In order for an individual to be eligible for Medicaid, there are financial standards that need to be met. Many Medicaid applicants will have to spend some of their assets in order to meet Medicaid’s financial threshold. There are a few excludable resources that are exempt from the Medicaid spend down. These assets can be retained by the Medicaid applicant and will not impede Medicaid eligibility. An individuals personal possessions, a prepaid irrevocable funeral trust, and a special needs trust for a disable child are just a few excludable resources when applying for Medicaid.
Today we will discuss utilizing a special needs trust with the excess “spend-down” money. When a Medicaid applicant has a disabled child, a special needs trust allows the transference of assets from a parent to the child without jeopardizing the child’s government benefits.
Special needs trusts are also referred to as “supplemental care trust”. These trusts supplement the disabled child’s Supplemental Security Insurance (SSI) and Medicaid benefits. The money in a special need trust may only be used for specific items or services. The trust is meant to supplement and not pay for basics such as food and shelter. Some things that may be purchased through a special needs trust include:
• Home modifications to assist the disabled
• Medical treatments and equipment not already covered by government assistance programs.
• Education and recreation equipment
• Computers
• Musical instruments
• Sports equipment
• Travel expenses
• Prepaid funeral
When a parent creates a special needs trust for a disabled child, he/ she chooses a trustee. A trustee is an individual or institution who manages the assets in the trust. The trustee’s responsibility is to follow the terms and guidelines outlined in the trust as well as transferring the funds from the trust to the beneficiary or disabled child. A trustee can be a family member, attorney, bank or anyone that one chooses to assign as a trustee.
The trust restricts the beneficiary (or disabled child) and parent access to the assets in the trust. Only the trustee would have accessibility to the funds and therefore it’s considered an unattainable asset for both the parent and disabled child. To summarize, the Medicaid Applicant who transfers assets to a special needs trust for a child will not incur a Medicaid penalty. Additionally, the recipient will not jeopardize the government benefits which they receive.