disabilities can usually be grouped into two main categories: “means-tested” programs and “insurance” programs. Means-tested benefits are based on need and available only to individuals with disabilities who have very little, or no, money or other assets. Supplemental Security Income and Medicaid are examples of means-tested government benefits. Government insurance programs, such as Social Security Disability Insurance and Medicare, are based on an individual’s work record or his or her parents’ work record. These benefits are available to all eligible people, regardless of their assets.
Supplemental Security Income (SSI) is an important source of monthly income to people with disabilities, including TBIs. It is a federal entitlement program administered by the Social Security Administration. SSI is a cash benefit intended to cover food, clothing, and shelter. It is available to disabled minors and adults and elderly or blind individuals who have very little income and assets. Social Security defines disability as a mental or physical condition that keeps the individual from earning more than a certain amount of money (for adults) or results in severe functional limitations (for children) and is expected to last at least a year. If a person is under 18, his or her parents’ income and assets are usually considered in determining eligibility. Assets include things like cash, bank accounts, stocks and bonds, real estate, and any other items of value that a person owns. Social Security, however, does not count the following assets when determining eligibility for SSI: the individual’s home, a car, burial plots, personal and household goods, and some insurance policies, depending on their value.
The amount of SSI a person receives is a function of how much income he or she has from other sources, including earnings. If an eligible person has no income, he or she will receive the maximum amount. The amount will be reduced if the person has income or receives other types of support for food, clothing, or shelter. This food, clothing or shelter provided at reduced or no cost is called “in-kind support.” Note, if an SSI recipient only receives a small amount of SSI, it is important to ensure that the amount of in-kind support does not cause him or her to lose all their SSI unless they do not need Medicaid for their health insurance. When someone loses all their SSI, they also lose Medicaid. Many people with disabilities depend on Medicaid as their primary health insurer and may need it more than the SSI cash payments or the in-kind support.
Medicaid covers the medical expenses for people with disabilities who have limited income and assets. Medicaid is an incredibly complex program. Eligibility requirements are incredibly strict. SSI recipients are automatically covered by Medicaid. Note, however, if a person does not receive SSI, there other ways to become eligible for Medicaid. If a person with a disability has income and/or assets below certain thresholds and meets certain other requirements, the person can qualify for Medicaid.
The Social Security Administration also oversees Social Security Disability Insurance (SSDI), which is a cash benefit paid to individuals with disabilities and their parents who have worked enough to be covered by the system. Adults with developmental disabilities who have not paid enough into the Social Security system may receive dependents’ benefits under a parent’s work record if the parent worked enough to be covered and has a disability or is retired. A person can qualify under a parent’s work record if the parent has died, through the survivors’ benefits program. In order to receive dependents’ or survivors’ benefits, the person’s disability must have begun before he or she was 22 years old and be expected to last for at least a year. The amount a person receives in SSDI depends on how much he, or his or her parent, earned while working. If a person receives SSDI on his own work record, SSDI determines the amount he receives based on that work record. If a person receives dependents’ or survivors’ benefits, the amount is usually a percentage of the covered parent’s disability or retirement amount. The amount of assets a person has does not affect his SSDI benefit. However, income may affect SSDI benefits, depending on whether the income is earned or unearned. Unearned income, such as a pension or annuity, is not considered in determining SSDI eligibility. Earned income is treated differently because if a person can work and earn a significant amount of income he or she will not meet the disability requirement and will not be eligible for SSDI benefits.
Work incentives exist that can, in certain circumstances, help people retain eligibility for SSDI if they make more than the set maximum. Earned income that is less than the set maximum does not affect the amount of SSDI benefits. However, whenever someone earns income, it could cause the Social Security Administration to examine whether they are still considered a person with a disability and therefore eligible for SSDI. If a person receiving SSI begins receiving SSDI, he or she could lose their SSI. When someone receives SSDI, they may qualify for Medicare instead.
