Faculty
Patricia E. Kefalas Dudek
Patricia E. Kefalas Dudek & Associates
30445 Northwestern Hwy, Suite 250
Farmington Hills, MI 48334
(248) 254-3462
Email: pdudek@pekdadvocacy.com
Website: www.pekdadvocacy.com
Why Planning for People with
Disabilities is a Great Area of Practice
Growing Need:
• More individuals with disabilities of all ages tie in with elder law
•
•
•
Better medical care/ Long-term support
Longevity
Tie to elder law
Make a real difference in clients’ lives and their Quality
of Life:
•
•
•
•
•
Public benefits
Asset protection & private resources
Structure for care and financial management
Relieving burden on siblings
Create public/private partnership
2
Effect of Affordable Care Act
• Fewer people will need Medicaid because
there is no more pre-existing condition
exclusion
• Fewer people will need to maintain SSI
eligibility in order to get Medicaid
3
Public Benefits
Some of the Available Programs:
•
Medicaid
•
Medicare
•
Supplemental Security Income (SSI)
•
Social Security Disability Income (SSDI)
•
Housing
•
Veteran Benefits
•
Other: http://www.pekdadvocacy.com/wpcontent/uploads/2014/09/Benefits-Checklist.pdf
4
Public Benefits
Medicaid
Vital
• Coverage is more extensive than Medicare or
private insurance
• Often provides supplemental benefits, such as
personal care attendants
• Eligibility and benefits differ among states and
even counties
• In many states tied to SSI – including South Dakota
5
Public Benefits
Medicare
• No asset restrictions
• Eligible after receiving SSDI for 2 years (or with
certain exceptions)
• Not as comprehensive as Medicaid for long term
support
• But more doctors accept reimbursement
• Co-payments and deductibles
6
Basic Eligibility Criteria - Medicare
•
A person is eligible for Medicare if that person (or that person’s spouse):
•
Is 65 years or older, a citizen or permanent resident of the United States, and
has worked for at least 10 years in Medicare-covered employment.
•
•
Is 65 but not eligible for Social Security retirement benefits.
If the person is not yet 65, s/he might also qualify for coverage if the person:
 Has been receiving either Social Security Disability Income or Railroad
Retirement Board disability benefits for at least 24 months from date of
entitlement (first disability payment).
 Suffers form and receives treatment for End-Stage Renal Disease (ESRD -
permanent kidney failure requiring dialysis or transplant).
7
Medicare
Medicare Part A (Hospital Insurance)
•
Medicare Part A helps pay for: inpatient hospital care, critical access hospitals (small facilities that
give limited outpatient and inpatient services to people in rural areas), and skilled nursing facilities
(not custodial or long-term care), hospice care, and some home health care.
•
A person is automatically eligible for Part A at age 65 WITHOUT having to pay premiums if s/he:
 Is eligible to receive SSA or Railroad benefits but has not yet filed for them or already receives
retirement benefits from SSA or the Railroad Retirement Board.
 Had Medicare-covered government employment (includes spouse).
•
If a person does not automatically receive premium-free Part A, s/he might be able to purchase it if:
 That person is age 65 and was not entitled to SSA benefits because s/he did not work or did not
pay enough Medicare taxes while working.
 Or the person was previous on SSDI but no longer receives premium-free Part A because s/he
has returned to work.
8
Medicare
Medicare Part B (Medical Insurance)
•
Medicare Part B helps pay for:
 Doctors’ services, outpatient hospital care, and some medical services that Part A does not cover
(such as physical and occupational therapist services, and some home health. Part B helps pay for
these covered services and supplies if they are medically necessary).
 Hospital observation stay days.
 Generally covers 80% of Medicare-approved amount for covered services.
•
Medicare Part B is optional and requires payment of a monthly premium.
 The standard monthly Part B premium for 2014 is $104.90.
 Part B premiums are higher for singles with income of $85K or more (single) or $170K or more
(joint filers). For additional details, go to: http://www.medicare.gov/your-medicare-costs/partb-costs/part-b-costs.html and http://questions.medicare.gov/app/answers/detail/a_id/2310.
 Higher-income beneficiaries will pay $104.90 PLUS an additional amount, based on the income
related monthly adjustment amount (IRMAA).
9
Medicare
Medicare Part C (Medical Advantage Plans)
•
Medicare Part C plans are alternatives to Traditional Medicare (Parts A&B).
Part C plans are managed by private insurance companies approved by and
under contract with the Centers for Medicare and Medicaid Services (CMS).
•
Plans function like managed care (i.e., HMO or PPO).
•
Plans are required to include coverage that is virtually equivalent to Traditional
Medicare. In some cases Part C plans offer benefits not available under
Traditional Medicare. Many Part C plans include prescription drug coverage.
•
Some Part C plans are labeled Special Needs Plans.
•
These are “special” because of the nature of the benefits offered and
otherwise unrelated to special needs planning.
10
Medicare
Medicare Part D (Prescription Drug Plans)
• Medicare Part D plans are managed by private insurance
companies approved by CMS and are offered by either in
conjunction with a Part C plan or as a stand-alone plan.
• Helps cover the cost of prescription drugs.
• Plans vary in cost and list of formulary drugs that are covered.
Medigap Coverage (Medical Supplemental Insurance)
• Medigap coverage is purchased through private insurance
companies and are designed to fill the co-pay gaps.
11
Medicare
Traditional Medicare Appeals
•
Process begins when a beneficiary receives a Medicare Summary Notice (MSN) denying a claim.
•
There is no appeal right unless a MSN is received.
•
If a beneficiary receives a denial notice from a health care provider, the beneficiary must
request that the provider submit the claim to Medicare
•
(1) The first level of appeal is the redetermination.
•
Must be filed within 120 days of the receipt of the MSN.
•
The redetermination is filed with the Medicare contractor, as listed on the MSN. (42 CFR
405.944.
•
Standard of promptness for a decision is 60 days.
•
(2) The second level of appeal is reconsideration by a Qualified Independent Contractor (QIC)
•
Must be filed within 180 days from the date of the receipt of the redetermination decision
•
Standard of promptness for a decision is 60 days.
12
Cont..
•
(3) The third level is an appeal to an Administrative Law Judge. Must be filed within
60 days from the date of the receipt of the reconsideration notice.
•
•
•
May also be requested when a QIC fails to make a reconsideration decision
within 60 days. This is known as an escalation.
Standard of promptness for a decision is 90 days.
If appeal is a result of an escalation, the standard of promptness is 180 days.
•
(4) The fourth level is a review by the Medicare Appeals Council.
• Must be filed within 60 days from date of receipt of ALJ decision.
• Standard of promptness for a decision is 90 days.
•
(5) The final level is Federal Court.
13
Medicare
Hospital Discharge Appeal Rights
Written notice of discharge must meet the following requirements to be proper:
•
(1) Provide name, address and phone number of the Quality Improvement Organization (QIO)
serving hospital and instructions for appealing decision [42 CFR §412.42 – 412.48].
•
(2) The hospital notifies the beneficiary in writing that:
•
(a) In the hospital’s opinion, and with the attending physician or QIO’s concurrence, s/he no
longer requires inpatient care.
•
(b) Customary charges will be made for continued hospital care beyond the second day
following the date of the notice.
•
(c) The QIO will make a formal determination on the validity of the hospital’s finding if the
beneficiary remains in the hospital after they are liable for charges.
•
(d) The determination of the QIO will be appealable by the hospital, the attending
physician, or by the beneficiary under the QIO Medicare Part A appeals procedures.
14
Medicare
Hospital Discharge Appeal Rights Cont.,
•
The beneficiary must file a timely request for reconsideration of an initial denial
determination to the QIO. The appeal must be filed by noon the next calendar day.
•
During the appeal, the patient will remain in the hospital.
•
If discharge is determined to be inappropriate by the QIO, it will be delayed. If it is
determined to be appropriate, the patient will need to leave or pay privately.
•
If the patient remains an inpatient, the QIO must complete its reconsideration within 3
working days after the QIO receives the request for reconsideration.
•
If discharge is not safe and appropriate or if more time is needed to arrange for proper
after care, the advocate should request a discharge planning meeting.
•
The QIO’s determination will be appealable by the hospital, attending physician, or by the
beneficiary under the QIO Medicare Part A appeals procedures.
15
Medicare
Medicare Beneficiary Rights Advocacy in the Nursing Home
•
The most common reasons given for termination of skilled/rehabilitation services is that the
resident has plateaued or is not making progress/improving.
•
The Centers for Medicare & Medicaid Services (CMS) has issued manual guidance
(Change Request 8458) related to the Jimmo v. Sebelius No. 5:11-CV-17 settlement.
•
Guidance states that No “Improvement Standard” is to be applied by Medicare contractors in
determining Medicare coverage for maintenance claims that require skilled care.
•
The proper standard to justify continuation of Medicare coverage includes prevention of
deterioration. [42 CFR §409.32(c)].
•
In addition, skilled rehabilitation services may continue even for maintenance purposes. [42
CFR § 409.33(c)].
16
Medicare
Medicare Beneficiary Rights Advocacy in the Nursing Home Cont.,
•
If the SNF determines the patient is no longer eligible for Medicare payment for skilled care,
the SNF must give the patient a written “Notice of Non-Coverage.”
•
The SNF is required to submit a “demand bill” or “no-payment” bill to Medicare at the request
of a resident or resident’s representative.
•
The resident may be eligible for an expedited review process, under the following conditions:
•
•
(a) The SNF gives notice two days before the loss of services.
(b) The resident files an expedited appeal to the QIO by noon on the day that they
receive notice.
•
The QIO must inform the SNF of the appeal and the SNF must provide the resident with a
more detailed notice of non-coverage.
•
The QIO has 72 hours to make a determination.
17
Medicare
What Practitioners Need to Know About Medicare
•
There is a broad range of differences between the Medicare plans.
•
Many beneficiaries have been disappointed with Medicare Advantage (C) plans.
Therefore, Traditional Medicare is often the best choice.
•
Beneficiaries are required to pay premiums for Parts B, C and D.
•
Practitioners should become familiar with Medicare options and State Health
Insurance Assistance Program (SHIP) or identify someone who is to work with to help
clients select the best plan(s) to provide for the client’s specific conditions and needs.
•
Dual eligible (Medicare & Medicaid) beneficiaries have added benefits.
18
Public Benefits
Supplemental Security Income
• Restrictive, must be poor, no SGA, & disabled
• $2,000 limit on countable assets
• Federal benefit level ($721 a month in 2014) plus state
supplement
• Dollar-for-dollar income offset (after $20 disregard)
• In-kind income ruler
• In kind support and maintenance (ISM) – 1/3 of $721 plus
$20 - $260 (in 2014)
19
Supplemental Security Income (SSI)
• Background – Nixon nationalized state welfare
• Administered by SSA
• Financing – federal general revenue funds
• Relationship to Medicaid - $1 of SSI = Medicaid
• Section 1634 of SS Act
• State Enabling Statutes
• Categorical Eligibility + Poverty – both are required
• Either Aged – 65+ or Disabled
• Countable Assets less than $2,000 plus low income
20
Sequential Evaluation Process
(“Substantive Law” - see Appendix 2)
Methodology to determine if someone is
“disabled” under SS Act:
1. Engaging in Substantial Gainful Activity?
2. Has a non-severe impairment?
3. Meets federal Listing of Impairments?
4. Can perform Prior Relevant Work?
5. Can perform new occupation?
Given the claimant’s RFC + Age + Education
21
SSA Claims and Appeals Procedure
Mostly the same for T2 and T16
(“Procedural Law” - see Appendix 3)
1. Initial application
2. Reconsideration
3. Administrative Law Judge Hearing
4. Appeals Council – Washington, D.C.
5. U.S. District Court
6. U.S. Circuit Court of Appeals
7. U.S. Supreme Court
22
SSI non-financial requirements
• Citizen or lawful resident
• Not be a fugitive felon, in prison, violating parole
• Not be outside the U.S. for more than one month
• Must apply for all other benefits for which you are
eligible
• Accept medical treatment
• And other requirements (see written materials)
• If an alien, meet special requirements
23
SSI financial eligibility - principles
• Two tests –income and resources (assets)
• Measured on a month-by-month basis
• Amount paid has nothing to do with
“calculated need” – it is Federal Benefit Rate
(FBR 2014 is $721) less all “countable
income”
• “Income” is not IRS income but “public
benefits income
24
SSI financial eligibility principles,
continued
• Claimant’s responsibility to report income
and assets
• Retrospective monthly accounting
• “Income in the month received becomes
resource (asset) if retained on first of
following month”
• For cessations, Goldberg vs. Kelly rules
apply
• No liens at death to repay SSI
25
SSI financial eligibility principles,
continued
• “Countable Income” is anything “that comes
in” that is not counted nor excluded by law
• Things that are “not income” by law
• Proceeds of a loan
• Tax refunds
• Payments made to third parties for goods or
services that are not ISM
26
SSI financial eligibility principles,
continued
“Exclusions of income”
• Ten Earned Income exclusions – applied in strict order
• Twenty-Two Unearned Income exclusions –
• Deemors (healthy parent or spouse) entitled to
exclusions before deeming applies to SSI claimant
27
SSI Income – Four Types
The four types of income are treated differently in
terms of how much is subtracted from the SSI
monthly check. The four types are:
• Earned income
• Unearned income
• In-kind Support and Maintenance (ISM)
• Deemed income – parent to child, spouse-to spouse
28
SSI – Earned Income
• Earned (vs. Unearned) is highly favored by the law
• Subtract $20 general income disregard, then take $65 off the
top, then subtract 50%, and the remainder is “countable
income.”
• Example:
Joe’s part time work pays $400 that month
Earned Income
Less general income disregard
Less earned income exclusion
Remainder
Less 1/2 of earned income
TOTAL COUNTABLE INCOME
SSI Federal Benefit Rate
Less Countable Income
TOTAL SSI CHECK AMOUNT
$400
($20)
($65)
($315 - $157.50)
$315
($157.50)
$157.50
$721.00
($157.50)
$563.50
29
SSI – Unearned Income
• Gifts are countable “unearned income”
• SSDI, pensions, etc., are “unearned income”
• Everything is unearned unless it is earned
• All unearned income, except $20, counts unless on the
specifically excluded list – examples of exclusions:
• One third of child support
• WWII war reparation payments
• Interest on excluded burial space purchase
30
SSI Income – In-kind Support
and Maintenance (ISM)
• ISM consists of ten “food and shelter” items
• ISM is payments made to third parties that give
the SSI claimant one or more of the ten “food
and shelter” items
• No matter how much is paid, the Presumed
Maximum Value of the “food and shelter” is
$260.33 that month
• $721 FBR minus $260.33 = SSI check of $460
31
SSI and ISM, continued:
The ten “food and shelter” items are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Food
Mortgage (including property ins. required by lender)
Real property taxes (less any tax rebate/credit)
Rent
Heating fuel
Gas
Electricity
Water
Sewer
Garbage removal
ONLY THOSE TEN TRIGGER THE PMV
REDUCTION FOR ISM !!!
32
The Second Financial Eligibility Test: Few
Resources (assets) - Principles
• Measured on the first moment of the first day of each
month
• “X” is “income in the month received, and if retained
becomes a resource on the first of the next month”
• Resource is anything owned by the claimant that can be
converted to cash, unless excluded by law
• It is a resource “if the claimant has the right, authority,
or power to liquidate the property”
• Resources of deemor may count
33
SSI Resources - exclusions
• The first $2,000 ($3,000 if married couple)
• Home of any value
• Car of any value
• Household goods and personal effects used by
claimant
• SNT investments (“my millionaires on welfare”)
• Retroactive SSI or SSDI payments for 9 months
• And others (see list in written materials)
34
SSI – Deeming of Income and Resources Principles
• Deeming applies in ONLY THREE situations –
1. parent to minor child (stops on child’s 18th
Birthday)
2. Spouse to spouse
3. Sponsor to alien
• For parent and spouse deeming, only applies if
deemor lives with SSI claimant
• Certain things not deemed – e.g., deemor’s IRAs
and pension funds
35
SSI Deeming – cont.
• No deeming upstream nor laterally
• Child’s income not deemed to SSI sick parent
• Siblings’ incomes not deemed to SSI sick child
• Remember: Parental deeming
stops at age 18
36
The Following
Deeming
Eligibility
Chart for
Children
does not apply
when:
• The parent(s) receives both earned income (for
example, wages or net earnings from self-employment)
and unearned income (for example, Social Security
benefits, pensions, unemployment compensation,
interest income, and State disability).
• The parent(s) receives a public income maintenance
payment such as Temporary Assistance for Needy
Families (TANF), or a needs–based pension from the
Department of Veterans Affairs.
• The parent pays court-ordered support payments.
• The child has income of his or her own
• Any ineligible (healthy child not on SSI) child has
income of his or her own, marries, or leaves the home.
• There is more than one disabled child applying for or
receiving SSI Benefits.
37
SSI Penalty for Transfers
• Look back period is 36 months
• Penalty is amount transferred divided by
FBR in the month transferred (Example:
$10,000 divided by $721 yields a penalty of 13
months from the past date of transfer)
• Result is the number of months of
ineligibility for SSI
38
SSI Transfer Penalty (cont.)
Exceptions to Transfer Penalty
• Transfers to SNTs
• Transfer of home under certain conditions
• Non-home transfer exceptions
• Resource returned, then claimant seeks
conditional benefits pending sale
• Transfers for purposes other than to qualify for
SSI
• Undue hardship
39
Fees in Social Security Claims
• Highly regulated
• Failure to follow = civil and criminal penalties
and disbarment from appearing before SSA
*
I SAY BRING IT ON!!
• Fees cannot be paid unless approved by SSA in
most cases
40
Public Benefits
Social Security Disability Income
• Not based on financial eligibility
• Benefit based on beneficiary’s work record or that
of parent
• If based on parent’s work record, child must have
been disabled before age 22, and parent must either
be receiving SS benefits or be deceased
• Benefit may be more or less than SSI benefit
• Can change from SSI to SSDI when parent retires
• Easier to manage than SSI
41
Social Security Disability
Insurance (SSDI)
Basic Eligibility Criteria




