The Alberta government has proposed new legislation to provide families with more options for financial support for children with disabilities without jeopardizing their entitlement to provincial benefits.
The Bill seeks to exempt assets in trusts when determining whether someone is eligible for funds under the existing Assured Income for the Severely Handicapped (“AISH”) program.
BILL 5: AN ACT TO STRENGTHEN FINANCIAL SECURITY FOR PERSONS WITH DISABILITIES
The government of Alberta has proposed to pass Bill 5, an Act to Strengthen Financial Security for Persons with Disabilities, to amend current AISH legislation.
If passed, this new legislation would allow families, guardians and AISH beneficiaries to set up trusts to provide for individuals with disabilities without adversely affecting the individual’s eligibility for the AISH program. This would then provide individuals with disabilities authorization for a living allowance, child benefits and personal benefits under the AISH program, while also allowing families to plan for their disabled child’s future.
The Minister of Community and Social Services, Irfan Sabir, stated, about the proposed legislation:
All Albertans should be able to plan for their children’s future. This legislation will provide Albertans receiving supports from the AISH program and their families with the time and tools to plan for their children’s financial future and security.
At this time, the AISH program can recover, or even deny, benefits if a recipient has a trust account valued at more than $100,000. This may be worrisome to families as parents plan for their disabled child’s future after their deaths.
The purpose of the proposed bill is to provide “peace of mind” to those with disabilities and families attempting to provide for their disabled child’s future following the parents’ death.
WHAT IS THE AISH PROGRAM?
The AISH program provides a living allowance, health benefits and supplementary benefits to eligible adult Albertans with a permanent disability that substantially limits his/her ability to earn a living. Almost 60,000 Albertans currently receive AISH benefits.
Individuals with disabilities who depend upon AISH receive living allowances of up to $1,588 a month. AISH beneficiaries may also receive $100 per month for each dependent child and health benefits (i.e. prescription drugs, dental, optical, diabetic supplies and emergency ambulance) for themselves, spouse/partner and dependent children. AISH beneficiaries are also eligible to receive personal benefit expenses for specific needs beyond their monthly living allowance for such things as health related personal benefits (i.e. addiction treatment, equipment maintenance for wheelchairs and scooters, medical alert service), funeral benefits, moving benefits to set up a new home and benefits to help deal with an emergency situation.
Notably, as mentioned earlier, under Alberta’s current law, those disabled individuals with assets totalling more than $100,000 are not eligible to receive AISH (although there are exceptions for matters such as principal residence and a vehicle adapted for the applicant’s disability).
WHAT ARE THE BENEFITS OF THE PROPOSED LEGISLATION?
The proposed legislation provides clarity and options for disabled Albertans by exempting both discretionary and non-discretionary trusts as assets when determining eligibility for AISH.
If passed, the bill would establish a one-year grace period to allow Albertans time to move an inheritance or lump sum payment, which are considered non-exempt assets, into a trust so individuals do not lose their benefits. This would allow an AISH applicant/beneficiary or their cohabiting partner sufficient time to make financial decisions instead of immediately becoming ineligible for the AISH program.
Currently, only people with non-discretionary trusts are eligible for AISH benefits. Individuals that hold discretionary trust assets, regardless of whether they receive payments from the trust, are prohibited from the AISH program. The new legislation would exempt trusts as assets when determining eligibility for the AISH program.
A discretionary trust means that the recipient has complete control over the money they receive, whereas a non-discretionary trust comes with rules on when and how that money is distributed.
To be clear, all income from the trust is considered as “income” to be reported to the AISH program. Under the AISH regulations, trust income is considered “partially exempt” income. The first $200 of income is exempt, plus 25% of the remainder of the income.
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