Child Support Payments and Children with Special Needs

Originally published by the Ohio State Bar Association on August 21, 2016

Updated September 2019

Written by Logan K. Philipps and William K. Root

Q: My husband and I are ending our marriage. I will have custody of our child with special needs. Could my husband’s child support payments to me affect our child’s government benefits?

A: Yes. Any child support payments you receive will be counted as income to your child, which could reduce or eliminate your child’s eligibility for Medicaid assistance and Social Security payments.

Q: My disabled child is over age 18 and I am his guardian. Can I still receive child support payments for him, even though he is no longer a minor?

A: Yes. A court can order child support payments for your son if the court finds that he is physically or mentally disabled and cannot support himself, even though he is over age 18. However, not all courts in Ohio will issue a new child support order for a disabled child over age 18.

Q: How do child support payments affect my son’s Medicaid eligibility?

A: A disabled person’s assets and income determine Medicaid eligibility. To receive Medicaid assistance, your son cannot have assets (such as money in a savings or checking account) of more than $2,000 as of July 1, 2016. Child support that you do not spend in any given month will be counted as an asset the following month.

Also, two-thirds of what you receive in child support for your son counts as income and may cause a reduction to the Medicaid benefits your son would otherwise receive.

Q: How do child support payments affect my disabled child’s eligibility for Supplemental Security Income?

A: Supplemental Security Income is a U.S. government program that provides stipends to low-income persons who are either 65 years of age or older, or are blind or disabled. If your child is under age 18, one-third of the child support is not counted, but the other two-thirds counts as unearned income. After the first $20, any countable unearned income you receive on your child’s behalf causes a dollar-for-dollar reduction in your child’s SSI benefit.

If your child is over age 18, the one-third exclusion does not apply. This means that all (100 percent) of the child support payment counts as unearned income. After the first $20, your child’s SSI benefits are reduced dollar-for-dollar by this unearned income.

As mentioned above, any child support money you receive but do not spend becomes an asset.

Q: My 18-year-old daughter, Judy, has special needs. Her father and I are preparing to divorce. Judy will live with me, and her father will make child support payments. How can I protect Judy’s eligibility for government benefits and still receive needed child support payments?

A: You can protect Judy’s government benefits, both Medicaid and SSI, if your divorce decree directs the noncustodial parent to make child support payments to a special needs trust for Judy’s sole benefit. Child support payments to a special needs trust cannot be counted as income to the child with special needs.

Let’s say Judy is eligible for SSI benefits of up to $771 per month, and the divorce decree orders Judy’s father to make child support payments of $800 per month directly to you for Judy’s benefit. Every $800 paid for child support will be applied against the SSI benefits. The first $20 is ignored, but the remaining $780 completely displaces the $771 of SSI, causing Judy to lose her SSI eligibility. If, instead, the divorce decree required Judy’s father to make the $800 monthly child support payment to a special needs trust, Judy would receive both her SSI benefit of $771 plus the $800 child support payment.

Q: What is a special needs trust?

A: A special needs trust is a specialized legal document designed to benefit an individual with a disability. The parents of someone with special needs can serve as “grantors” or “trustmakers” for the trust. They can also act as trustees, meaning that they will be responsible for managing the trust and for making distributions from the trust for the sole benefit of their child (the disabled beneficiary of the trust).

Q: Are there rules about how the funds in a special needs trust can be used?

A: The funds in a special needs trust may be used to supplement income from benefits for “quality of life” expenditures such as medical and dental care not paid by other sources, private rehabilitation training, services or devices, supplementary education assistance, entertainment and hobbies, vacations and transportation.

This “Law You Can Use” consumer legal information column was provided by the Ohio State Bar Association. It was prepared by attorneys William K. Root and Logan K. Philipps. Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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