40 SSA work credits, 20 of which must have been earned in the last 10 years ending
with the year that the individual became disabled.
 Number of credits required is based on age, and when the individual
becomes disabled.
 In 2014, an individual gains 1 credit for each $1,200 of wages. Therefore,
earnings of $4,800 equal 4 credits (no matter when earned in the year).
Paid Social Security taxes on earnings.
Total Disability - inability to perform any Substantial Gain Activity (SGA.)
5 question step-by-step process to determine disability.
SSDI Income/Medical Eligibility Issues





SSDI is an entitlement and there is no asset limit for eligibility.
There is no deeming under SSDI, except for possible earned income.
SSDI benefits are not affected by unearned income (unlike SSI).
Trial Work Program (TWP) - Individual on SSDI can test ability to work.
After 24 months of SSDI eligibility, eligible for Medicare.
42
Social Security Disability
Insurance (SSDI)
Eligibility for Children, Disabled Adult Child Benefits

Adult child can receive SSDI benefits on parent’s work record, if:
 A parent/s who is disabled or retired and entitled to Social Security benefits.
 A parent who died with qualifying work record.
 In some cases a child could be eligible based on the work record of his/her grandparent.

SSA relies on the same criteria to evaluate an adult child’s disability as is used to determine
disability for workers.

Benefits are available to an adult child who received dependent’s benefits on a parent’s Social
Security earnings record prior to age 18, if s/he is disabled at age 18 and is unable to engage in
SGA.

Adult child receiving SSI benefits automatically switches to SSDI when working parent
becomes disabled, dies or retires.

If adult child receives SSDI benefits based on his/her own work record, and if the child was
disabled prior to age 22, s/he retains insured status but is entitled to receive benefits on a
parent’s work record (if benefit rate is higher).

If child is under the age of 18, with or without a disability, the child will receive the Child’s
Benefit provided his or her parent is retired, disabled or deceased.
43
Social Security Disability
Insurance (SSDI)
Social Security Benefits Eligibility for Spouses and Ex-Spouses
 A spouse and an ex-spouse may qualify for benefits based on a worker’s record.
 The money paid to a divorced ex-spouse does not reduce the worker’s benefit or any
benefits due to the worker’s current spouse or children.
 Ex-spouse must be unmarried and must have been married to worker at least 10 years
prior to divorce.
Disability Benefits for Widows and Ex-spouses
 To qualify for disability benefits, a widow/er (ex-spouse) must be found to be disabled
within a prescribed time frame.
 The widow(er) must have become disabled either:
 Before the death of the insured spouse, or
 Before his/her entitlement to father’s or mother’s benefits has ceased, or
 Within seven years after either of these events, or
 Within seven years after a previous entitlement to disabled surviving spouse’s
benefits terminated because disability had ceased.

