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Supplemental needs trust
Supplemental needs trust is a US-specific term for a type of special needs trust (an internationally recognized term). Supplemental needs trusts are compliant with provisions of US state and federal law and are designed to provide benefits to, and protect the assets of, individuals with physical, psychiatric, or intellectual disabilities, and still allow such persons to be qualified for and receive governmental health care benefits, especially long-term nursing care benefits, under the Medicaid welfare program.
Supplemental Needs Trusts are often used to receive an inheritance or personal injury litigation proceeds on behalf of an individual with a disability, in order to allow the person to qualify for Medicaid benefits despite their receipt of the settlement.
Medicaid is the Federal program administered by the states which provides health care for those who cannot afford it, based primarily on a standard of impoverishment. See 42 U.S.C. § 1396 et. seq. Federal law establishes certain mandatory requirements which each state must adopt in its local Medicaid program. States are also given options to elect certain other components of the Medicaid program, which they then provide to qualified individuals. Accordingly, Medicaid coverage does vary from state to state in certain aspects, but there are also mandatory Federal law provisions.
To qualify for Medicaid and its long-term medical and nursing care benefits, the applicant must be "impoverished." There is a strict limit to the countable assets which a Medicaid recipient can own. To qualify for Medicaid, an applicant must meet the asset guidelines for Supplemental Security Income (SSI). SSI allows a single applicant to own no more than $2,000 in countable assets and a married applicant to own no more than $3,000 in countable assets. Certain assets, such as the home in which one is living, are specifically exempted and are not countable.
A trust is a legal arrangement in which legal title to assets is held by a trustee under certain defined restrictions written within the governing instrument (usually a will or a written trust agreement) for the benefit of another party known as the beneficiary. Trusts can be used as a vehicle to make assets available to a beneficiary but still significantly restrict them. Such Trusts are called spendthrift trusts. A beneficiary does not necessarily have to be disabled to benefit from a spendthrift trust, but most spendthrift trusts would not suffice to qualify their beneficiary for Medicaid as the assets held within them would be countable.
Federal Medicaid law imposes significant requirements on the type of spendthrift trust which can be used to preserve assets of a beneficiary and still qualify the beneficiary for governmental benefits.
Prior to the enactment of the Omnibus Budget Reconciliation Act of 1993 (OBRA-93), P.L. 103–66, it was possible to create a self-settled, discretionary trust for the benefit of the settlor and still allow the settlor to qualify for Medicaid's long-term nursing care benefits. These trusts were called "Medicaid Qualifying Trusts" (MQT) and did not require an individual to be disabled to qualify for Medicaid, merely impoverished. The settlor of an MQT impoverished themselves simply by transferring their assets to the MQT, but they still had access to the use of such funds for their unrestricted, general support. Recognizing that numerous individuals who were otherwise solvent were qualifying for governmental benefits through the use of MQTs, Congress deemed MQTs to be abusive, and disallowed their use in 1992.
Congress recognized that disabled persons were a special class of individuals who benefited from the use of MQTs and thus permitted the establishment of supplemental needs trusts. A supplemental needs trust will be legally valid so long as the trust in question meets several preconditions as per Title 42 United States Code Section 1396p(d)(4)(A):
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Supplemental needs trust
Supplemental needs trust is a US-specific term for a type of special needs trust (an internationally recognized term). Supplemental needs trusts are compliant with provisions of US state and federal law and are designed to provide benefits to, and protect the assets of, individuals with physical, psychiatric, or intellectual disabilities, and still allow such persons to be qualified for and receive governmental health care benefits, especially long-term nursing care benefits, under the Medicaid welfare program.
Supplemental Needs Trusts are often used to receive an inheritance or personal injury litigation proceeds on behalf of an individual with a disability, in order to allow the person to qualify for Medicaid benefits despite their receipt of the settlement.
Medicaid is the Federal program administered by the states which provides health care for those who cannot afford it, based primarily on a standard of impoverishment. See 42 U.S.C. § 1396 et. seq. Federal law establishes certain mandatory requirements which each state must adopt in its local Medicaid program. States are also given options to elect certain other components of the Medicaid program, which they then provide to qualified individuals. Accordingly, Medicaid coverage does vary from state to state in certain aspects, but there are also mandatory Federal law provisions.
To qualify for Medicaid and its long-term medical and nursing care benefits, the applicant must be "impoverished." There is a strict limit to the countable assets which a Medicaid recipient can own. To qualify for Medicaid, an applicant must meet the asset guidelines for Supplemental Security Income (SSI). SSI allows a single applicant to own no more than $2,000 in countable assets and a married applicant to own no more than $3,000 in countable assets. Certain assets, such as the home in which one is living, are specifically exempted and are not countable.
A trust is a legal arrangement in which legal title to assets is held by a trustee under certain defined restrictions written within the governing instrument (usually a will or a written trust agreement) for the benefit of another party known as the beneficiary. Trusts can be used as a vehicle to make assets available to a beneficiary but still significantly restrict them. Such Trusts are called spendthrift trusts. A beneficiary does not necessarily have to be disabled to benefit from a spendthrift trust, but most spendthrift trusts would not suffice to qualify their beneficiary for Medicaid as the assets held within them would be countable.
Federal Medicaid law imposes significant requirements on the type of spendthrift trust which can be used to preserve assets of a beneficiary and still qualify the beneficiary for governmental benefits.
Prior to the enactment of the Omnibus Budget Reconciliation Act of 1993 (OBRA-93), P.L. 103–66, it was possible to create a self-settled, discretionary trust for the benefit of the settlor and still allow the settlor to qualify for Medicaid's long-term nursing care benefits. These trusts were called "Medicaid Qualifying Trusts" (MQT) and did not require an individual to be disabled to qualify for Medicaid, merely impoverished. The settlor of an MQT impoverished themselves simply by transferring their assets to the MQT, but they still had access to the use of such funds for their unrestricted, general support. Recognizing that numerous individuals who were otherwise solvent were qualifying for governmental benefits through the use of MQTs, Congress deemed MQTs to be abusive, and disallowed their use in 1992.
Congress recognized that disabled persons were a special class of individuals who benefited from the use of MQTs and thus permitted the establishment of supplemental needs trusts. A supplemental needs trust will be legally valid so long as the trust in question meets several preconditions as per Title 42 United States Code Section 1396p(d)(4)(A):