In June 2008, Special Needs Answers discussed how military Survivor Benefit Plans (SBPs) could jeopardize a child with special needs' receipt of other government benefits like Supplemental Security Income (SSI). As the article pointed out, many military families of children with special needs face a difficult decision about whether to participate in the SBP, an important military retirement benefit that provides up to 55 percent of a retiree's pay to his surviving spouse or child.
The main problem with SBPs, from a special needs standpoint, is that the benefit payments cannot be assigned to a special needs trust, and therefore become countable assets for purposes of SSI and Medicaid. Children with special needs who receive SBP payments risk losing needs-based government benefits if their SBP payment is greater than their monthly SSI award.
Military families with children with special needs may have some good news on the way. Support is building for new federal legislation, yet to be introduced, that would allow a military retiree to direct his SBP payments into a special needs trust for the benefit of his child with special needs. Once the benefits are placed into this type of trust they become non-countable assets and the child could maintain eligibility for SSI and Medicaid.
Ron Pearson, the certified financial planner and retired Navy captain featured in our earlier article, is looking for stories of military families who have been adversely affected by the current SBP regulations pertaining to special needs trusts. If you or someone you know can provide a first-hand example of how the SBP's restrictions on special needs trusts have harmed a child with special needs, please contact Mr. Pearson at firstname.lastname@example.org.