Health insurance is important for everyone, but clearly, it is absolutely essential for people with disabilities. Depending on the circumstances, care and treatment can cost millions of dollars over the course of a lifetime.
Since a significant percentage of people with disabilities cannot work, they do not have health insurance through their jobs, and they have limited financial resources. As a result, they can qualify for Medicaid coverage. You are probably aware of the fact that Medicaid is a government health insurance program for financially needy individuals.
There is another need-based government program that provides income for disabled people who have little earning power called Supplemental Security Income.
Once you are deemed eligible for these programs, the eligibility is not necessarily permanent. Sometimes people come into money for one reason or another, and a change in financial status could cause a loss of benefit eligibility.
Self-Settled Supplemental Needs Trusts
Someone with a disability who is enrolled in these benefit programs who comes into money for some reason, perhaps through a personal injury settlement or judgment, could potentially use a supplemental needs trust to preserve benefit eligibility.
The way that it works is that a parent, a grandparent, or a legal guardian would use the assets that were the property of the beneficiary to fund a supplemental needs trust. These trusts are alternately called special needs trusts.
Because of the divestiture of direct personal possession of the assets, they would not be counted for benefit eligibility purposes. However, the trustee that is named in the trust declaration could use the assets to satisfy some of the beneficiary’s unmet needs.
A supplemental needs trust can indeed preserve government benefit eligibility, but there is one negative. The Medicaid program is required to seek reimbursement from the estate of an individual who was enrolled in the program. As a result, assets that remain in the trust could be attached by Medicaid after the death of the beneficiary.
We should also point out the fact that a supplemental needs trust can be established with funds provided by third party. The same situation would exist with regard to the trustee’s ability to improve the beneficiary’s quality of life without impacting benefit eligibility.
One difference lies in the fact that Medicaid would not seek to attach assets that remain in the trust after the beneficiary’s passing.
We Can Help
There are many different ways that assets can be positioned. As you can see, a special needs trust can be a good solution when certain circumstances exist.
If you would like to discuss your own unique personal situation with a licensed professional, our firm would be glad to assist you. We offer no obligation consultations, and you can feel free to send us a message through this page to request an appointment: Grand Forks ND Estate Planning Attorneys.