Many military families with disabled children face a dilemma when they retire – whether or not to choose the Survivor Benefit Plan (SBP) retirement option.
SBP will pay up to 55% of the military memberís retirement pay to a spouse and/or dependent child. The member can select a lesser benefit at less cost, if they choose. The military member can select between coverage for a spouse only, a spouse and children, or children only. The member pays about 6.5% of retirement pay for SBP for a spouse and only about $20/month for dependent children.
In addition to or in place of SBP, a military member can provide an array of benefits for a child with a disability. In most cases a disabled child over age 18 can be designated as an Incapacitated Dependent (DD Form 137-5) and be permanently eligible for military post privileges as well as TriCare health benefits.
However, military benefits do not include supported living programs or vocational opportunities and the SBP and TriCare benefits are often not enough to support a child with a disability. So the family looks to other programs. If the disabled child over age 18 has assets of less than $2,000 and minimal income, the disabled adult child will usually be eligible for Supplemental Security Income (SSI) and Medicaid. Although SSI only pays $674 monthly and Medicaid may seem to duplicate TriCare, these programs can be critical to the long term support for a disabled child. If a disabled child is living independently, SSI money pays for food and shelter while Medicaid pays for supported living programs, day programs, job coaching and other supports. Thus, TriCare does not provide the same benefits as Medicaid; they complement each other for the disabled child.
SSI payments are offset by income received by the disabled child. Any unearned income over $20 offsets SSI income dollar-for-dollar. Once SSI income reaches zero, SSI is lost and, in most cases, Medicaid is lost. If the military member dies having chosen SBP for his or her child, the disabled child will receive 55% of the memberís income. If that 55% of retirement pay amounts to more than $674 monthly (2009 benefit amount), the disabled child will lose SSI and Medicaid health care benefits. In my home state and in many states, if the SBP exceeds $2,022 per month, then all supported living assistance, job coaching, respite care and other services provided under Medicaid ìwaiverî programs are lost.
A recent example from my practice is an individual who has lived in a group home for 18 years and attended a day program for people with disabilities. His only income was SSI and those benefits and Medicaid paid for his programs. Then his father, a retired Navy officer, died. His adult son began to receive SBP in the amount of $2,030 per month. This SBP made him ineligible for Medicaid. The private pay cost of these programs is $8600 per month and his SBP could not cover that. He lost his group home placement, as well as his day program.
What about just canceling the SBP beneficiary payments? Unfortunately, once they start, there is no way to stop them. The only option is to not elect the benefit when the military member retires. If you have already made an SBP election including children, and you have a child with a disability, then you can apply to the Board for Correction of Military Records to modify your SBP election. This option must be completed while the member is still alive since SBP beneficiary payments to the disabled child start upon death. The member must complete DD Form 149 justifying why the SBP selection option must not include children (i.e. spouse only). For example, you might tell them you did not understand when you originally made the selection including children how the SBP benefit would negatively impact your disabled childís other benefits. The individual services each have a Board for the Correction of Military Records that will consider such requests.
Non-military parents can easily assign their pension and life insurance benefits to a special needs trust for their child with a disability. This allows the child to receive SSI and Medicaid and supplement those funds with a special needs trust containing other assets or benefits the parents have earned to help care for their child. Defense Finance and Accounting regulations state that the SBP may only be paid to a ìpersonî and they interpret that literally and will not allow assignment of the SBP to a trust for the benefit of that ìperson.î
Support is growing for a legislative fix to this problem, allowing SBP to be assigned to a special needs trust. The Military Coalition has placed this issue on their legislative agenda and House Resolution 2059 was introduced on April 23, 2009. The new law, if enacted, would allow the SBP to be assigned to a special needs trust. An identical provision is expected to be introduced by Senator James Webb of Virginia, as part of the National Defense Authorization Act later in the legislative session. The Special Needs Alliance is actively participating in the lobbying effort on this legislation.
If you have or know of a story of the adverse impact of this SBP rule on a disabled adult child, please share your story with us. We may be able to use it in our lobbying effort.
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