To be eligible, a widow/er must have attained age 50, but not attained age 60, and be
under a disability which began the prescribed period ends.
44
Social Security Disability
Insurance (SSDI)
SSDI Notice of Overpayment or Reduction – Waiver
There are
2 ways to challenge an overpayment claim by SSA:
 Reconsideration (SSA-561-U2), if:
 The individual is over paid and does not agree with the amount.
 Can be done in conjunction with request for Waiver.
 Must be requested within 60 days of receipt of denial letter.
 Waiver (SSA-632-BK), if:
 The individual concedes the overpayment but seeks relief from
recoupment.
 Individual must be “without fault.”
 Enforcement of overpayment would either be:
 “Against equity and good conscience” (beneficiary relied to their detriment
on benefits paid and changed financial position, eg., sent child to college,
bought home, etc.) or,
 Would “defeat the purposes of the Act” (beneficiary can’t afford to repay
overpayment.)
Watch out for Administrative attempts to charge an overpayment after statute of limitations
(4 years) has passed even though there is no fraud.
Make sure Administration shows the math for their calculations.
45
Social Security Disability
Insurance (SSDI)
Appeals Process
 Appeal must be submitted within 60 days of date denial or negative action
letter is received.
 SSA assumes the letter is received 5 days after date of the letter,
unless there is evidence showing it was received later.
 A request to keep benefits from being cut off must be received
within 10 days of receipt of the letter.
 If benefits do continue and the appeal is unsuccessful, the
claimant may have to pay back any money s/he was not eligible to
receive.
 There are four levels of appeals:
 Reconsideration / Waiver.
 Hearing by an Administrative Law Judge.
 Review by the Appeals Council.
 Federal Court review (District, Court of Appeals, Supreme Court).
46
Social Security Disability
Insurance (SSDI)
What Practitioners Need to Know About SSDI

Approximately 60% of initial applications for SSDI are denied.

Denials often due to insufficient evidence of the severity of the
medical conditions.

“Packaging” the claim will improve results.

Practitioners should decide whether to assist with applications as
part of the practice or to outsource the benefits application process
to a local expert. Same with appeals.

Attorney fees are regulated by SSA.
47
Social Security Disability
Insurance (SSDI)
Additional SSDI Resources

Sanford J. Mall and Patricia E. Kefalas Dudek. After Your Client has SSDI, What About
Medicare?- SSDI Eligibility Challenges, NAELA Advanced Elder Law Institute Presentation,
(October 23-26, 2008).

The Basics of Social Security Disability Insurance (SSDI) - 9/2/10
 Available to members of the Academy of Special Need Planners at:
http://www.specialneedsplanners.com/resources/

Ticket to Work: A Way to Ease Into the Workforce Without Losing SSDI Benefits - 1/6/2009
 Available to members of the Academy of Special Need Planners at:
http://www.specialneedsplanners.com/resources/.

Social Security Website
 www.ssa.gov/disability/.
 Social Security Disability Practice, Thomas E. Bush (James Publishing.)
 The Wilborn Method — Social Security Disability: A Step-by-Step Guide to Getting Your
Benefits, Ralph Wilborn, Tim Wilborn, Etta L. Wilborn (Disability Key Books, LLC.)
48
Public Benefits
Housing
• Section 8 most prominent but 811 & others are
growing
• Other state and federal programs, so ask
• Section 8 has tough rules on treating recurring
payments as income
• But applied differently by different agencies
49
Veteran Benefits
• Veterans with disabilities may receive
benefits for:
• Service Connected Disabilities
• Non-Service Connected Disabilities
• Income and Resource limitations apply
• SNTs – (d) (4) (A) and (C) – not currently
recognized by the Veteran’s Administration,
but no transfer penalty (for the moment)
50
What is Traditional Medicaid?
• A jointly funded, Federal-State health insurance program for
low-income, needy people, and persons with disabilities.
• The law establishing Medicaid can be found in Title XIX of
the federal social security statute; sometimes Medicaid is
referred to as, “Title XIX”.
• Each state then has it’s own statutes and regulations as the
program is administered by the states.
• Each state has a department that administers the program,
typically the Department of Human or Social Services. These
departments likewise have program manuals which state the
policies and procedures the Department uses to administer
the Medicaid programs.
51
Medicaid Services
(States do vary in the services offered)
•
Inpatient and Outpatient Hospital and Clinics
•
Physicians, Nurses, Dentists, Vision care
•
Pediatrics
•
Laboratory and X-Rays Dialysis
•
Long Term Care (Nursing Homes)
•
Prescription Medications
•
Medical supplies, equipment, and appliances (wheelchairs, etc.)
•
Non-Emergency medical transportation
•
Hearing aids/prosthetic eyes
52
Who is Eligible for
Medicaid?
53
Who is Eligible for Medicaid?
• US citizens
• Permanent residents
• Pregnant Women (without regard to citizenship
or legal status)
• Immigrants who entered the US illegally
(only in case of medical emergency)
• Must be a resident of the State in which Medicaid
is sought!! HUGE ISSUE
54
Who is Eligible for Medicaid?
• Supplemental Security Income (SSI) Recipients
• Persons who are blind, disabled, or aged (defined as 65 years
or better) and who meet certain income and resource
limitations; these income and resource limits will be
discussed in greater detail
• Pregnant women with family income less than 200% of the
Federal Poverty Level
• Children under age 6 with family incomes less than 133% of
the Federal Poverty Level
• Children ages 6 – 19 with family income up to 100% of the
Federal Poverty Level
55
Who is Eligible for Medicaid?
Definition of “Blind or Disabled”
Under 18: The individual must have a medically determinable
physical or mental impairment which results in marked and
severe functional limitations and can be expected to result in
death or last for a continuous period of not less than 12 months
18 and Over: The individual must have a medically determinable
physical or mental impairment which results in the inability to
engage in any substantial gainful activity and can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months
Blindness defined: see www.ssa.gov
56
Who is Eligible for Medicaid?
Substantial Gainful Activity (SGA)
• “Substantial Gainful Activity” is measured by level of work
activity and earnings.
• Work is “substantial” if it involves doing significant physical or
mental activities, or a combination of both.
• “Gainful” work activity is either of the following:
• Work performed for pay or profit;
• Work of a nature generally performed for pay or profit; or
• Work intended for profit, whether or not a profit is realized.
• 2014 income level for SGA –
• Blind:
$1,800 per month
• Disabled:
$1,070 per month
57
Medicaid Counted Resources
“Resources” also sometimes referred to as “assets”
are things an individual owns such as:
•
Cash
•
Land
•
Bank Accounts
•
Life insurance
•
Stocks
•
Personal property
•
U.S. savings bond
•
Automobiles
• and anything else which could be changed to cash and used
for food or shelter, subject to certain exclusions.
• The resource limit for most of these programs is $2,000.00
for a single individual.
58
Examples of Excluded Resources
 Home in which the beneficiary
resides
 Joint Ownership in Residence
 Real Property Unable to be Sold
 One automobile, there may be an
equity limit
 Food Stamps
 Household goods
 School Lunch Programs
 Personal effects
 Child Nutrition Programs
 Burial Space
 Grants, Scholarships, Fellowships, or
Gifts Set Aside to Pay Educational
Expenses
 Irrevocable Prepaid Burial Contractmay be limits on the amount
 Life Insurance (face value and the face
value of any other life insurance
policies total $1,500 or less)
 Resources and income in a special
needs trust
59
Medicaid – Counted Income
Income is any item an individual receives in cash or
in-kind that can be used to meet his or her need for
food or shelter, including the receipt of anything
which can be applied, either directly or by sale or
conversion, to meet basic needs of food or shelter,
subject to certain exclusions.
60
Examples of Excluded Income
•
First $20 per Month. However state may vary in these rules if the recipient is not also
an SSI recipient.
•
Infrequent or irregular income: $60 per quarter of infrequent or irregular unearned
income and $30 per quarter of infrequent or irregular earned income
•
Other items if not food or shelter and cannot be used to obtain food or shelter
•
Certain Medical and Social Services
•
Food and shelter received during medical confinement
•
Personal services performed for an individual
•
Income Tax refunds
•
Rebates and Refunds or other return of money he or she has already paid
•
Loan proceeds
CAUTION: an item may not be countable income, but if held past
the month’s end, it could become a countable resource!!
61
Pathways to Medicaid
Pathway
Income Eligibility
Asset Limit
(Individual/Couple)
SSI
< 74% of poverty
Medicaid
Criteria are essentially the same as SSI in most states,
except applicant does not wish to receive SSI payments
Medically
Needy
Spend-down
income
$2,000
$3,000
Medicaid
Benefits
$2,000+
$3,000+
Y
Y
62
Pathways to Medicaid
Pathway
Income Eligibility
Asset Limit
Medicaid
(Individual/Couple) Benefits
NH Res.
< 300% of SSI level
$2,000
$3,000
Y
Home-Based < 300% of SSI level* $2,163
Waivers
Y
QMB
N
< 100% of poverty
$4,000
$6,000
Medicare Premiums
& Cost-Sharing
Y**
*Will vary among states
**Qualified Medicare Beneficiary; eligibility will vary among states.
63
Transfer of Asset Rules
For long term care Medicaid programs, such as skilled
nursing home placement or long term home and
community-based services, there are transfer of asset
rules in addition to the resource and income rules. This
is known as the 5 year look-back. If the applicant has
given away assets, there may be a period of ineligibility.
64
Medicaid Services
Some Other State Options
Home and Community Based Waiver Programs (HCBW)
•
Must meet regular Medicaid requirements
•
Programs vary from State to State
•
States can use federal Medicaid funds for Medicaid services to
persons needing institutional levels of care which can be provided at
home or in the community
Katie Beckett Option (children with special needs)
•
Home care for the child must be appropriate
•
Estimated cost of community services may not exceed the cost of
institutional care
•
The child must require the level of care normally
provided in an institution
65
Medicaid Services
Some Other State Options
Ticket to Work
•
Meets the increased income and resource requirements
established by the State (for example, CT allows an individual
to earn up to $75,000 per year and have up to $10,000 in
resources under CT’s Employed Disabled Program)
•
Must be “disabled” and otherwise (SSI) but for his or her
earnings
•
A person is not required to be receiving SSI in order to be
eligible under the Medicaid provision
•
The fact that the individual is working will not be considered
when making the disability decision for this law
•
Some modest co-payments may be required
66
Medicaid in South Dakota
 What Programs Are Available To Assist People
With Disabilities in South Dakota?
 Is there a Medicaid waiver program in South
Dakota? South Dakota has several waivers including:

CHOICES;

Family Support 360;

Assistive Daily Living Services;

Elderly
67
Medicaid in South Dakota
 What state department handles the Medicaid waiver program in
South Dakota? The CHOICES and Family Support waivers are both
operated by the Department of Human Services (DHS), Division of
Developmental Disabilities (DDD); the Assistive Daily Living Services
(ADLS) waiver by the DHS, Division of Rehabilitation Services; and the
Elderly waiver by the Department of Social Services (DSS), Division of
Adult Services and Aging. Each waiver is administered by the DSS,
Division of Medical Services, which is the Single State Medicaid
Agency.
 What programs assist people who have developmental
disabilities? The CHOICES Medicaid waiver program assists persons
with intellectual/developmental disabilities in South Dakota. The
Family Support 360 Medicaid waiver program also supports persons
with intellectual and developmental disabilities.
 What is the best number to call to get started?For services available
for adults, call 605-773-3438. For services available for children, contact
John New at john.new@state.sd.us .
 Is there a website? http://dhs.sd.gov/
68
Medicaid in South Dakota
 Are there income limits to receive waiver services
in South Dakota? You may qualify for Medicaid
waiver services if you earn 300% of the SSI Federal
Benefit Rate (FBR) or below.
 How old do you have to be to start receiving
waiver services? There is no age requirement to
receive services under the CHOICES waiver or the
Family Support 360 waivers. The ADLS waiver requires
a person to be 18 years of age or older. The Elderly
waiver requires a person to be age 65 and older or age
18 and older with a qualifying disability.
69
Health Care Reform – 1/1/14
Patient Protection and Affordable Care Act (P.L. 111-148)
There is no resource test for the expanded Medicaid program.
•
Medicaid will expand to include most persons with income up to
133% of the federal poverty level plus a 5% disregard. Those
individuals currently covered by traditional Medicaid will not be
able to qualify for the ACA, Affordable Care Act coverage.
•
ACA does not cover individuals age 65 +
•
ACA does not cover long term care in a nursing home or in the
home
•
Requires States to expand Medicaid to include childless adults
•
Federal Government pays 100 percent of costs for covering newly
eligible individuals through 2016
•
Expansion of States’ ability to use HCBW funds
70
The Affordable Care Act (ACA)
 The Affordable Care Act (ACA) is the most important legislation
affecting special needs planning since 1993 when Congress enacted
42 USC §1396p(d) that authorized special needs trusts (SNTs). Much
of the ACA is focused on protecting the rights of people with
chronic, long-term physical or cognitive conditions. In this article, we
will discuss the important features of the ACA to allow the special
needs practitioner to provide proper advice to their clients and how
the ACA will affect existing special needs plans.
Excerpt from: How the Affordable Care Act Affects Special Needs Planning
By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq
*Available with NAELA membership
71
Access to Health Care
 Under the provisions of the ACA, many of the barriers to private health
care for persons with disabilities will disappear. The biggest change is
that a pre-existing condition will no longer deny an individual access to
private health care. The ACA also makes private health care more
attractive because it removes the lifetime limits on health insurance that
made private plans unattractive to many persons with profound
disabilities. An added benefit of the ACA is that it requires private health
care coverage for children (up to age 26) on a parent’s plan even if that
child has moved away, is disabled, gone to school, or married. Also, the
ACA caps the amount of money that a person will have to pay out-ofpocket each year on premiums and deductibles. For example, if the
person in California earns less than $17,235 a year, the annual out-ofpocket limit he or she has to pay is $2,250. Otherwise, the general ACA
annual out-of-pocket limit for an individual is $6,250 per year.
Excerpt from: How the Affordable Care Act Affects Special Needs Planning
By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq
*Available with NAELA membership
72
Access to Health Care
 There is a mandate that all persons in the United States be covered
by health care. Because so many persons with disabilities have
limited income, the ACA provides ways to pay premiums at a
reduced cost. If the person with a disability has income, he or she
can pay a reduced premium even if they earn up to 400 percent of
the federal poverty limit (FPL) ($45,960 for individual in 2013). For
example, for the year 2014 in California, a person earning less than
$17,235 a year will pay between $19 to $57 a month for a premium
based on their actual income.
Excerpt from: How the Affordable Care Act Affects Special Needs Planning
By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq
*Available with NAELA membership
73
Expanded Access to Medicaid
 For those persons with disabilities who have little to no income,
access to Medicaid (for people between the ages of 19 to 65) will be
expanded to include individuals with incomes up to 133 percent of
the FPL (plus an automatic 5 percent income disregard) ($15,586 for
individual in 2013). There is no resource limitation for this new
expanded Medicaid program. Thus, for new people qualifying for
Medicaid, they can have more than the $2,000 in resources and still
qualify for Medicaid if their income is below 138 percent of the FPL.
It is important to note that this new expanded program does not
apply to persons currently receiving Medicaid, for those over age 65
applying for long-term care nursing home care, and some other
restrictions. Further, not every state has agreed to participate in
Medicaid expansion, so it is important to see if your state has
agreed to implement expanded Medicaid.
Excerpt from: How the Affordable Care Act Affects Special Needs Planning
By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq
*Available with NAELA membership
74
Expanded Access to Medicaid
 There are several important health care benefits generally not covered by the
ACA and private health care that are important to persons with disabilities. Two
of the most important (and expensive) benefits that the ACA will not cover
include payment for long-term skilled nursing care and payments for in-home
care giving services. Thus, for clients with disabilities who require nursing home
level care or who require caregivers in order to remain independent in the
community will likely still need Medicaid to assist them with their ongoing care.
In some states, Medicaid provides unique services for the developmentally
disabled that specialize in support for independent living and other related
services. Thus, it is important for the practitioner to determine what health
care-related services for persons with disabilities are covered by Medicaid (but
not through private health care) in determining whether a client should give up
his or her government-paid-for health care.
Excerpt from: How the Affordable Care Act Affects Special Needs Planning
By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq
*Available with NAELA membership
75
Key Provisions in ACA
 The Affordable Care Act has set new standards, called essential
health benefits, outlining what health insurance companies must
now cover. But there's a catch: Insurance firms can still pick and
choose to some degree which specific therapies they'll cover within
some categories of benefit. And the way insurers interpret the rules
could turn out to be a big deal for people with disabilities who need
ongoing therapy to improve their day-to-day lives.
 The new rules for what health insurance companies have to cover
may still change. Federal regulators plan to review them as the
health law rolls out and could make changes in 2016.
Excerpt from: Obamacare Presents Complex Choices For People with Disabilities
76
Essential Benefit Package
The ACA links the essential health benefits package to limits on costsharing. So health plans that are required to provide essential health
benefits will also be required to limit the amount consumers will have to
pay out-of-pocket. Specifically, health plans will be prohibited from
requiring consumers to pay annual cost-sharing that is greater than the
limits for high deductible plans linked to health savings accounts. Currently,
those limits are $5,950 per year for individuals and $11,900 per year for
families. In addition, small group plans must limit deductibles to $2,000 for
individual coverage and $4,000 for family coverage. As with all health plans
under the ACA, there is no cost-sharing for certain preventive health
services recommended by the United States Preventive Services Task
Force.
77
Essential Benefit Covered Under
the ACA
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services *
 Prescription drugs *
Rehabilitative and habilitative services and devices *
Laboratory services
Preventive and wellness services
Chronic disease management
Pediatric services, including oral and vision care
78
Mental Health Parity
In 2008, Congress passed the Paul Wellstone and Pete Domenici
Mental Health Parity and Addiction Equity Act taking a great step
forward in the decade-plus fight to end insurance discrimination
against those seeking treatment for mental health and substance use
disorders. This law requires health insurance to cover both mental and
physical health equally. Under this law, insurance companies can no
longer arbitrarily limit the number of hospital days or outpatient
treatment sessions, or assign higher co-payments or deductibles for
those in need of psychological services.
79
Mental Health Parity
The 2008 act closes several of the loopholes left by the 1996 Mental
Health Parity Act and extends equal coverage to all aspects of health
insurance plans, including day and visit limits, dollar limits,
coinsurance, co-payments, deductibles and out-of-pocket maximums.
It preserves existing state parity and consumer protection laws while
extending protection of mental health services to 82 million Americans
not protected by state laws. The bill also ensures mental health
coverage for both in network and out-of-network services.
80
Could a Trustee of SNT Determine
to go Without Insurance?
 What happens if I don’t sign up for Obamacare?
 You won’t have health insurance. You’ll be responsible for every
from the flu shots to major surgery.
 I thought I could just sign up when I need it?
 Not exactly. The law requires insurance companies to cover
people with pre-existing conditions, but you still have to sign up
during the enrollment period. That will be from October 1,
2013 to March 31, 2014.
 Serious problems in Michigan with delayed Medicaid Expansion
and states with no Medicaid expansion
81
Could a Trustee of SNT Determine
to go Without Insurance?
(cont.)
 So what if I get sick after March 31, 2013?
 You’ll have to wait until the next enrolment period, which begins
October 1, 2014. Until your new coverage kicks in January 1,
2015, you’ll have to pay for any medical costs.
 What if I lose my insurance during the year?
 You can sign up them. Outside of the regular enrollment period,
people can sign up for insurance when they have a major lifechanging event (i.e. getting married, changing jobs, having a
baby, or moving to a new state)
82
Could a Trustee of SNT Determine
to go Without Insurance?
(cont.)
 Are there any penalties for not signing up?
 Yes, if you don’t sign up for insurance, you’ll pay a fine when you
do you taxes in 2015. The fine will be $95.00 or 1% of your
annual income, whichever is higher. And in future years, it will
be even higher.
 What if I refuse to pay the fine?
 The IRS will take the money out of any refund you would receive
on your federal income tax. It is not allowed to put you in jail or
seize your property for failing to pay the fine, however.
83
Could a Trustee of SNT Determine
to go Without Insurance?
(cont.)
 When do I have to sign up?
 Technically speaking, you need to have insurance on January 1,
2014. However, the enrollment period lasts until March 31,
2013 and you may be able to sign up later in the year if you have
a major life event.
 What if I am uninsured for part of the year?
 You won’t pay the full fine. The amount is prorated, so you
would just pay for the number of months you were uninsured.
Also, gaps of less than three (3) months in a given year aren’t
counted.
84
Could a Trustee of SNT Determine
to go Without Insurance?
(cont.)
 Are there any other exceptions?
 Yes, but they are limited. Certain religious groups, such as the
Amish, and federally recognized Indian tribes don’t have to sign
up. You can also get exemption if you have a lower income,
especially if your state rejected the Medicaid expansion.
 Medicare or Medicaid is enough! (Either only Part A Or Parts A
& B)
85
What if I have Medicare?
 Medicare isn’t part of the Health Insurance Marketplace, so
you don’t need to do anything. If you have Medicare, you are
considered covered.
 The Marketplace won’t affect your Medicare choices, and your
benefits won’t be changing. No matter how you get Medicare,
whether through Original Medicare or a Medicare Advantage
Plan, you’ll still have the same benefits and security you have
now. You won’t have to make any changes.
 Medicare’s Open Enrollment Period (October 15-December 7)
hasn’t changed.
86
ACA Provisions
(cont.)
 Expanded Medicare benefits for preventive care, drug
coverage
 Medicare benefits have expanded under the health care law–
things like free preventive benefits, cancer screenings, and an
annual wellness visit.
 You can also save money if you’re in the prescription drug
“donut hole” with discounts on brand-name prescription drugs.
87
Closing the Donut Hole
The Patient Protection and Affordable Care Act and accompanying
health care reform legislation added important improvements to
Medicare prescription drug coverage. The health reform law helps
cover expenses for people falling into the "donut hole" coverage gap
beginning in 2010, and the hole in coverage is eliminated altogether by
2020. The law also provides for additional assistance for low-income
beneficiaries.
To view full article: Closing the Donut Hole
88
Closing the Donut Hole
 The new law provides assistance to help seniors bridge this donut hole.
 50 percent rebate on brand-name drugs in 2012. A 50 percent rebate will




