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When crafting a special needs plan, a comprehensive understanding of the individual's financial situation is crucial. Begin by determining their budget, considering factors such as rent, living expenses, food, entertainment, and medical costs. Eligibility for programs like access (AHCCCS) or Medicaid can significantly reduce medical costs. However, Supplemental Security Income (SSI) provides a limited amount (approximately $914 per month), which may not suffice for all expenses.
For additional funds, one might consider a third-party special needs trust, often funded from a deceased parent's estate. Many special needs plans incorporate life insurance for the parents to fund this trust. The earlier you start this conversation, the better, as life insurance premiums increase with age. Consequently, a permanent policy may be necessary for adequate trust funding. Hence, it is essential to develop a budget that will support the individual's lifestyle and ascertain the death benefit necessary for this.
Several government benefits cater to individuals with special needs. The primary ones are SSI and Medicaid. Additionally, upon turning 65 and meeting other qualifications, individuals could be eligible for Medicare, though this does not cover long-term care.
In Arizona, for instance, long-term care falls under a separate entity - the Arizona Long-Term Care System (ALTCS). Other programs include the Social Security Disability Insurance (SSDI) based on individual work history, and the Social Security survivor's benefit based on parents' work history.
Benefits vary from state to state; some provide more programs, including in-home support services. It's crucial to familiarize yourself with the offerings in your specific state. At a federal level, the key benefits to consider are SSI, SSDI survivor's benefit, and Medicare or Medicaid.
A special needs trust serves two primary purposes. First, it helps maintain eligibility for government benefits. Second, it enhances the quality of life for the individual with special needs. While SSI covers essential expenses like rent and food, it does not cover entertainment. A special needs trust can bridge this gap and cater to such expenses, thereby enriching the individual's life.
When qualifying for programs like access (AHCCCS), individuals receive coverage for medical care. However, long-term care needs fall under separate systems like ALTCS and have their own qualification criteria.
As special needs may change or escalate with age, a fully funded special needs trust becomes critical in addressing long-term care needs. By providing resources not covered by government benefits, such a trust can significantly contribute to maintaining a high quality of life in the long term.
Guardianship and decision-making for individuals with special needs are determined on a case-by-case basis. Some individuals with special needs may possess the capacity to sign Power of Attorney documents, authorizing another person to make medical or financial decisions on their behalf. However, if they lack this capacity, a court-ordered guardianship is often sought.
As a guardian, you become akin to the parent of a minor child again, tasked with determining their living situation, education, and managing a certain amount of funds. In Arizona, if the individual has more than $10,000, a conservatorship might be required to manage these funds. Nevertheless, with proper special needs planning, no estate would need conservation since it would all be placed in a special needs trust.
In order to become a guardian, you need to go through the court process. This involves nominating a guardian in a will, taking the will to the court, and filing a petition for guardianship. Even though nomination in a will doesn't automatically appoint a person as a guardian, it starts the process. A court investigator assesses the nominated individual to determine their suitability for the role. This includes looking at criminal convictions and other factors that may affect their ability to provide suitable care.
Furthermore, the court will require a medical report to get the doctor's opinion. You can certainly nominate someone, but during special needs planning, it's critical to assess the potential guardian's appropriateness. This includes reviewing factors such as potential substance abuse issues, debts, and their overall ability to act as a guardian. Through careful vetting during planning, you can minimize issues when petitioning the court. For more information on Financial Considerations In Special Needs Planning, an initial consultation is your next best step.
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