Many clients come to our office for estate planning services. Other clients come to our office to plan for a child or loved one with disabilities.

In either case, our office regularly advises clients on the benefits available to them or their loved ones and provides guidance about how an inheritance may affect the beneficiaries they name in their estate planning documents. An inheritance may have unintended consequences that may frustrate a client’s testamentary intent when a beneficiary is receiving government benefits.

One area that we have not written about extensively relates to a particular type of government benefit, Social Security Disability Insurance (SSDI) benefits. While this article is by no means a comprehensive list of issues that arise when a beneficiary is receiving SSDI benefits, the article attempts to address frequently asked questions related to this benefit.

What are SSDI benefits?

SSDI payments are funded primarily through employment taxes. They are made to individuals who can no longer work due to a qualifying disability.

There is currently no income or resource requirement since SSDI benefits are not a “means based” test. To receive these benefits, the applicant only must have worked enough quarters and paid employment taxes during these qualifying quarters and be suffering from a medical condition that meets the Social Security Administration’s definition of a disability.

What disabilities qualify?

The Social Security Administration has compiled what is known as a “Blue Book of Impairments.” The Blue Book lists all qualifying medical conditions that meet the test for disability.

The medical conditions listed in the Blue Book are not limited solely to physical impairments. It also includes numerous intellectual, neurological or emotional impairments. It is important to note that the Blue Book is only for guidance. One may have a condition that does not meet any individual qualification of a particular impairment but that, when viewed in light of other impairments, may qualify the applicant for SSDI benefits.

If you think you or a loved one have an impairment that might qualify for SSDI benefits, you should contact an experienced SSDI attorney.

What is the difference between SSDI and SSI?

Many clients confuse the SSDI benefit with another benefit offered by the Social Security Administration, Supplemental Security Insurance (SSI). While both benefits are available to assist individuals with disabilities, it is important to note the distinctions between each.

The main difference between these benefits is that the SSI program is designed to help individuals who are aged, disabled or blind and have little to no income. It is designed to provide cash assistance to meet basic needs of food, clothing and shelter regardless of the individual’s work history. In order to receive this benefit, the applicant must meet the income and resource requirements of the program.

In contrast, the SSDI program is designed to help those who have worked for a qualifying period of time, but can no longer perform substantial gainful activity. There are no resource or income limits required to receive this benefit.

What is ‘substantial gainful activity’?

Substantial gainful activity is a term used to describe a level of work activity. Work is substantial if it requires significant physical or mental function or the combination of both. If an applicant is deemed to be engaging in substantial work activity, they would not be eligible for SSDI benefits. This factor is often the reason for the initial denial of claims.

Can someone work if they are receiving benefits?

Possibly. If an individual is already receiving disability benefits, the Social Security Administration has work incentives and “Ticket to Work” programs designed to allow beneficiaries to work and continue receiving benefits. The Ticket to Work program is designed to assist beneficiaries to receive job training and vocational rehabilitation as well as job referrals.

However, the Social Security Administration limits the amount of income a beneficiary can receive through working before benefits will stop. If you have questions related to employment while receiving SSDI benefits, you should contact an experienced attorney.

Do benefits replace all prior work-related income?

No. SSDI payments are not designed to replace lost income. Payments are designed to cover basic living needs that may no longer be met due to an inability to work. In 2015, the average monthly disability benefit was only $1,165.

Importantly, a disability payment can be supplemented without affecting SSDI benefits if a beneficiary has a private disability insurance policy. Such a policy may assist in covering further lost income in the event a future disability that prevents the beneficiary from working. For more information regarding how a disability insurance policy can factor into your estate plan, you should contact an experienced professional.

How are SSDI benefits affected by worker’s compensation or other benefits?

If a beneficiary is receiving workers’ compensation or other public disability benefits, they may continue to receive SSDI payments. However, these payments may be reduced. Payments will be reduced if the combined total of SSDI benefits plus workers’ compensation payments and any other public disability payments received exceed 80 percent of the beneficiary’s average work earnings prior to the injury or illness.

As you can see, this analysis can be complicated. In the event you or a loved one are receiving a public disability benefit or workers’ compensation benefits and are thinking of applying for SSDI benefits, you should contact an attorney with experience in these areas to ensure that you understand why your benefits may be reduced and to determine whether any reduction has been calculated correctly.

You should also keep in mind that the above analysis only applies to public disability benefits. In the event you receive disability payments from private sources such as a private pension or insurance benefit, your SSDI benefits should not be affected.

How does an inheritance affect SSDI benefits?

Since SSDI is not a “means based” program and does not require an individual to provide documentation regarding income and resources, an inheritance received by an individual receiving SSDI benefits should not affect their eligibility to continue to receive SSDI benefits.

However, individuals receiving SSDI benefits are often receiving other government benefits, such as Medicaid, or may receive other government benefits in the future. These other government benefits may be affected by an inheritance since the programs may require proof of income and resources.

If a beneficiary included in your estate plan is receiving SSDI or other government benefits, you should consider trust planning and the use of a Supplemental Needs Trust to preserve the beneficiary’s government benefits. For more information on trust planning, please contact an experienced estate planning attorney.

Learn more about the article’s author, and other community education opportunities, at Check out the book, “Long Term Care Guide: Essential Tools for Solving the Elder Care Puzzle,” at the Whistlestop Bookshop or Amazon, and see Keystone’s free directory of services for older adults at Keystone Elder Law has offices in Mechanicsburg and Carlisle. Call 717-697-3223 for a free telephone consultation.