be applied at the pharmacy for brand name medications.
14 percent rebate on generic drugs in 2012. A 14 percent rebate will be
applied at the pharmacy for generic medications.
Closure of the donut hole by 2020 for brand-name and generic drugs. The
co-payments required for brand-name and generic drugs will be phased
down to the standard 25 percent by 2020, eliminating the donut hole. For
brand-name drugs, manufacturers will increase their discounts each year to
negate the coverage gap. Beginning in 2011, co-payments required by Part D
law for generic drugs will be reduced by seven percentage points each year
until the coverage gap is eliminated for these drugs as well.
Immediate assistance for seniors. A typical senior that fell into the donut
hole saved $250 in 2010, over $600 in 2011, and will save over $3,000 by
2020.
Provides catastrophic coverage sooner to protect seniors. The legislation
will help seniors get out of the donut hole sooner beginning in 2014. The
dollar amount of the catastrophic threshold, where seniors' co-payments are
dropped to 5 percent of drug costs, will be more slowly increased from year
to year at this point.
To view full article: Closing the Donut Hole
89
Closing the Donut Hole
Assistance for Low-Income People
 The health reform legislation also provides improves eligibility and
coverage for low-income Medicare beneficiaries:
 Co-payments are eliminated for many beneficiaries receiving
home- and community-based services who are eligible for
both Medicare and Medicaid.
 The new law will reduce the number of low-income
beneficiaries that are required to change plans each year to
maintain zero premiums.
 It allows widows and widowers to more easily retain their lowincome eligibility.
 Outreach programs are enhanced to ensure that more
beneficiaries who are eligible for a Low-Income Subsidy are able
to enroll.
To view full article: Closing the Donut Hole
90
Other ACA Provisions to Watch
1. Medicaid Managed Long Term Services and Supports
2. State Demonstrations to Integrate Care for Dual Eligible Individuals
and other Medicare-Medicaid Coordination Initiatives
3. Other Long Term Services and Support Include
A. Balancing Incentive Program
B. Medicaid State Plan Amendments under 1915(i)
C. Community First Choice Option under 1915 (k)
D. Medicaid Health Homes
Click here for full site
91
Other ACA Provisions to Watch
(cont.)
 Medicaid Managed Long Term Services and Supports
 Refers to the delivery of long term services and supports through
capitated Medicaid managed care programs.
 Increasing numbers of States are using MLTSS as a strategy for
expanding home- and community-based services, promoting
community inclusion, ensuring quality and increasing efficiency.
 MLTSS offers States a broad and flexible set of program design
options, and may be used as an overarching structure to promote
initiatives such as Money Follows the Person, participant-directed
services, the Balancing Incentive Program, etc.
 Do you know what your state is doing?
Click here for full site
92
Other ACA Provisions to Watch
(cont.)
 State Demonstrations to Integrate Care for Dual Eligible Individuals and
other Medicare-Medicaid Coordination Initiatives
 Under the State Demonstrations to Integrate Care for Dual Eligible
Individuals, fifteen states across the country have been selected to
design new approaches to better coordinate care for dual eligible
individuals.
 CMS will provide funding and technical assistance to states to
develop person-centered approaches to coordinate care across
primary, acute, behavioral health and long-term supports and
services for dual eligible individuals. The goal is to identify and
validate delivery system and payment coordination models that can
be tested and replicated in other states.
 CMS is also making technical assistance available to all states
interested in improving services for dual eligible individuals.
93
Other ACA Provisions to Watch
(cont.)
 Other Long Term Services and Support Include
 Balancing Incentive Program
 Authorizes grants to States to increase access to
non-institutional long-term services and supports
(LTSS) as of October 1, 2011.
 This program will help States transform their longterm care systems by:
 Lowering costs through improved systems
performance & efficiency
 Creating tools to help consumers with care
planning & assessment
 Improving quality measurement & oversight
94
Other ACA Provisions to Watch
(cont.)
 States with approved applications – New Hampshire,
Maryland, Iowa, Mississippi, Missouri, Georgia, Texas,
Indiana, Connecticut, Arkansas, New York, New Jersey,
Louisiana, Ohio, Maine, Illinois
 States with structural change work plans – New
Hampshire, Maryland, Missouri, Georgia, Texas,
Mississippi, Indiana, Iowa
95
Other ACA Provisions to Watch
(cont.)
 Other Long Term Services and Support Include
 Expanded Medicaid State Plan Amendments under 1915(i)
 Allows states to offer HCBS under a Medicaid state plan to
individuals who are Medicaid-eligible
 It limits eligibility to individuals with incomes up to 150 percent
of poverty who, but for the program services, would need an
institutional level of care
Click here for full site
96
Other ACA Provisions to Watch
(cont.)
 Other Long Term Services and Support Include
 Community First Choice Option under 1915 (k)
 Lets States provide home and community-based attendant
services to Medicaid enrollees with disabilities under their
State Plan
 This option became available on October 1, 2011 and
provides a 6 % increase in Federal matching payments to
States for expenditures related to this option
 Community First Choice was established under the
Affordable Care Act of 2010
97
Other ACA Provisions to Watch
(cont.)
 Other Long Term Services and Support Include
 Medicaid Health Homes
 Benefit for states to establish Health Homes to coordinate care
for people with Medicaid who have chronic conditions by
adding Section 1945 of the Social Security Act.
 Health Homes are for people with Medicaid who:
 Have 2 or more chronic conditions
 Have one chronic condition and are at risk for a second
 Have one serious and persistent mental health condition
 States can target health home services geographically
 States can not exclude people with both Medicaid and
Medicare from health home services
 Anyone have a client in this program? Appears very, very
limited!!
98
State Insurance Exchanges as
Asset Protectors
99
State Implementation of Health
Insurance Exchanges
According to the Center on Budget and Policy Priorities as of June 14, 2013
States choosing to establish a State-based Exchange (SBE) were required to
submit their exchange proposals to HHS by December 14, 2012 while
those considering a Partnership Exchange had until February 15, 2013. As
of December 17, 2012, seventeen states and the District of Columbia have
declared their intention to establish a State-based Exchange (SBE), and an
additional six states are pursuing a State Partnership Exchange. All twentyfour State-based and Partnership Exchanges have been conditionally
approved by HHS. Twenty-seven states have declined the opportunity to
operate an SBE or State Partnership Exchange, and instead will default to a
Federally-facilitated Exchange (FFE) (Figure 1).
100
Figure 1 – Status of 2014 Exchange
Implementation
101
Medicaid Liens
If Medicaid pays for injury-related expenses for a
person injured as the result of a tort, Medicaid is
entitled to recover all or some portion of the monies it
spent on injury-related medical expenses from the
settlement or judgment. 42 U.S.C. § 1396k
However, Medicaid can only collect from that portion
of the settlement or award that compensates for
injury-related medical expenses. Arkansas
Department of Health and Human Services et al. v.
Ahlborn, 547 U. S. 268 (2006)
But . . . Tristani V. Richman, 609 F. Supp. 2d 423,
(W.D., Pa., 2009)
102
Medicaid Liens
Source of Funds
Medicaid Payback
Inheritance
No
Gifts
No
Windfalls
No
Personal Injury Damages
Yes
103
Estate Recovery
States must pursue recovering costs for medical
assistance consisting of:
• Nursing home or other long-term institutional services;
• Home- and community-based services;
• Hospital and prescription drug services provided while
the recipient was receiving nursing facility or home- and
community-based services; and
• At State option, any other items covered by the Medicaid
State Plan.
104
Estate Recovery
Estates from which recovery can be made:
• Estates of deceased Medicaid recipients who were
55 or older (65 for some States) when they received
benefits
• Estates of Medicaid recipients who were
permanently institutionalized, regardless of age
States may exempt recipients whose only Medicaid
benefit is payment of Medicare cost sharing
(Medicare Part B premiums)
105
What is a “Special Need” or Amenity?
 Special needs refers to things which are not considered basic needs,
but assist in supporting the person when such items uncovered are
not being provided by any public agency.
 Special needs can include (but are not limited to):
1.Automobile/Van
2.Accounting services
3.Acupuncture/ Acupressure
4.Alterations or mending to clothing (i.e. shoe repair)
5.Appliances (i.e. TV, DVD, stereo, microwave, stove,
refrigerator, washer/dryer, etc.
For full list of: Permissible Distributions
**Please notify us if you think of some common examples not on this list**
106
Third-Party Trusts
• By parents and grandparents
• Discretionary vs. more limited
• Trend towards more discretionary, less
limited
• Intent language
• Revocable vs. Irrevocable
107
Third-Party Trust Funding
• Usually at death
• May include contributions from others
(grandparents, aunts, uncles)
• Life insurance
• Retirement plans – Urgh!!
• How much?
• Revocable or Irrevocable?
108
Drafting and Funding the Third Party SNT
Statement of Intent -- why the trust was created
Sample Language: It is my primary concern in drafting this Trust that it
continue in existence as a fund to supplement public assistance for Mary, the
beneficiary throughout her life. Continued access to basic living needs which are not
provided for by public assistance programs is required in order to provide Mary with a
continued level of humane dignity and for Mary to receive humane care. I recognize
that in view of the vast costs involved in caring for a person with a disability, a direct
distribution to Mary would be rapidly dissipated. In addition, if this Trust were to be
invaded by creditors, subjected to any liens or encumbrances, or cause public benefits
to be terminated, it is likely that the Trust corpus would be depleted prior to Mary’s
death. In this event, there would be no coverage for emergencies or supplementation of
basic needs. I further intend that Mary receive all government entitlements to which
Mary would otherwise be entitled, but for the distributions hereunder.
109
Drafting and Funding the Third
Party SNT
Use of trust assets
Assets shall only be used to
supplement and not supplant
government benefits!!
Typical directive language: The purpose of the Trust is to permit the use
of Trust Funds to supplement, and not to supplant, impair or diminish any benefits or
assistance of any federal, state or local governmental agency, office or department, including,
but not limited to Medicaid and Supplemental Security Income, and any other needs-based
benefits, eligibility for which is dependent on income or assets, from any other public or
private source, to which benefits Mary may be eligible or which Mary may be receiving (such
benefits collectively referred to hereafter as “Public Assistance Benefits”).
110
Drafting and Funding the Third
Party SNT
Include some specific direction and limitation
on use:

