Effective April 1, 2018, Alberta introduced changes to the Assured Income for the Severely Handicapped Act and Regulations to allow families and guardians more options for financial support for persons with disabilities without negatively affecting their entitlement to provincial benefits through the AISH program.
What is the AISH Program?
In Alberta, the Assured Income for the Severely Handicapped (“AISH”) program provides support for people who are mentally or physically disabled. AISH provides a monthly living allowance, a monthly child benefit, health benefits and approved personal benefits to those who are eligible. Individuals with disabilities who depend on AISH may receive a standard living allowance of up to a maximum of $1,588 per month or $1992 per month for a nursing home or approved designated supportive living facility. Individuals with disabilities may also receive $100 per month for each dependent child, if they qualify. Health benefits such as prescription drugs, emergency ambulance, dental services, optical and diabetic supplies for themselves, their spouse/partner and dependent children are also available. AISH beneficiaries are also eligible to receive personal benefits for specific needs over and above their monthly AISH living allowance, such as emergency costs, addiction treatments, employment/training costs, funeral costs, moving costs and travel costs for health related services, court attendances or training.
To qualify for AISH, the individual must meet the age, residency, financial and medical criteria. AISH is available to adults living in Alberta who have a permanent medical condition that limits their ability to earn a living. Recipients must meet the criteria for financial eligibility. The AISH program considers income and assets that the disabled person and spouse/partner have when considering financial eligibility. How AISH treats income depends on where it comes from and whether it is received by the disabled person or their spouse/partner. While some income is not counted, other income is counted at full value or at partial value.
The AISH program also looks at assets that the disabled person and his/her spouse or partner have when determining AISH eligibility. Assets are either non-exempt or exempt. Non-exempt assets affect the disabled person’s eligibility for AISH. The total market value of all non-exempt assets cannot be more than $100,000. There are a number of exempt assets that a disabled individual can own and still qualify for AISH, including: a house, vehicle, Registered Disability Savings Plan (“RDSP”) and a pre-paid funeral.
The New Act and its Benefits – Trust Exemption and Temporary Asset Exemption
Previously in Alberta, the AISH program could deny or even recover benefits if a recipient had an interest in a trust or other non-exempt assets valued at more than $100,000.00. Even a fully discretionary trust, or “Henson Trust” as it is popularly referred to, in which the trustee has complete discretion on how, when and if payment would be made to or for the benefit of the disabled individual, could make the disabled individual ineligible for AISH.
The amendments introduced to the AISH legislation exempt assets in trusts when determining whether someone is eligible for the AISH program. This exemption allows families to set up trusts, including discretionary trusts, to provide for individuals with disabilities without adversely affecting the individual’s eligibility for the AISH program. In addition, the changes to the AISH legislation establish a one-year grace period to allow the disabled person time to move an inheritance or other lump sum payment, which would otherwise be considered a non-exempt asset, into a trust or other non-exempt asset so that eligibility for AISH is not denied. This grace period would permit a person who receives AISH or his/her spouse/partner sufficient time to make financial decisions instead of immediately becoming ineligible to receive AISH benefits. The money from an inheritance, gift or insurance payout can be used to purchase a house, a vehicle, an RDSP or to set up a trust for the disabled person.
It is important to note that trust income is considered to be partially exempt income, which means part of its value is counted when determining AISH benefits and that it must be reported to the AISH program. Therefore, the trust income actually received will still affect the level of an AISH client’s monthly living allowance.
These welcome changes to the AISH legislation provide greater opportunity and flexibility for individuals and families for estate planning involving disabled beneficiaries. The new rules provide greater certainty and less stress about the potential loss of benefits for parents who want to provide care for a disabled child after they are gone. Also, the AISH recipient who receives an inheritance can have time to invest the money into a trust without losing his/her AISH eligibility.
If you require advice or assistance with respect to estate matters involving disabled beneficiaries, the team at Miller Thomson would be pleased to assist.