Many individuals with special needs are not capable of working, so they do not receive health insurance through their employers. Obviously, these folks need coverage more than the average person, and Medicaid is there to fill the void.
The Supplemental Security Income (SSI) program provides a very modest stream of monthly cash to augment the health care insurance. Since these are need-based programs, you cannot qualify if you have more than $2000 in countable assets.
Medicaid Estate Recovery
After the death of a beneficiary, the Medicaid program is required to seek reimbursement from their estate. A person with less than $2000 in assets is not going to have much of an estate, so the cupboard is usually bare when Medicaid is looking through it.
Supplemental Needs Trust
The situation is different with regard to the estate of a benefit recipient if they were the beneficiary of a supplemental needs trust. A person with a disability that comes into money can use the resources to fund this type of trust, and they would not lose benefit eligibility.
When the trust is being established, a trustee would be named to act as the administrator, and the beneficiary would not be able to act as the trustee. Under the rules of these programs, the trustee could use assets in the trust to satisfy the supplemental needs of the beneficiary.
These would be anything other than food and shelter, but the beneficiary could live in a home that is technically owned by the trust. If assets are utilized to provide food and shelter under different circumstances, the benefits would not be completely forfeited.
Medicaid eligibility would remain intact, but there would be a reduction in the Supplemental Security Income payout. The maximum reduction is one third of the benefit plus an additional $20.
There is a long list of goods and services that can be provided by the trustee, including vacations with or without a companion, a specially equipped vehicle, training, tuition, electronic equipment, leisure activities, and medical and dental treatments not covered by Medicaid.
Since a person with a disability could qualify for these benefits if they are the beneficiary of a trust, there may well be assets remaining in the trust after the death of the beneficiary.
If the beneficiary was the source of the funding, it would be a self-settled or first party special needs trust. Under these circumstances, Medicaid would be able to attach property that is held by the trust after the death of the beneficiary.
When a third party uses their funds to establish a supplemental needs trust for the benefit of someone else, the recovery situation is different.
A successor beneficiary would be named in the trust declaration at the time of its creation. After the death of the initial beneficiary, the successor would receive distributions in accordance with the grantor’s wishes. Medicaid would have no access to the assets during the recovery phase.
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