Medicare is the federal health insurance program for individuals receiving Social Security Disability Insurance or Social Security Retirement benefits. A person automatically receives Medicare after being eligible for SSDI for two years, whether qualifying on his own or through a parent’s work record. In addition, everyone 65 and older who receives Social Security Retirement benefits is eligible for Medicare. Medicare Part A covers hospitalizations and related services while Medicare Part B covers outpatient treatment and physician services. Part B requires eligible people to pay a premium. In addition to the premiums that must be paid monthly, recipients typically have a co-pay for a portion of their care because Medicare typically pays 80 percent or may start paying only after a recipient has paid a deductible. Medicare Part D covers prescription drugs and medications for people who receive Medicare. Since Medicare does not cover the entire cost of a recipients’ care, many people purchase private insurance to pay the co-payments and deductibles. This type of insurance is referred to as “supplemental,” “secondary,” or “Medigap” insurance. If you qualify for both Medicare and Medicaid, Medicaid covers co-pays and deductibles not covered by Medicare. If a person has Medicare but has a low income and does not qualify for Medicaid, he or she may qualify for a Medicare Savings Program. These programs include the Qualified Medicare Beneficiary (QMB) or Specified Low Income Medicare Beneficiary (SLMB). QMB and SLMB help pay for premiums and/or co-pays for low-income individuals.
Estate Planning/Decision Making Tools
Estate planning is another major part of planning for individuals with TBIs. Through this type of planning, a disabled individual (or loved one/family member) can address issues involving most aspects of long-term care including the designation of individuals to manage his or her legal, financial, and health care matters in the event of need/incapacity.
All adults, including people with disabilities like TBIs, are entitled to make their own decisions. Some adults may need help making some decisions but can still make others on their own. Other adults are not able to make decisions at all. Minors and some adults with disabilities need others to make personal, financial and/or health care decisions on their behalf. This can be done informally or formally. The most restrictive way to assist a person with decision-making is through guardianship. A “guardian of the person” can generally make personal decisions such as where a person will live, what kinds of health care he or she will receive and where he or she will go to school or work. A “guardian of the property” determines how a person’s money is invested and spent. An individual may need a guardian of the person but not a guardian of property, or vice versa. Guardianship can be broad enough to cover all decisions or limited to certain kinds of decisions. A person does not need a guardian simply because he or she has a disability or makes mistakes or choices with which others may not agree.
Power of Attorney for Health Care
An agent under a health care power of attorney (HCPOA) can make health care decisions on behalf of another person, which may include instructions to the agent regarding whether to provide, withhold, or withdraw certain medical treatments, often referred to as life-sustaining treatment. Examples include artificial nutrition and hydration (tube feeding) and mechanical ventilation. An advance directive may be referred to as “health care power of attorney,” “medical power of attorney,” or “living will.” Advance directives are usually written but may be made orally, and both written and oral advance directives must be witnessed. The person signing the advance directive must be over age 18, competent to make an advance directive and able to communicate his or her health care wishes, or at a minimum who should make those health care decisions for them.
Power of Attorney for Property
A competent adult can execute a durable power of attorney for property (POAP) in Illinois, which appoints an agent to act on his or her behalf to make legal and financial decisions. The POAP must be in writing and must be witnessed and notarized. The POAP can be broad, or it can be limited so that the agent can only make certain types of decisions. A power of attorney is “durable” if it remains effect after the individual becomes incapable of making his or her own financial and legal decisions.
A trust is a legal document that provides a way for someone to take care of assets, including money or property, for someone else. Trusts can be created for different reasons. A trust can direct who will handle financial decisions, including how to invest and spend the trust money. A trust can also be set up to avoid probate, limit the use of assets for certain purposes, or protect assets for the use and benefit of a person with a disability while at the same time preserving that person’s eligibility for government benefits. This type of trust is called a “supplemental” or “special” needs trust.
There are two types of special needs trusts: third party special needs trusts and first party (also referred to as a “payback trust” or “OBRA trust” or a “d4A trust.” special needs trusts. With a third-party special needs trust, the trust is typically set up by a parent, relative, friend, etc. for the benefit of a disabled person. It is best if the trustee is given complete discretion in making distributions for the beneficiary, so it is crystal clear that the beneficiary has no control over trust assets. This is critical to preserve a beneficiary’s eligibility for government benefits. The trustee may be instructed to limit distributions to those things not covered by government benefits; that is, to supplement the beneficiary’s benefits and not duplicate what the government already provides. With a third-party trust, the grantor decides who gets the trust assets when the beneficiary dies.
With first party trusts, a disabled individual can fund the trust with his or her own assets and still qualify for SSI and Medicaid. The beneficiary must be under the age of 65. This type of trust must specify that when the beneficiary dies, assets remaining in the trust must be repaid to the state Medicaid program up to the amount of benefits provided during the beneficiary’s lifetime. Any funds remaining after that may go to the beneficiary’s heirs, estate or, if the beneficiary is capable of making the decision at the time the trust is created, to whomever the beneficiary chooses.