Molly Dear Abshire
Wright Abshire, Attorneys
Bellaire, Texas
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20% of U.S. population is disabled at any
given time.
10% of U.S. population is severely disabled
and relies on benefit programs to provide for
basic needs.
Need for planning for public benefits is
growing.
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Evaluates funding options for financing LTC
Assists in qualification for public benefits
Counsels regarding available programs
Preserves existing public benefits
Advises regarding estate planning documents
and prepares same
If capacity:
 Financial Power of Attorney
 Medical Directives
 Will and/or Trust
If no capacity:
 Guardianship/Conservatorship
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Private pay
Long-term care insurance
Public benefits
 Medicare
 Medicaid
 VA Benefits
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Most people feel they will never need LTC
When the need arises many cannot qualify for
LTC insurance & premiums may be costprohibitive
Many mistakenly believe that Medicare will
cover LTC needs
Long-Term Care Partnership Programs
 Not counted as income to the Medicaid recipient
 Benefits paid = assets can exclude
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Rising costs of care for disabled individuals
Unavoidable Impoverishment
Protection of the “Community Spouse”
Private insurance exhausted
Uninsurability
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Many personal needs left uncovered
 Clothing
 Dental care
 Transporation
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Trust planning can help close the gap
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Identify the client
Avoiding fraud
Diligent representation
 Malpractice for failing to preserve public benefits
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Client capacity and gifting
Medicaid planning by non-attorneys
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Enacted March 23, 2010, fully implemented
by Fall of 2014
Expansion of Medicaid benefits to qualified
lower income retirees, effective in 2014,
states may opt out.
Federal High Risk Insurance Program
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Monthly cash assistance program
For qualified individuals who are disabled
before age 65
Worked appropriate number of quarters
Must meet disability criteria
Non-means tested benefit
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Federal Health Insurance Program
80/20 plan
For eligible individuals 65+ and SSDI
beneficiaries after 24 months
Lifetime limits
No LTC
Non-means tested benefit
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Part A = in-patient services, home health,
hospice and limited SNF
Part B = doctor charges
Part C = Medicare Advantage HMO
Part D = voluntary drug plan
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Medicare has deductibles, co-pays and
premiums
Without Medigap, not 100% insured
Choice of provider, but government
regulated
Open enrollment period
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For adult children with disabilities
Provides 55% of base pay divided by eligible
children
TRICARE health coverage
Non-means tested benefit
Two Types:
 Service Connected Disability Compensation –
injury, illness or aggravation of a pre-existing
condition during active duty, non-means
tested benefit
 Non-Service-Connected Disability Pension –
low income disability payments, meanstested benefit
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Disability contracted during active duty (no
wartime requirements)
Veteran must not have been discharged
dishonorably
Injury must not be the result of misconduct
Once disability is determined, a rating must
be assigned
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Disability does not have to be service
connected
Don’t have to be retired military
No requirement for combat
Must meet income and net worth
requirements
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Federal cash assistance program
 $698/month individual
 $1,048/month couple
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Provides minimum level of income for
individuals with disabilities
Means-tested benefit
To be eligible person must be:
 Age 65 or older or blind or disabled,
 U.S. Citizen or qualified alien, and
 Not a resident of public institute.
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Income limitation
Resource limitation
 <$2k for single individual in countable resources
 Excluded resources = home, car, prepaid funeral
and household goods
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ISM = food & shelter
Lesser of $ for $ reduction or 1/3 reduction of
SSI
Example: 1/3 reduction = [$698 x 1/3 =
$292.67 + $20 disregarded income = $252.67]
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Joint federal and state funded program for
medical services
Means-tested benefit
States administer Medicaid 3 different ways:
 209b states
 SSI states
 1634 states
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Example: Connecticut
Use at least one eligibility criteria more
restrictive than SSI program
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Example: Alaska
If eligible for $1 of SSI, then eligible for
Medicaid
States determine eligibility
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Example: New York & Texas
Use SSI eligibility, if eligible for $1 of SSI, then
eligible for Medicaid
SSA determines eligibility
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Hospital – in-patient & out-patient
Physician services
Physical therapy
RX
SNF
Home and community
Community supported living arrangements
Personal care services
Case management services
Emergency care
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For low-income Medicare beneficiaries
Vary according to income, Medicaid states
and institutional status
May pay deductibles, premiums and co-pays
of Medicare
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Nursing Home Medicaid
Waiver Programs
Community Based Services
Personal Care Services
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Categorical Requirements
 US Citizen/lawful alien
 65 years of age or older, blind or disabled
 Medical necessity
 Medicaid facility, Medicaid bed
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Income Test
Resource Test
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Cannot give assets away and qualify for
means-tested public benefits
5 year look back period for all states
Penalty rules vary by state
Disclaimer not okay
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If there were no restrictions, many individuals
would become eligible for Medicaid by giving
their assets away
The federal statute requires states to penalize
transfers for less than fair market value
In Texas, the transfer penalty affects
payments for institutional facility services
and eligibility for home and community
based waiver programs
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Pursuant to OBRA ‘93
States required to recoup funds expended on
Medicaid recipients at death
MERP often affects homestead
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Federal housing subsidy
Means-tested governmental benefit
SNT not considered an asset for eligibility
purposes
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Meet a needs based test determining
inadequate income for adequate care
Suffer from a permanent and total disability
(100%) rating
Veteran must not have been discharged
dishonorably
Must not be the result of misconduct
Served at least ninety consecutive days, with
at least one day during wartime
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Veterans with low incomes who are over age
65 are considered disabled
Unreimbursed medical expenses may reduce
countable income
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A surviving spouse is entitled to a lower
pension, VA calls a “death benefit”
The Veteran must have met the previous
requirements
The surviving spouse has not remarried
And, meets the requirements for the level of
compensation
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The estate of the Veteran must be insufficient
to support the Veteran
The net worth is the fair market value of all
real and personal property
Except for the homestead and value of
personal items within the homestead
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Case by Case analysis
No set amount or limit
Based on actuarial life expectancy and
shortfall
$80,000 fallacy
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Many elderly Vets and spouses may qualify
Allows elderly Vets to afford care at home or
assisted living
Could be used to pay for care during Medicaid
Penalty Period
Monthly cash assistance
Means-tested benefit
Beware of penalty period
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Aid and Attendance – for Veterans who are
unable to perform activities of daily living
without assistance
Housebound Allowances – for Veterans who
are permanently housebound and who meet
the requirements for non-service connected
disability pension
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Largest healthcare network in the country
Service requirements
Financial eligibility requirements
Enrollment – 10-10EZ
Priority/ Status Groups
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Preventative Care Services
Ambulatory (out-patient) Diagnostic and
Treatment
Hospital (in-patient) Diagnostic and
Treatment
Medication and Supplies
Federal & State Veterans’ Nursing Homes
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Most common tool to protect resources
May be
 Self-settled
 Third-party settled
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They supplement (but do not supplant) public
benefits.
