Military families with special needs children face unique challenges when planning for their future, as location and other family-life situations can affect their care and support plans. Since a key legislative update in 2016, the U.S. Federal Government has provided new options to help military families better support children with special needs throughout their lives. However, many families may still need to take steps to ensure they’re taking full advantage of these provisions. 

Updates to the Survivor Benefit Plan (SBP) for Special Needs Trusts (SNTs) 

Since 2016, the SBP allows military retirees to designate surviving dependents to receive up to 55% of their retirement pay as an annuity. Before this change, directing the annuity to an adult child with a disability could disqualify them from certain federal or state benefits. 

Now, military retirees can direct SBP payments to a Special Needs Trust instead of directly to the child. An SNT is a legal tool that allows funds to support the beneficiary’s specific needs while protecting their eligibility for other federal or state benefits such as Supplemental Security Income (SSI) or Medicaid. There are attorneys who specialize in this area and are qualified in assisting you to explore your options. Your installation's Exceptional Family Member Program, through the Military and Family Support Office or the Legal Assistance Office, can provide advice and referrals to local attorneys who specialize in special-needs laws. 

Key Points About SBP and SNT Designations 

• Active Servicemembers: Those planning ahead for retirement can designate SBP benefits to an SNT during the election process. 
• Current Retirees: Those already participating in SBP with child coverage can update their election to direct annuity payments to an SNT. 
• After Death of the Retiree: Surviving parents or guardians can establish or redirect an annuity to an SNT for a dependent child. 

Other Essential Steps for Families with Special Needs Children 

In addition to SBP updates, military families should consider these important actions: 

• Incapacitated Dependent Designation: Designating a child over 18 as an "Incapacitated Dependent" ensures they retain benefits such as TRICARE coverage and base privileges, which would otherwise expire. For more information, please see DOD Requirements for Permanently Disabled Adult Children. 
• VA Household Benefits: Veterans with a VA disability rating of 30% or more should confirm that their disabled adult children are officially listed as dependents to maximize household benefits. For information about VA Dependency Claims, please see View Or Change Dependents On Your VA Disability Benefits | Veterans Affairs. 

Although the 2016 changes to SBP and SNTs are no longer new, many families may still need to act. Establishing an SNT or updating SBP elections may require careful planning and legal expertise, but these steps are essential for securing your child's future and preserving their access to critical benefits. 

By taking these steps, military families can ensure their children with special needs receive the support they deserve for a lifetime. 

Please contact AAFMAA Member Benefits for additional questions about SBP and Special Needs Trusts at [email protected] or 800-522-5221, option 2, then option 2 again. 

This article was originally published April 21, 2016.