March 26

When Your Baby Has Special Needs

baby has special needsAs a parent, discovering your baby has special needs can be overwhelming. Perhaps it was something you expected because of prenatal testing or birth trauma, or maybe your baby’s disability or diagnosis was discovered because of developmental delays. Either way, it can feel like you’ve been thrust into an advanced parenting class with no preparation. Where do you possibly begin to help your child take on the challenges ahead? Here are a few suggestions.

Become Your Own Expert. As a parent, you are your baby’s best advocate. Trust your medical professionals but arm yourself with everything you can learn. Rely on information from reputable organizations such as the American Academy of Pediatrics and Easter Seals. The Arc is a national organization serving people with intellectual and developmental disabilities and their families. As you navigate medical and other appointments, ask questions for understanding and clarification. The more you know, the stronger your confidence in speaking up when you need to for your child.

October 9

Special Needs Planning Basics

If you are the parent or guardian of a child or an adult with special needs, the day-to-day demands alone can be overwhelming.  Thinking about the future can seem like mission impossible. When you consider how critical you are to the daily well-being of your loved one, how will you and your family ensure their future, especially if you are not there?

Define. No one knows what your child, or disabled adult under your care, needs better than you. Before you worry about complex legal, governmental, and medical concerns, take some time to think about the life you want for your loved one.

What will it look like?

What aspects of your loved one’s day-to-day living need to be addressed to ensure a high quality of life?

What will a typical day look like?

Who will be there to fill your role?

What potential challenges might there be?

Write it all down. To make sure you capture the most information possible, you will want to take your time doing this, and you also will want to revisit and update it in years ahead.

Communicate. Once you are clear, you’ll want to make sure your wishes are expressed.  While not legally binding, an attorney can also assist you in writing a letter of intent to serve as a detailed care roadmap, outlining important considerations and insights invaluable to anyone who assumes care for your loved one. You likewise will want to prepare a will and/or trust to direct how your estate will be used after your passing, and, if necessary, to nominate a future guardian.

Provide. Structuring assets is critical for the long-term provision and care of your loved ones. An important consideration is to assess which government benefits might be available, and how eligibility is determined. Whether these are means-tested benefits such as Supplemental Security Income (SSI) or Medicaid, or entitlements based on eligibility such as Social Security Disability Insurance (SSDI) or Medicare, you’ll need to know how to appropriately structure your financial plan to ensure your loved one receives the care and support he or she needs. One answer may be a special needs trust that can provide financial resources while still ensuring your loved one remains eligible for important government benefits.

Don’t Go It Alone. There is help. Attorneys such as Butenhof & Bomster who specialize in working with the families and caregivers of individuals with special needs can bring valuable knowledge and help in translating your wishes and your loved one’s care needs into a solid plan for the future. Knowing you’ve done what you can to provide vital care, resources, and protection for your loved one tomorrow can give you invaluable peace of mind today.

 

Letter of Intent_Special Needs Planning

April 4

Special Needs Planning: What to Know About Age 65

Special Needs Planning Age 65

Age 65

Medicare is a health insurance program offering coverage to individuals who are over the age of 65 and eligible to receive Social Security Retirement or Railroad Retirement benefits.  Medicare also provides health insurance coverage to persons under the age of 65 who have received Social Security Disability Insurance benefits for two years or more.  An individual who is receiving coverage under Medicare Parts A, B, and D generally will receive health coverage for in-patient hospital care, skilled nursing facility care (but not long-term custodial nursing home stays), home health care, hospice care, physician visits, certain preventative services, lab tests and prescriptions.  There are no preexisting condition exclusions for persons entitled to receive Medicare.  General information concerning Medicare benefits can be found online at www.medicare.gov, an informational website managed by the U.S. Centers for Medicare & Medicaid Services.

When do Social Security Disability Insurance benefits automatically change to Social Security Retirement?

Social Security disability benefits automatically change to retirement benefits when the person on SSDI reaches the full retirement age set by the Social Security Administration.  Many folks receiving Social Security Disability Insurance (“SSDI”) often think their SSDI benefits automatically convert to Social Security Retirement Benefits when they turn age 65. However, because the Social Security Administration periodically adjusts the full retirement age, anyone born after 1937 does not reach “full retirement age” at age 65. Anyone born after 1960 will not reach full retirement age until age 67, and only then will their SSDI monthly cash benefit convert to Social Security Retirement Benefits.  If you were born after 1937, but before 1960, you can determine your full retirement age on the Social Security Administration’s website: https://www.ssa.gov/planners/retire/ageincrease.html.