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Individuals who are disabled and need public
benefits.
Family members of a disabled person who
needs to maintain public benefits.
SUPPLANTING
 Food
 Shelter
 Medical items or
services paid by
Medicaid
SUPPLEMENTING
 Medical needs not
covered by Medicaid
 Social needs
 Recreational needs
 Educational expenses
2 types:
 Special Needs Trust [(d)(4)(A)]
 Pooled Special Needs Trust [(d)(4)(C)]
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65 y.o. beneficiary’s own money
Corporate trustee
Payback provision
Settlor = parent, grandparent, guardian or
court
Irrevocable
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Beneficiary’s own money
Shared corporate trustee/ administered by
non-profit
Payback provision
Irrevocable
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Testamentary or Inter-Vivos
Funded with third party funds
Not a resource, unless client can revoke the
trust or direct use of its assets for his own
support and maintenance
Distributions to/for client can be countable
income (unless for medical/social purposes)
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Self-Settled Trusts v. Third-Party Trusts
 Self-Settled Trusts: funded with the beneficiary’s
own money
 Third-Party Trusts: funded with other people’s
money
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Always ask yourself: where is the money
coming from to fund this trust; not originally,
but just before funding
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Elderly clients with capacity and I Love You
Wills
 Leave estate to a SNT for benefit of surviving
spouse
 Partition and transfer
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Client is parent/grandparent of disabled child
 Inter vivos or testamentary third party SNT
 Crummey provisions if taxable estate
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Disabled spouse is divorcing
 Consider funding SNT
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Disabled child’s parents divorcing
 Review effect of child support
 Consider funding SNT
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Elderly client with disabled child needs
Medicaid eligibility
 Consider funding sole-benefit trust with SNT
provisions for disabled child
 Immediate eligibility for client, continued
eligibility for disabled child
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Client is receiving personal injury recovery
 Self-settled SNT or pooled trust
 Mandatory distribution language
 Corporate trustee
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Client is receiving inheritance
 Self-settled SNT or pooled trust
 Mandatory distribution language
 Corporate fee except in rare situation
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If trust is cost prohibitive, consider alternative
action
Spend down excess resources
Purchase exempt resources
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SSI POMS standards plus some states impose
additional requirements
States have authority to monitor
administration of and distributions from SNTs
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Trustee choice
No contributions after age 65
Distribution standards
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Meet POMS requirements.
Some states have non-profits who have
formed pooled trusts.
Example: Texas has one pooled trust: ARC of
Texas SNT. New York has many pooled trusts.
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Irrevocable
No support language
Distribution provisions
Termination clause
No payback provision
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Corpus not a countable asset, unless client –
 Can revoke the trust; or
 Direct use of trust assets for his/her own support
& maintenance
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Distributions to/or client are countable
income (if such income is ordinarily counted)
Other distributions do not affect client’s
eligibility
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Distributions restricted to goods/services that
do not count as income (no cash, food, or
shelter)
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Any distribution is allowed that will not
actually disqualify client for benefits.
If client not on benefits, distribution for cash,
food and shelter okay.
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Trustee may make distributions that result in
in-kind support & maintenance (“ISM”),
which reduces SSI payments, but does not
eliminate benefits.
Distributions for room and board, resulting
ISM up to PMV ($252.67) okay.
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Distributions are totally at trustee’s discretion
Trustee may make distributions in any
amount & for any purpose
In some states (not Texas) it automatically
disqualifies client for Medicaid
Texas Medicaid evaluates each distribution
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Notification to SSA
Notification to state agency
Distribution advice
 $ for $ reduction
 ISM
▪ Food
▪ Mortgage payments
▪ Rent
▪ Real property taxes
▪ Utilities
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Attendant Care
Medical supplies and equipment
Dental
Electronic equipment
Legal and accounting fees
Entertainment, recreation, short vacation
Non-food grocery items
Telephone and cable expenses
Clothing
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Self-settled SNTs funded with inheritances,
excess funds and proceeds from PI claims
Resolve Medicare claims, Medicaid liens
Consider annuity structure tie-in to SNT
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Public benefits planning is a growing area of
law
SNTs are an important estate-planning tool
Drafting SNTs is not a “one-size-fits-all”
process
Conform to federal and state law
Inquire regarding beneficiary’s need for public
benefits in every estate planning consultation