As a parent of a disabled child approaching adulthood, you may be wondering how child support payments will affect their Supplemental Security Income (SSI). The simple answer is “yes”—child support does reduce your child’s SSI benefits. Here’s how it works:
Child support payments ordered by a court are considered income for the child under the SSI program, even if the payments go directly to the other parent. While your child is under 22 and still attending school, one-third of the child support payments are excluded from SSI calculations, meaning two-thirds are counted as income. However, once your child turns 22, the entire child support payment is counted dollar for dollar, reducing their SSI benefit.
Are There Ways to Receive Child Support Without Affecting SSI?
Thankfully, there are strategies to receive child support without negatively impacting your child’s SSI benefits. Here are some options:
1. Assign Child Support to a Special Needs Trust
You can assign child support payments to a First Party Special Needs Trust (also known as a payback trust or (d)(4)(A) trust). This trust can hold the funds for your child’s benefit and use them for expenses like recreation, medical care, therapy, education, respite care, and travel. For this to work, a judge must order the child support payments to be deposited directly into the trust, and the receiving parent must irrevocably assign their rights to receive these payments. This way, the funds are protected from reducing your child’s SSI.
2. Direct Payment to Service Providers
Another option is for the paying parent to cover certain expenses directly. For example, instead of paying child support, the parent can directly pay the vendor for things like clothing, therapy sessions, or other essential services for the child. Since the money doesn’t go to the child, it won’t be counted as income by SSI.
3. Consider Alimony Instead of Child Support
Parents may arrange to make or receive alimony payments instead of child support. However, this would require court involvement and an agreement between both parents. Since 2019, alimony is no longer taxable to the recipient or deductible for the payer, making it a potentially tax-efficient way to support your child without affecting SSI.
What About ABLE Accounts?
One option that isn’t available is having child support paid directly into an ABLE account. Under SSI rules, even though the funds are deposited into the account, they still count as income and will reduce your child’s SSI benefits.
Navigating child support and SSI rules can be complex, but these strategies can help protect your child’s benefits while ensuring they receive financial support. Always consult with a special needs attorney or financial planner to determine the best solution for your family.