Self-Settled Special Needs Trusts and Age 65

Many government benefits programs that are available to persons with disabilities, like Supplemental Security Income (“SSI”) and Medicaid, limit the amount of monthly income an individual may receive, and the value of certain countable assets the individual can may own if applying for benefits.  These federally-mandated limits often prevent someone from being eligible in the first instance, and sometimes may result in individuals losing some or all of their essential public benefits.  The asset limits for SSI cash assistance is $2,000, and for many Medicaid programs the limit is $2,500 or less.  Therefore, persons with disabilities who depend upon these essential public benefits based on financial need continually must monitor their “countable” assets, as well as their income, to ensure they never exceed the allowable limits.

There are some planning options available for individuals to set aside their own assets and remain eligible for SSI and Medicaid.  Generally, a person with disabilities cannot transfer assets out of his or her name, especially to an irrevocable trust, without causing a period of disqualification for SSI benefits and some Medicaid programs, unless the transfer either (a) occurred before a time period commonly known as the “look-back period” or (b) the assets were placed into a certain type of irrevocable trust that contains specific provisions and restrictions.  These unique trusts commonly are referred to as “self-settled” special needs trusts (“SNTs”), since they hold assets which previously belonged to the trust beneficiary.   Assets transferred to a qualifying SNT are exempt from the usual asset transfer penalties for SSI and Medicaid eligibility.  However, these irrevocable trusts must be drafted very carefully to satisfy strict federal guidelines.

Using a self-settled SNT to hold countable assets or to receive unearned income is a favored planning technique when the goal is to preserve financial eligibility for public benefits programs like SSI and Medicaid.  Self-settled SNTs can be created to benefit a person with disabilities who is about to receive an unexpected inheritance, settlement of a personal injury claim, alimony or child support, or who has personal savings and unexpectedly becomes disabled.

Again, a self-settled SNT holds funds that previously belonged to the person with disabilities who later becomes the beneficiary of the SNT.  Self-settled SNTs differ from “third-party” SNTs, which are trusts that benefit a person with disabilities but hold assets that originally belonged to someone else.  A third-party SNT often is used by family members or friends who want to plan for the future care of a loved one by setting aside an inheritance as part of an overall estate plan.  Although third party and self-settled SNTs both help to preserve eligibility for public benefits which are based on financial need, like SSI and Medicaid, the two types of SNTs have very different requirements because self-settled SNTs are defined by federal law.

For instance, while third-party SNTs have no age restriction whatsoever, the person creating a self-settled SNT under federal law, 42 U.S.C. §1396p(d)(4)(A) (a “(d)(4)(A) SNT”), must be under the age of 65 at the time the SNT is established.  The trust must be irrevocable, and must be created either by the person with disabilities, a parent, grandparent, guardian or a court.  Also, any assets remaining in a (d)(4)(A) SNT at the beneficiary’s death must be used first to reimburse the state or states for Medicaid benefits paid for the person with disabilities during his or her lifetime.  This feature of self-settled SNTs is known as the “Medicaid payback” and only self-settled SNTs have this requirement, third-party SNTs do not.  Any funds remaining in a (d)(4)(A) SNT, after paying back the state(s), can be paid to whoever is named as successor beneficiaries.

A “pooled” SNT is another type of self-settled SNT that complies with a different sub-section of the same federal law, 42 U.S.C. §1396p(d)(4)(C) (a “(d)(4)(C) SNT” or “Pooled SNT”), and often is used for more modest estates or when an individual needs to spend assets quickly to remain eligible for government benefits.  Pooled SNT programs operate in many states, including New Hampshire.  Although federal law does not impose an age restriction on who can create and fund a (d)(4)(C) SNT, New Hampshire follows guidance issued by the Center for Medicare and Medicaid Services (CMS) which states that if the person with disabilities is age 65 or older, a penalty for Medicaid eligibility will be imposed for any transfers of assets to a (d)(4)(C) SNT.  There is on-going litigation in certain states to clarify whether a transfer to a (d)(4)(C) SNT after age 65 should be a disqualifying transfer that disrupts certain needs-based public benefits.