Beneficiary cannot direct distribution

Regular contact with beneficiary

Evaluation

Retain professionals: Care Manager;
government benefits advisor; attorney; CPA
111
Drafting and Funding the Third
Party SNT
Use of trust assets
DO NOT PUT A MEDICAID PAYBACK
PROVISION IN A THIRD-PARTY SNT!!
Do Not Comingle Money!
112
Drafting and Funding the Third
Party SNT
Origin of trust assets

Funds come from third parties -- parents,
grandparents, other relatives, friends.

Funds must NOT come from the special needs
beneficiary! * Examples Are Important!
113
Drafting and Funding the Third
Party SNT
Source of Assets
Testamentary bequest(s)
Lifetime gift(s)
Beneficiary-designated property
Life insurance
Deferred comp plans / IRAs
TOD/POD accounts
114
Drafting and Funding the Third
Party SNT
Timing of funding
During lifetime -- SNT should be standalone
and irrevocable if gifts from other than
grantors
At death from parents -- SNT can be standalone
(revocable or irrevocable) or testamentary
At death, from third parties other than parents -SNT should be standalone and irrevocable
115
Drafting and Funding the Third
Party SNT
Issues respecting IRAs:
Timing of Payout -- inherited IRA
Based on life expectancy of oldest beneficiary
Charitable contingent beneficiary = faster payout
Do not use conduit provisions in the SNT, but….
Conduit third party SNT pouring into accumulation d4A?
Minimize income tax effect?
Other options PEKD has used
116
Drafting and Funding the Third
Party SNT
Life insurance:
Death benefit can pour into SNT
SNT generally should not own life insurance
---can consider doubling as ILIT but no
Crummey power to primary beneficiary
Use separate ILIT to hold life insurance, with
SNT as beneficiary of ILIT
117
Drafting and Funding the Third
Party SNT
Real Estate:
SNT can own a residence or LLC shares
Primary beneficiary can occupy the residence
Consider ISM, but also PMV for SSI – or Not!
Provide funding for cost of maintenance
118
Drafting and Funding the Third
Party SNT
Multigenerational drafting issues:

inform other family members of the SNT

multigenerational input into contingent
beneficiaries when drafting SNT

exempt transfer for Medicaid!
119
Drafting and Funding the Third
Party SNT
A Few Final Drafting Tips

Beneficiary and beneficiary’s spouse cannot serve
as Trustee

Trustee does not have to provide for Beneficiary's
basic support and maintenance

Beneficiary cannot compel a distribution from the
SNT for support and maintenance
120
Drafting and Funding the Third
Party SNT
A Few Final Drafting Tips

Do not prohibit the Trustee from providing for
food and shelter so long as Trustee considers the
effect on means-tested benefits

Provide a list of permissible expenditures to give
Trustee more guidance but Be Careful!!

