Whenever I see a parent with a disabled child, it tugs at my heartstrings. On the one hand, I can’t imagine the hardships they must face almost every day. I think of our neighbors—a retired couple our age (in their 70s) whose only child is a 40-year-old son with cerebral palsy. So much of their lives seems to revolve around the care for their son.
On the other hand, I’ve heard from readers who tell me that having a child with a disability can offer unique opportunities for growth and learning, both for the child and the family. While it can be challenging, there are benefits to be found in the increased empathy, adaptability, and family bonding it can foster. Additionally, there are various financial and support systems available to help families navigate these challenges. Today, I’m going to talk about one of those support systems: Social Security.
Since almost the beginning of the Social Security program in the 1930s, minor children have qualified for benefits on a retiree’s record. A child gets an amount equal to one-half of the retiree’s full retirement age benefit rate, subject to rules that limit how much a family with children can get in total monthly benefits. (Those rules are too messy to explain in today’s column.)
Benefits to kids usually stop once the child turns 18. But those benefits can continue indefinitely if the child is disabled. And let me clarify that a little more. More often than not, once retirees reach Social Security age, they no longer have minor children at home. But they possibly could have a disabled “adult child” still at home, be living on their own or in some kind of facility that cares for disabled adults. And the law says if that “child” was disabled before the age of 22, he or she will get disabled adult child, or DAC, benefits. And just like a minor child, that DAC will get an amount equal to 50 percent of the retiree’s FRA benefit rate. (When the retiree dies, that bumps up to a 75 percent rate.)
That all sounds relatively simple. But now, let me throw in a little twist. Very often, these disabled adult children will be getting Supplemental Security Income (SSI) benefits before mom or dad files for Social Security. SSI is a federal welfare program that pays a small monthly stipend (currently around $970—although it can be less) to old folks or poor and disabled people. While a disabled child is young and living at home, the income and assets of the parents are counted in the SSI calculation and that usually keeps the child from getting SSI. But once the child turns 18, the parents’ resources no longer count. So, lots of these “disabled adult children” get SSI benefits until one or both parents file for Social Security—at which point the child is switched from SSI to Social Security DAC benefits.
And that switch must be made. Why? Because SSI is a welfare program, and welfare rules state that if a person is on SSI, he or she must file for any other benefits they might be due.
One other point. SSI benefits almost always come with full Medicaid coverage. (Medicaid is kind of like the welfare version of Medicare.) Although the rules can vary from state to state, they generally say that if someone loses their SSI because they start getting DAC benefits, the Medicaid coverage can continue.
To help clarify things even more, here are answers to questions from folks who have a disabled adult child.
Q: I am 64 and plan on waiting until my full retirement age to file for benefits. I will get $3,700 per month then. My wife is about to turn 62. She'll get $1,400 per month if she files for her own Social Security. We have a 32-year-old developmentally disabled daughter getting $967 in SSI benefits. I don’t think my wife should file for Social Security because our daughter will lose her SSI. My wife wants to file anyway. Who is right?
A: I’m not a financial planner. But I think your wife is right. If she files, your daughter will get an amount equal to one-half of your wife’s FRA benefit rate. If her age 62 benefit is $1,400, her FRA rate must be about $2,000. And half of that, or $1,000, would be your daughter’s DAC benefit. And that is more than your daughter’s current $967 SSI check. So, your wife and daughter are financially ahead to file for Social Security. (And again, your daughter will likely keep her Medicaid coverage.)
Oh—and when you file for your own benefits down the road, your daughter will be switched to 50 percent of your much higher monthly benefit. And now here is a similar question from another reader, with just a couple of little twists.
Q: I am a single mom about to turn 62 and want to file for Social Security. My monthly benefit would be $1,120. My disabled 25-year-old daughter currently gets $967 from SSI. I think her SSI check is more than she would be due from my Social Security. How do I keep her off of my Social Security so she can keep getting her SSI check?
A: You can’t keep her off your Social Security. You must file a claim for DAC benefits for her at the same time you file for your retirement benefits. But things will work out, as I will explain.
I’m guessing your full retirement age benefit is about $1,600. And that means your daughter will be due $800 in DAC benefits. But for reasons too messy to explain in this column today, only $780 of that counts against her SSI check. In other words, your daughter would get $800 in Social Security DAC benefits and $187 in SSI benefits ($967 minus $780 equals $187). So, your daughter will end up with $987 in total monthly benefits—compared to the $967 she gets now. And to repeat, she will keep her Medicaid coverage.
