Military Survivor Benefit Plans

As part of the legislation passed in the Carl Levin and Howard P. “Buck” McKeon National Defense Authorization Act (NDAA), military members may now designate that survivor benefit payments be placed into a special needs trust for a dependent child with a disability. Prior to this legislation, military members had been able to designate members of their families to receive a percentage of their retirement benefits (Survivor Benefit Plan) after their death. However, a person with a disability who would receive income from a Survivor Benefit Plan would risk losing needed government benefits, such as SSI and Medicaid. This legislation gives military families the flexibility to ensure that their disabled dependent child can receive the benefits of the Survivor Benefit Plan in a special needs trust while continuing to receive benefits through SSI and Medicaid, thereby ensuring a better quality of life for the individual with a disability. The special needs trust designation can even be added after the retiree dies. If the Survivor Benefit Plan had been elected and the dependent is disabled, the dependent’s parent, grandparent or legal guardian may decide to have the payments made to a special needs trust for the individual.

In order to have Survivor Benefit Plan payments placed in a special needs trust, the military member or retiree must submit a written statement requesting the payments be made to a trust, and the statement must include the name and tax identification number of the trust. In addition, there are certain requirements that must be met in order for the payments to be placed into a special needs trust. First, the special needs trust must meet the federal statute. The trust must be irrevocable once established. The trust must have a Medicaid payback provision, and the funds in the trust must be for the sole benefit of the beneficiary. Also, one important limitation of this legislation to be aware of is that the special needs trust option only applies to dependent children of military members, not to disabled spouses.

The Disability Foundation is pleased to be able to provide the 2014 Ohio Community Flexible-Spending Trust (OCFST) as an option of special needs trusts to military families. For years, military service members and retirees were faced with a difficult decision when planning for the future of their children with disabilities. Providing their disabled dependents with the Survivor Benefits Plan payments that they had earned from their years of service could cause their dependents to lose the SSI and Medicaid benefits that they relied on for survival. Now, they are able to place the funds into a special needs trust such as the OCFST to provide for their supplemental needs, while still protecting their SSI and Medicaid benefits.

Comments are closed.