Can be for more than one Beneficiary
121
rd
3
Testamentary
Party Special
Needs Trust
 Established at the death of the person establishing the trust
pursuant to their trust or will
 Are not immediately accessible until the share belonging to
the special needs trust is transferred into the special needs
trust;
 Is a sub trust created within the scope of the broader
revocable living trust or will
 Works for spouses in a nursing home
122
Stand-Alone Third-Party
Special Needs Trust
 Established while the stand-alone Grantor is alive
 Can receive assets from multiple persons wishing to provide for the
well-being of the person with special needs (parents, grandparents,
siblings, etc.)
 When the Grantor dies, or perhaps becomes disabled, the assets
remain immediately accessible to assist the person with disabilities
from the date the trust is established
 Is a single purpose trust
 Can remain empty until funded for Medicaid planning or upon death
of Grantor
123
Third Party Special Needs Trust A
Within Pooled Trust
 Third party Special Needs Trust can be created within a pooled trust as
well
 In order to protect vulnerable family members, counsel will properly
suggest a custom drafted third-party special needs trust as part of a
complete estate plan. Most third party trusts are created either by
execution of a custom drafted document, or through use of a third party
joinder agreement with a pooled trust
 Works really well for families with multiple generations of Medicaid long-
term support users or with genetic disabilities (Huntington’s; Fragile X,
etc.)
Full article: The Third-Party Pooled Trust: an alternative planning tool to help avoid the biggest
mistakes in special needs planning
124
Funding a Special Needs Trust:
How Much is Enough?
The Grantor(s) will want to ensure that the person with special
needs will remain financially secure even when you are no
longer there to provide financial back up. Given the significant,
ongoing expenses involved in the loved ones long-term
support and uncertainty about what needs may arise or what
public benefits may be available, determining how much a
special needs trust (SNT) should hold is no small feat.
125
Funding a Special Needs Trust:
How Much is Enough?
 Fortunately, help in calculating a special needs goal is available from
special needs calculators, which are accessible free of charge on the
Internet.
 Here are two such calculators:
 MetDesk Special Needs Calculator:
http://www.metlifeiseasier.com/metdesk
 Merrill Lynch Special Needs Calculator:
www.totalmerrill.com/specialneeds . (Click Special Needs
Calculator under "Tools and Resources".)
126
Funding a Special Needs Trust:
How Much is Enough?
 The first step in determining the amount to protect in an SNT is
considering your goals and expectations for the beneficiaries.
 If parents haven't yet created a Memorandum of Intent, also called a
Letter of Intent or a Life Plan, this is the time to draft such a
document. It should address factors such as your child's medical
condition, legal advocacy needs, ability to work and desired living
arrangements, all of which will drive the special needs calculations.
 This really allows for details on how to coordinate public benefits
with the private resources
 Look at samples: important to address private health insurance,
uncovered Medicaid, dental specifically.
127
Letter of Intent
 A Letter of Intent is one of the most important documents a parent
can complete for the child’s future care-givers
 This is not a stand-alone document; it should be incorporated into
an estate planning process
 Can be used when caring for parents or grandparents as well
 The Letter of Intent should provide the trustee with guidance as to
what “special needs” the beneficiary has or will have and define the
quality of life as quality means different things to different people
 The Letter of Intent should be frequently updated as the
beneficiary’s needs change
128
Letter of Intent
• Guides trustees
• Provides in depth information about beneficiary
likes and dislikes, medical information, parents’
hopes for child
• Updating necessary
• Often seems to fall by the wayside
129
Sample Letters of Intent
 http://www.pekdadvocacy.com/firm-news/client-
intake/attachment/letter-of-intent-informationregarding-child/
 http://www.pekdadvocacy.com/documents/pattispublica
tions/Representing/Att7.pdf
 http://www.pekdadvocacy.com/documents/pattispublica
tions/Representing/Att8.pdf
Letter Of Intent
Be Specific!
Education
Transportation
Housing with Person
Directed Supports
Medical Care
and Equipment
Quality of Life
Social, travel, recreation, etc.
Real Employment
131
SNT Trustee Instruction Letter
http://www.pekdadvocacy.com/wpcontent/uploads/2010/10/Duties_as_Trustee_to_SNT123-13-2.pdf
132
Choice of Trustee:
The Family
The Bad:
• Poor investments
• Poor reporting
• Difficulty following SSI rules
• Slow Response Time
133
Choice of Trustee:
The Family
The Good:
• Knows the beneficiary’s needs
• Knows service providers
• Care
• Continuity
134
Choice of Trustee:
Professional Trustees
The Bad:
• Don’t know beneficiary
• Don’t know benefit rules
• Arbitrary
• Lack of control
• Trust officers changing
• Banks changing / very impersonal
135
Choice of Trustee:
Professional Trustee
The Good:
• Investment acumen
• Ability to say “no”
• Proper accounting
• Proper tax reporting
• No conflict of interest
• Ability to set up accounts properly
• Staffed so response time is sometimes
better
136
Traps for the Unwary
• Distributing more than $20 directly to the beneficiary in
a calendar month
• Commingling the beneficiary’s funds with the trust
funds, with the trustee’s own money or between trusts
• Poor record-keeping
• Leaving disabled individual as beneficiary of IRAs and
life insurance policies
• Savings bonds
• Failure to notify state and federal agencies
137
First-Party Trust
• First party = the trust beneficiary.
• Assets in a first-party special-needs trust are
assets to which the trust beneficiary is entitled:
• From a personal injury case.
• From an inheritance.
• From the beneficiary’s savings, including
retirement accounts.
• Contrast assets in a third-party trust which are
assets that belonged to the grantor and to
which the trust beneficiary was not entitled.
138
A Payback Trust
• The term “payback” is sometimes used to
describe a first-party trust because one of the
cardinal rules applicable to first-party trusts is
that when the trust beneficiary dies (or the trust
is terminated during the beneficiary’s lifetime),
any state that has provided Medicaid for the
beneficiary must be reimbursed from
remaining trust assets for Medicaid provided.
• Contrast a third-party trust from which no
reimbursement is required.
139
(d)(4)(A) Trust
• Refers to the subsection of the federal statute
which governs first-party, special-needs trusts.
• Contrast a third-party trust which is not a
statutory creation, usually created by common
law.
140
Federal Medicaid Statute
• The governing statute for first-party, special-needs
trusts is 42 U.S.C. § 1396p(d)(4)(A), as amended
by the Omnibus Budget Reconciliation Act of 1993
(OBRA), Pub. L. No. 103-66.
• This statute is sometimes referred to simply as
“(d)(4)(A)” and the enacting law as “OBRA ’93.”
141
Federal Medicaid Regulations
In November 1994, the year after OBRA ’93 became
effective, the Health Care Financing Administration
(HCFA), the government agency that then administered
the federal Medicaid program (now the Center for
Medicare and Medicaid Services [CMS]), issued
Transmittal No. 64. This transmittal interprets Section
1396p(d)(4)(A) but is considered outdated and does not
provide much guidance.
Although can be helpful at times – defines sole benefit off
142
Social Security Statute
• Until 2000, individuals who gave away assets
(except to special-needs trusts that met the
requirements of Section 1396p[d][4][A]) could be
disqualified only for Medicaid, but not for SSI; the
SSI rules contained no penalties for giving away
assets.
• In 1999, transfer penalties were added to the SSI
rules. 42 U.S.C. § 1382b, as amended by the Foster
Care Independence Act of 1999, Pub. L. No. 106-169.
• The Foster Care Independence Act of 1999
incorporated the Medicaid transfer rules and
Medicaid rules regarding special-needs trusts into
the SSI statute.
143
Social Security Rules (POMS)
•
Social Security rules regarding special-needs trusts are contained in
the Program Operations Manual System (POMS). Although the
POMS rules are not technically regulations or rules, they set forth
the Social Security Administration’s positions on Social Security
matters somewhat like private letter rulings in the tax area.
•
Since most Medicaid recipients also receive SSI, the POMS provides
important guidance on special-needs trusts.
•
A special-needs trust that complies with the POMS rules will, in
most states, comply with state law applicable to special-needs trust
although some states have even more stringent restrictions.
•
POMS provisions regarding special-needs trusts apply only to trust
beneficiaries who receive Supplemental Security Income (SSI). If
the beneficiary does not receive SSI, some of the POMS provisions
applicable to first-party special-needs trusts may not need to be
included in the trust.
144
Four Cardinal Requirements for a
(d)(4)(A) Trust
1.
The trust must be established by a parent, grandparent,
court, or guardian.
2. The trust must be for the benefit of the disabled person.
3.
Beneficiary must be disabled and under 65.
4. The trust must provide for reimbursement upon the
beneficiary’s death to all states that have provided
Medicaid for the beneficiary.
• These four requirements for first-party, special-needs
trusts are in a single paragraph, 42 U.S.C. §
1396p(d)(4)(A), and are restated and, in some cases
amplified, in the HCFA transmittal, the POMS, and in
state law.
145
Establishment of the Trust
•
The trust must be established by a parent, grandparent, court, or guardian.
•
A competent, disabled beneficiary cannot establish first-party trust for
himself or herself, although a competent, disabled beneficiary can establish
a first-party pooled special-needs trust for himself or herself, 42 U.S.C. §
1396p(d)(4)(C). Note: As of the writing of this presentation legislation was
pending in Congress that would allow a competent, disabled person to
establish a first-party special-needs trust.
•
Depending upon your state’s law and practice, if a guardian is establishing
the trust, the probate court should authorize the guardian to do so.
•
If a court is establishing the trust, the court order should specifically state
that the trust is being established by the court, not simply that the court
approves establishment of the trust or authorizes establishment of the
trust. POMS SI 01120.203B.1.f.
•
An agent acting under a power of attorney for a disabled beneficiary cannot
establish the trust. POMS SI 01120.203B.1.g.; see also, Draper v. Colvin (U.S.
Dist. Ct., D. S.D., No. 12-4091-KES, July 10, 2013).
146
What Court is a Court?
•
Although it is not clear from federal Medicaid statutes or
regulations or POMS, it appears that the court that can establish
a first-party trust must be a court of competent jurisdiction – a
court that has statutory authority or equitable powers to establish
a trust.
•
At least in New England, a probate court cannot establish a
special-needs trust as part of probate of a decedent’s estate. In a
1995 letter to a Boston-area elder-law attorney, the associate
regional director of the New England regional office of HCFA,
now CMS, stated that a probate court does not have jurisdiction
to establish a special-needs trust as part of probate of a
decedent’s estate. Letter dated July 24, 1995, from Ronald Preston
to Donald N. Freedman, published in Elder and Disability Law
Conference (MCLE, Inc. 1999).
147
The Sole Benefit Rule
• The federal statute itself provides only that
the trust must be for the benefit of the
disabled beneficiary.
• The HCFA transmittal added the word “sole”
before benefit.
• POMS also emphasizes sole benefit. (SI
01120.201F.2.)
148
Beneficiary Must Be Disabled And
Under 65
• The trust can be established only for a
beneficiary who is under 65.
• No assets can be added to the trust after the
beneficiary is 65.
• Assets that a beneficiary may not be entitled
to receive until after he or she is 65 can be
irrevocably assigned to the trust before the
beneficiary is 65.
149
Reimbursement
• The trust must provide for reimbursement upon
the beneficiary’s death to all states that have
provided Medicaid for the beneficiary.
• There are no exceptions to the reimbursement
rule, except if there are no funds remaining.
• POMS provisions prohibit certain payments
before reimbursement. POMS SI 01120.203B.3.b.
Language in the trust document should not
contravene the POMS prohibited payments.
150
Funding a First-Party Trust
Competent Beneficiary
• If the trust beneficiary is competent and the trust is
established by the beneficiary’s parent or
grandparent, the POMS contains a very convoluted
requirement: The parent or grandparent must
establish a “seed trust”—must fund the trust with a
small amount of his or her own money. Then the
disabled beneficiary can transfer his or her own
assets to the trust. POMS SI 01120.203B.1.f.
• An agent acting under a power of attorney for a
disabled beneficiary can transfer the beneficiary’s
assets to the trust.
151
Funding a First-Party Trust
Incompetent Beneficiary
• If the trust beneficiary is not competent by reason
of age or disability, a guardian who establishes a
first-party, special-needs trust should get probate
court authorization to transfer assets to the trust.
•
If the trust is being established by a court, the court
could order transfer of the beneficiary’s assets to the
trust. See, POMS SI 01120.203B.1.g.
• If a trust for an incompetent beneficiary is
established by the beneficiary’s parent or
grandparent, a guardian must be appointed and the
guardian must obtain court permission to transfer
the beneficiary’s assets to the trust.
152
Look To The POMS
• A first-party, special-needs trust usually must
include provisions that comply with POMS and
must exclude provisions contrary to POMS. In
certain cases, however, for a beneficiary who
does not receive SSI, compliance with some
POMS provisions may not be necessary.
• Refer to POMS SI 01120.203B.1 and POMS SI
01120.200D.1.a and b and make sure that the
trust document complies with those provisions.
153
Mandatory Provisions
• A first-party (d)(4)(A) trust must provide that the
beneficiary
•
does not have legal authority to revoke or terminate the trust.
•
cannot direct use of trust principal for his or her support and
maintenance.
• The trust must be completely discretionary and not require
mandatory distributions to the beneficiary.
• The trust must prohibit payment of certain expenses, such
as funeral expenses, upon the beneficiary’s death, prior to
Medicaid reimbursement. POMS SI 01120.203B.3.b.
• The trust must be irrevocable. POMS SI 01120.200D.2&3.
154
Irrevocability
POMS takes the position that a (d)(4)(A) trust may
be revocable if it does not contain named remainder
beneficiaries. POMS SI 01120.200D.2&3. This
position is based upon the doctrine of worthier title
which has been specifically revoked in some states.
In a state that has not revoked the doctrine of
worthier title, the trust document should designate
remainder beneficiaries by name or by class (my
children, for example) and not provide for a
remainder to the beneficiary’s heirs-at-law.
155
Less Is More
• First-party special-needs trusts, like third-party special-
needs trusts, often contain a list of ways the trustee could
spend trust funds for the beneficiary’s benefit. Some of
these common items, such as paying friends and
relatives to visit, are now restricted by POMS provisions.
Since the trustee of a special-needs trust has complete
discretion, current wisdom is not to include such a list
because some items listed may become unacceptable.
• The drafting attorney can provide the trustee with a list
of permissible expenditures.
• Parents of a disabled beneficiary should provide a
memorandum to the trustees of suggested expenditures.
156
Eschew Forms
Don’t use a form for any trust unless you know
that the form is up to date and in accordance
with recent POMS.
FOR EXAMPLE:
157
HOT Issues
 http://www.pekdadvocacy.com/wp-
content/uploads/2010/10/Begley-POMS-changesbox.pdf
 https://secure.ssa.gov/apps10/reference.nsf/links/0423
2014010832PM
 http://attorney.elderlawanswers.com/some-potential-
problems-with-ssas-new-trust-guide-14693
 https://secure.ssa.gov/poms.nsf/lnx/1601825046
158
SSAPROGRAMCIRCULAR
Supplemental Security Income
Regional Program Circular 01-06 dated April 5, 2001 provided detailed instructions on
evaluating trusts for SSI resource purposes. A general rule of trust law, and one that is
followed by all Region V states, is that any trust can be revoked with the mutual
consent of the grantor and all beneficiaries. If the grantor and the beneficiary are the
same person and there are no other beneficiaries, the trust is revocable.
If there are residual beneficiaries, the trust may be irrevocable. In addition, if the trust
names other beneficiaries who may benefit from the trust during the SSI claimant’s
lifetime, this also may make the trust irrevocable. However, in that, case, even if the
trust is not a resource, we need to consider whether there has been a transfer for less
than fair market value. [This rule is true even if it is stated in the body of the trust that
the trust is irrevocable.]
For states in the Region, other than Michigan, language such as “heirs at law”, “heirs”
survivors”, “relatives”, “next of kin”, “family”, “distributees”, or similar language does not
create a residual beneficiary. Such language creates an inference that the grantor does
not intend to create a trust interest in the persons who may become his/her heirs or
next of kin. Such trusts should be viewed as revocable.
Full Article:
http://www.pekdadvocacy.com/documents/estateplanning/MichiganTrustLawChangeProgram-11-801.pdf
159
A Trust Is A Trust Is A Trust
• A first-party, special-needs trust is really just a
completely discretionary trust with bells and
whistles included to accomplish its goal.
• Because a special-needs trust is a trust, the drafter
must be knowledgeable about trust law as well as
about special-needs law.
160
Pooled Trust
 What is a Pooled Trust?
 A pooled trust is a trust established and administered by a non-
profit organization. A separate account is established for each
beneficiary of the trust, but for the purposes of investment and
management of funds, the trust pools these accounts.
 For self-settled, or (d)(4)(C) pooled trusts, each subaccount is
established by the person with a disability, a parent,
grandparent, guardian, or a court, and the trust is funded with
the assets of the person with a disability. The trust provides
that, upon the death of the disabled beneficiary, if there are
funds remaining in the beneficiary's subaccount, the trust must
pay to the state an amount up to the total amount of Medicaid
assistance provided to the beneficiary, to the extent that the
funds are not retained by the trust. The pooled trust is
irrevocable to avoid being treated as a resource.
161
Pooled Trust
(cont.)
 When is a (d)(4)(c) Pooled Trust used?
 Persons with disabilities who receive public benefits, including
Supplemental Security Income (SSI) and Medicaid, and then receive
an inheritance, divorce settlement, or personal injury settlement or
award. The receipt of these funds may make this person ineligible for
public benefits. The client could purchase exempt resources, and then
reapply for benefits. The person with a disability would then be
ineligible for public benefits until these funds are spent down. The
person could give the funds away, however, the gifts would result in a
period of ineligibility for SSI and Medicaid long-term care benefits.
 If under 65 years of age, then the person can transfer the funds to a
d(4)(A) Special Needs Trust (SNT). A fourth alternative is to transfer
the funds to a d(4)(C) ("Pooled Trust") subaccount.
Full article: What is a Pooled Trust, and When Should You Use One?
162
Pooled Trust
(cont.)
 Coordination of trust with public services
 To achieve a goal for the beneficiary, like staying out of a nursing
home is a key reason for use of the trust.
 Pooled trust work for people over 65 where D4A trust can’t be used
for people over 65.
 There is a little-known way for some people in certain states to
receive home care through Medicaid, without requiring them to
impoverish themselves first.
 Here’s how it works: a federal law established in 1993 allows disabled
people to put their monthly income or assets — above the amounts
Medicaid allows them to keep — into a special type of pooled trust.
They can then use the money in the trust to pay for their monthly
bills like rent, cable television, phone bill, etc. Medicaid, meanwhile,
pays for the home services.
Full article: What’s a Pooled Trust? A Way to Avoid the Nursing Home
163
Pooled Accounts Trust
 Established and managed by non-profit charity
 Created and funded by individual with a disability or
parent / family members
 Remainder goes to charity upon person’s death for
the benefit of people with disabilities, can include family
members
 Benefit to people with small / midsize estates and/or
small families
 Money is used for “special needs during lifetime
 Protects Medicaid and SSI eligibility; No ability to pay
beyond benefits
164
Pooled Accounts Trust
 Entire amount can be used during lifetime of person with a
disability.
 Any remaining at death can be used to help other people with
disabilities.
Pooled Accounts Trust
Springhill Housing Corporation, Inc.
Special Needs Trust # 1
$5,000
Special Needs Trust # 4
Future transfer from parents
will or trust and life insurance
Special Needs Trust # 2
$10,000 each year, gift
from grandparents
Special Needs Trust # 5
$20,000 back SSDI
benefits
Special Needs Trust # 3
$500,000 Personal Injury
Settlement
Special Needs Trust # 6-House
$50,000-grandmother on
Medicaid
165
Over 65 & Pooled Trust
Until relatively recently there was no prohibition from CMS against
establishing pooled trust sub-accounts in behalf of disabled persons
over the age of 65 who had assets (either their own, or assets resulting
from a PI settlement or from other third party sources) in excess of the
$2000 asset limit. Such funds can then be used for the benefit of the
disabled person to purchase goods and services not covered by
Medicaid that may be necessary to assure a decent quality of life for
that person. From 1993 through early 2008, CMS did not at any time
propose regulations or offer any policy statement or other subregulatory guidance suggesting that such transfers were impermissible
under federal law. In this regard, disabled persons over 65 were in a
similar position to those 65 and under, who are unquestionably
permitted to set up special needs trusts or pooled trust sub-accounts,
and to benefit from supplemental needs trusts established by third
parties.
166
Over 65 & Pooled Trust
Establishing pooled trust sub accounts for the benefit of disabled
persons over 65 is explicitly contemplated and permitted by the
federal Medicaid statute’s provisions pertaining to pooled trusts, which
were enacted in 1993 as part of the Omnibus Budget Reconciliation
Act, Pub.L. 103-66, 107 Stat. 312 (August 10, 1993) (hereinafter, OBRA
‘93) Congress has explicitly established three distinct exceptions to the
general rule that assets in a first-party funded trust are available for
purposes of Medical Assistance eligibility, one of which is a transfer to
a pooled trust sub-account. Federal law discusses three types of trusts
the assets of which are considered excluded, if the trusts are properly
established and administered. These are the Special Needs Trust, the
Miller Trust, and the Pooled Trust.
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Directory of Pooled Trust
Medicaid and SSI law permit "(d)(4)(C)" or "pooled trusts" for beneficiaries
with special needs. Such trusts pool the resources of many beneficiaries,
and those resources are managed by a non-profit association. Unlike
individual disability trusts, which may be created only for those under age
65, pooled trusts may be for beneficiaries of any age and may be created by
the beneficiary herself.
Click here for the Directory of Pooled Trust Around the U.S.
Local Recourses: http://www.pooledadvocatetrustinc.com/
http://www.specialneedsintegrity.org/pdf/Trust/South%20Dakota%20Trust.pdf
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Types of Special Needs Trusts
Source of
Funds
Who
Establishes
Trustee
Third Party
Anyone except
beneficiary
Anyone except
beneficiary
Grantor’s
wishes
Grantor’s wishes
Third Party
Pooled Trust
Anyone except
beneficiary
Anyone except
beneficiary
Non-profit
Grantor’s wishes
First Party
(d)(4)(A)
Disabled
beneficiary’s
funds before
age 65
Parent,
Grandparent,
Guardian, Court
Grantor’s
wishes
Medicaid payback;
then remainder
beneficiaries
Disabled
beneficiary’s
funds
Beneficiary,
Parent,
Grandparent,
Guardian, Court
Non-profit
Non-profit Trustee;
or, Medicaid
payback; then
remainder
beneficiaries
First Party
(d)(4)(C)
Pooled Trust
Distribution
Upon Death
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Typical Components of a
Pooled Trust
• Master Trust Agreement
• Joinder Agreement
• Beneficiary information and supporting documents
• Notices and Waivers
• Fees
• Investments
• Conflicts of Interest / Legal Advice
• Policies
• Forms
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Using a
rd
3
Party Pooled Trust
• Can be used for anyone needing protection
•
Disabled, Spendthrift, Creditor, Predator, Divorce
• Naming 3P Pooled Trust in documents
•
Ex. “Springhill Third Party Pooled Trust f/b/o John Doe”
• Designee in Will
• Designee in Trust
• Can be funded directly from:
•
Accounts
• Life Insurance
• Ladybird Deed
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Funding Income
Types of Income:
• Annuities / Structured Settlement
• Spousal Support
• Land Contract Payments
• Royalties
• Microenterprises
• Employment
172
Funding Resources
Types of Assets:
• Cash / Settlement / Inheritance
• Marital Assets
• Excess Social Security
• Microenterprise
• Real Estate
• Vehicles
• Recreational equipment
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Personal Injury Cases
• Generally self-settled trusts
• Disabled prior to injury?
• To structure or not to structure?
• Still need SNT
• Last minute nature of cases
• Dealing with PI attorneys
Additional Resources:


