Why Join and What are the Benefits of Joining SSNPT?
There are two primary public benefit programs that are available to those that are injured and disabled. The first is the Medicaid program and the intertwined Supplemental Security Income benefit (“SSI”). The second is the Medicare program and the related Social Security Disability Income/Retirement benefit (“SSDI”). Both programs can be adversely impacted by an injury victim’s receipt of a personal injury recovery. Understanding the basics of these programs and their differences is imperative to protecting the client’s eligibility for these benefits. There are many benefits to creating a trust for those clients who are disabled and receiving government assistance programs. First and foremost, it keeps eligibility intact if the right type of trust is utilized. Secondly, it provides a mechanism to safeguard and manage the monetary recovery. Lastly, it provides a framework for protection of a disabled person’s rights with the trustee engaging a team approach to advocate on behalf of the trust beneficiary.
Public Benefits for the Disabled
Before discussing the appropriate trust for those on government benefits, it is important to provide an overview of the different programs. Medicaid and Supplemental Security Income (hereinafter SSI) are income and asset sensitive public benefits that require special planning to preserve. In many states, one dollar of SSI benefits automatically provides Medicaid coverage. This is very important, as it is imperative in most situations to preserve some level of SSI benefits if Medicaid coverage is needed in the future. SSI is a cash assistance program administered by the Social Security Administration. It provides financial assistance to needy aged, blind, or disabled individuals. To receive SSI, the individual must be aged (sixty-five or older), blind or disabled and be a U.S. citizen. The recipient must also meet the financial eligibility requirements. Medicaid provides basic health care coverage for those who cannot afford it. It is a state and federally funded program run differently in each state. Eligibility requirements and services available vary by state. Medicaid can be used to supplement Medicare coverage if the client is eligible for both programs (“dual eligible”). For example, Medicaid can pay for prescription drugs as well as Medicare co-payments or deductibles. Because Medicaid and SSI are income and asset sensitive, the creation of a special needs trust may be necessary which is discussed in greater detail below.
Medicare and Social Security Disability Income (hereinafter SSDI) benefits are an entitlement and are not income or asset sensitive. Clients who meet Social Security’s definition of disability and have paid in enough quarters into the system can receive disability benefits without regard to their financial situation. The SSDI benefit program is funded by the workforce’s contribution into FICA (social security) or self-employment taxes. Workers earn credits based on their work history and a worker must have enough credits to get SSDI benefits should they become disabled. Medicare is a federal health insurance program. Medicare entitlement commences at age sixty-five or two years after becoming disabled under Social Security’s definition of disability. Medicare coverage is available again without regard to the injury victim’s financial situation. However, a special needs trust may be necessary to protect eligibility for Medicare if a set aside is created and the client is dual eligible. Dual eligibility means that the client is not only Medicare eligible but receiving Medicaid as well.
Trust Solutions for Injury Victims
Special Needs Trusts
The receipt of personal injury proceeds by someone seriously injured can cause ineligibility for needs-based government benefit programs. Medicaid and SSI are two such programs. However, there are planning devices that can be utilized to preserve eligibility for disabled injury victims. A special needs trust can be created to hold the recovery and preserve public benefit eligibility since assets held within a special needs trust are not a countable resource for purposes of Medicaid or SSI eligibility. The creation of a special needs trusts is authorized by the Federal law. Trusts commonly referred to as (d)(4)(a) special needs trusts, named after the Federal code section that authorizes their creation, are for those under the age of sixty-five. However, another type of trust is authorized under the Federal law with no age restriction and it is called a pooled trust, commonly referred to as a (d)(4)(c) trust.
The 1396p provisions in the United States Code govern the creation and requirements of such trusts. First and foremost, a client must be disabled to create an SNT. There are two primary types of trusts that may be created to hold a personal injury recovery each with its own requirements and restrictions. First is the (d)(4)(A) special needs trust which can be established only for those who are disabled and are under age 65. This trust is established with the personal injury victim’s recovery and is established for the victim’s own benefit. Second is a (d)(4)(C) trust typically called a Pooled Trust that may be established with the disabled victim’s funds without regard to age. Both types of trust work identically with the only difference being that a pooled trust is established and operated by a non-profit entity, so it can accept any size trust. Pooled trusts are typically more economical to establish and easier as well.
Dual Eligibility: The Intersection of Medicare and Medicaid – SNT/MSA
If you have a client that is a Medicaid and Medicare recipient, extra planning may be in order. If it is determined that a Medicare Set Aside is appropriate, it raises some issues with continued Medicaid eligibility. A Medicare Set Aside account is considered an available resource for purposes of needs-based benefits such as SSI/Medicaid. If the Medicare Set Aside account is not set up inside a Special Need Trust, the client will lose Medicaid/SSI eligibility. Therefore, in order for someone with dual eligibility to maintain their Medicaid/SSI benefits the MSA must be put inside a Special Needs Trust. In this instance, you would have a hybrid trust which addresses both Medicaid and Medicare. It is a complicated planning tool but one that is essential when you have a client with dual eligibility.
Disabled clients especially need counseling about trust options given the likelihood they will be receiving some type of public benefits. To prevent being exposed to a malpractice cause of action, the personal injury practitioner should understand the types of public benefits that a disabled client may be eligible for and techniques that are available to preserve those benefits. Having this knowledge will help the lawyer identify disabled clients they may want to refer for further consultation with other experts. As discussed above, if a client receives SSI/Medicaid then a Special Needs Trust is advisable. For clients that are dual eligible (Medicaid/Medicare), a more complex plan may be needed involving an SNT and an SNT/MSA.
Pooled Trust Services has a pooled SNT that can be used anywhere in the United States for clients who are disabled and are receiving SSI/Medicaid. The Settlement Solutions National Pooled Trust (SSNPT) is a low-cost SNT solution. The fees are a one-time joinder of $500.00 and a 1.5% annual trustee/asset management fee. SSNPT’s fees are among the lowest in the country. Even though it is low cost, it has world class customer service and unique features. For example, trust beneficiaries have access to True Link Financial’s VISA card making it easy to use the assets held in the trust. Also, it offers TEAM services for those family members who are being paid as caregivers. This allows them to work on behalf of their family member yet have workers’ compensation coverage in addition to having payroll automatically handled.
SSNPT has a sub-trust for those that are dual eligible and are establishing a Medicare Set Aside. This provides a complete solution for those that are dual eligible with separate sub-accounts for the non-MSA and MSA funds. The MSA funds are administered using a professional MSA administrator which does charge an additional fee beyond the annual trustee fee charged by the trustee. All fees come from the non-MSA sub-account as Medicare regulations don’t allow the MSA to pay administration costs out of the funds set aside.
To learn more about all of the pooled trust solutions, visit www.pooledtrustservices.com