A (d)(4)(C) SNT also must be irrevocable, used for the sole benefit of the trust beneficiary who is a person with disabilities, and created by the individual beneficiary, his or her parent, grandparent, guardian, or a court.  Further, like the (d)(4)(A) SNT, a self-settled (d)(4)(C) SNT also must contain a Medicaid payback provision.  Under the (d)(4)(C) SNT design, separate sub-accounts belonging to multiple beneficiaries are managed by a non-profit entity.  These funds then are “pooled” for management and investment purposes, but each sub-account is used for the sole benefit of the individual account beneficiary – this is why (d)(4)(C) SNTs also are known as Pooled SNTs.  Since some financial institutions either do not handle small SNTs or charge fees that may be cost-prohibitive for smaller amounts, Pooled SNTs offer beneficiaries access to skilled investment and trust administration services.  Finally, any assets remaining in the Pooled SNT after the beneficiary’s death typically are divided in some proportion between the state(s) for Medicaid recovery and the non-profit entity.

If a person with disabilities expects to receive a settlement, an inheritance or any other monies that would increase his or her countable assets to more than $2,000 for SSI, or more than $2,500 for many Medicaid programs, it is important that the individual or family members meet with an attorney who specializes in disability and public benefits planning so that proper planning can be done to protect the person’s continued eligibility for essential programs.

If you are interested in learning more about other Milestone Ages of Special Needs Planning, download our ebook now:

 

Milestone Ages Special Needs Planning

April 4

Special Needs Planning: What to Know About Age 55

Special Needs Planning Age 55

Age 55

A State’s Right to be Reimbursed for Cost of Medicaid Assistance

The age of 55 is relevant because it limits a State’s right to seek reimbursement for Medicaid benefits paid on an individual’s behalf.  Some people decide not to apply for help because they are concerned (a) they might have to pay the government back for the help received if they later inherit money or obtain a good job, (b) that a lien might be placed on their home, or (c) that the government will seek reimbursement from their estate at their death.  However, some of these concerns are misplaced.

Medicaid Recovery During Life

Benefits Correctly Paid

In general, federal law prevents the government from demanding reimbursement for help it provided while an individual is still living if the individual was, in fact, entitled to the help received.  For instance, if you accurately reported all of your income and resources when you applied for assistance and were found eligible for Medicaid, then you would not have to pay the government back during your lifetime, even if you later inherited a significant sum of money or became gainfully employed.  The one exception to this, described in greater detail below, applies to certain individuals who are at least age 55, not living in their home, and receiving Medicaid long-term care benefits.

Benefits Incorrectly Paid

If you did not report all of your income or savings, however, your eligibility for future benefits might be affected, and the government might have the right to request reimbursement.  It therefore is highly important to provide complete and truthful information when applying for assistance, and to then inform the relevant agency when your circumstances change.

Liens on Real Estate

You may have been told that the government will put a lien on your home if you receive Medicaid. For the most part, however, that is not true.

The Medicaid program will not force you to sell your house to pay it back for help to which you were entitled.  Your house cannot be “taken away” from you simply because you needed and received medical assistance from the government.  Moreover there are significant restrictions on when the State is allowed to file and enforce a lien on a home.

Specifically,

  • A lien cannot be placed on the home for most types of Medicaid benefits, but only for nursing facility level of care benefits (nursing home, or benefits under a home and community based care waiver);
  • Even if an individual is receiving nursing facility level of care Medicaid benefits, a lien cannot be placed on the home unless the individual is not living in the home, and only if it is determined that the individual cannot reasonably be expected to be discharged from the facility and return home;
  • A lien also may not be placed on the home if any of the following people live in the home:
  • The individual’s spouse; or
  • The individual’s minor or disabled child; or
  • The individual’s sibling, if the sibling had lived in the home for at least a year prior to the individual’s nursing home admission and who has some type of claim to the property.

Medicaid Recovery upon Sale of Real Estate

If a lien was properly placed on a home under the rules listed above, then the State can enforce its lien and seek recovery from the sale of the home for Medicaid nursing facility benefits paid on that individual’s behalf, but only for those benefits paid on behalf of the individual after the age 55.

Medicaid Recovery After Death

Although the State cannot seek reimbursement for Medicaid benefits that were paid correctly while the individual is living, it might have the authority to seek reimbursement after the individual’s death.  First, if a lien properly had been placed on the home during the individual’s lifetime, the State generally can seek recovery upon the sale of home.

However, it may not seek recovery if:

  • There is a child living in the home, and had been living in the home for at least two years before the individual was admitted to the nursing home, and provided care to that individual that resulted in a delayed nursing home admission.