http://www.americanbar.org/publications/bifocal/vol_34/issue_5_june2013/pooled_trusts
.html
http://attorney.elderlawanswers.com/uploads/ASNPConference/archive/documents/2014
0114/Lillesand_2014_SSI_Overview_with_Appendices.pdf
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Coordinating Special Needs Trust
with Government Benefits
175
What Services are Offered & What are
the Service Limitations in South Dakota
What services does the South Dakota Medicaid waiver program offer?
 The CHOICES waiver provides the following services: Service coordination; Residential
supports; Day habilitation; Pre-vocational; Supported employment; Nursing; Specialized
Medical Services; Equipment; and Drugs. The CHOICES waiver does not provide funding
for room and board.
 The Family Support services waiver offers the following services: Service coordination;
Respite care;Companion care; Environmental accessibility; Vehicle modification;
Specialized Medical Adaptive Equipment and Supplies; and Nutritional supplements.
The Family Support does not provide funding for room and board or residential services.
 The ADLS waiver provides the following services: Personal attendant services; Case
management; Consumer preparation services; Skilled nursing services; Emergency
response services; and incontinent supplies.
 The Elderly waiver provides the following services: Assisted living; Environmental
accessibility adaptations; In-home nursing; Meals/Nutritional supplements; Personal
emergency response systems; Adult day; Homemaker; Personal care; Respite care;
Specialized medical equipment and supplies; and Adult companion.
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Services Offered(Cont..)
 Does South Dakota offer community group
homes? Yes, Community Support Providers provide
residential options for people, such as group homes and
supervised apartments.
 Does South Dakota offer supported living? Yes,
Community living training and residential expanded
follow-along are also provided for those who are living on
their own or are working toward that goal.
 Are there still state owned institutions? How many
people are living in institutions? South Dakota has one
large state facility, The South Dakota Developmental
Center (SDDC), which serves approximately 130 persons
with Intellectual/Developmental Disabilities. Their
disabilities range from very mild
intellectual/developmental disabilities to severely
profound.
177
Coordination of Public Benefits
with SNTs
How It Works
Housing
Roommate
Special Needs Trust
Beneficiary
Family Community
Support Services
CMH
Support Services (Waiver)
Dept. of Community Healthformerly FIA
Adult Home Help Services
Food Stamps
178
House Ownership by Trust
• To be avoided, if possible
• Not a countable asset for SSI or Medicaid
• But subject to estate recovery and bad
management
• So SNTs often own houses
• What if parents and other siblings live in
house?
• Co-ownership? Rent? Ancillary beneficiaries?
179
Advocacy and Monitoring Care
Who will take over from parents?
• Parents are primary advocates and care
providers
• Who will take their place?
•
•
•
•
•
Other family members
Professional care managers
Guardian
Attorneys
Trustees
• Coordinating care
180
Trust Protectors
•
May be written into the trust or may be
informal
•
•
•
•
•
•
•
Care provider
Advocate
Family members
Special needs attorney
Financial advisor
Specialist in special need, e.g., social worker,
physical therapist, psychologist, etc.
Care manager
181
Additional Resources
 http://www.pekdadvocacy.com/wp-
content/uploads/2010/12/2015SummitRegBrochure.pdf
 http://specialneedsnj.com/blog/
 http://www.michbar.org/journal/article.cfm?articleID
=137&volumeID=12
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