Second, the State has the right to seek recovery against the individual’s “estate,” but only if none of the following individuals then are living:

  • The individual’s spouse; or
  • The individual’s minor, disabled or blind child.

An individual’s “estate,” for Medicaid recovery purposes, includes probate assets as well as life estates and joint tenancies in real estate, and property held in a revocable trust.

Medicaid Benefits Received Before Age 55

Why is the age 55 significant?  Because, generally, federal law prohibits a State from seeking reimbursement for Medicaid benefits that were correctly paid prior to an individual reaching the age of 55.  Therefore, if an individual dies prior to reaching the age of 55, there would be no Medicaid recovery regardless of how much was paid on that individual’s behalf.

There are two very significant exceptions to this rule, however:

  • The State can seek recovery against assets remaining in a self-settled special needs trust – i.e., a special needs trust that holds assets previously owned by the individual – and its claim can include any type of Medicaid benefits paid on the individual’s behalf, even if paid prior to the creation of the special needs trust.
  • The State can seek recovery for assets remaining in an ABLE account. ABLE stands for Achieving a Better Living Experience, and is an advantage savings account for certain individuals who became disabled prior to age 26. Medicaid recovery against an ABLE account includes Medicaid benefits provided after the date the ABLE account was established.

Not all Resources (such as a home) are ‘Countable’

To be eligible for Medicaid or Supplemental Security Income (“SSI”) you may have only a limited amount of “countable” resources in your own name, such as bank accounts, stocks, bonds, etc.  If you are eligible for Medicaid or SSI, receiving a significant amount of money from a personal injury settlement or an inheritance could present a true dilemma if retaining eligibility for this benefit is important.  One option is to use the money to purchase assets that are “non-countable,” such as a house, vehicle, furniture or other personal property; another option is to deposit the funds into a self-settled special needs trust, and then the trust later could purchase a house, vehicle, etc.  It also is possible to use both of these options – i.e., to purchase certain items, and then deposit the excess funds into a special needs trust.

Therefore, if a person were to die prior to reaching the age of 55, the State may not have a right to seek Medicaid reimbursement from the individual’s estate, but the State must be reimbursed from any assets remaining in a self-settled special needs trust or cash held in an ABLE account.  Since valuable assets, such as a home, may be titled in a self-settled special needs trust it is important to consider whether such assets should be titled in the name of the trust or in one’s own name.

There are a number of factors to consider.

Should a Home be Owned by a Special Needs Trust?

Pros:

Owning a home in your own name can bring a sense of pride and independence.  You can decorate the house to your liking.  You will have the right to borrow against the equity in the home in order to make repairs or improvements, and to determine who will live in the home with you.  You alone can decide whether to sell the home and how to use the sale proceeds.  Were you to pass away before the age of 55, the equity in your home will not be subject to Medicaid recovery.

Cons: 

If you have creditors, or are likely to have creditors, your housing could be at risk if you own the home in your individual name.  While having the ability to mortgage a house might be appealing, this may not be the best option for someone who tends to be irresponsible with money, or who is vulnerable to being taken advantage of by others.  Further, if you have limited income, you may not always be able to pay the monthly mortgage, which also will put your housing at risk.

If your special needs trust or a family member helps you pay the real estate taxes or other costs associated with owning a home, such assistance will be treated as your “unearned income” for both SSI and Medicaid eligibility purposes.  However, funds taken from an ABLE account and used to pay housing expenses are not treated as income by SSI or Medicaid.

Titled in the Name of a Special Needs Trust

Pros:

If a special needs trust owns a home, the home will be protected from any future creditors.  The trustee becomes responsible for all costs associated with the home.  If the trust pays property taxes and other carrying costs associated with the home, SSI will still treat such payments as unearned income to you, but, in NH, such trust expenditures will not be considered your income for Medicaid eligibility purposes.  You will not be able to take out a mortgage, which could be beneficial if you have a tendency to act irresponsibly or impulsively, or simply cannot afford a monthly mortgage payment.

Cons:

If a special needs trust owns the home, the Trustee ultimately makes all decisions, not you – including whether you may decorate the house in a particular way, whether certain improvements will be made, and whether the house will or will not be sold.  Assets titled in the name of a special needs trust at the time of your death might have to be paid to the State as reimbursement of Medicaid paid on your behalf over the course of your lifetime and will not be restricted to assistance provided after the age of 55.

If you are interested in learning more about other Milestone Ages of Special Needs Planning, download our ebook now:

Milestone Ages Special Needs Planning

NEWER OLDER 1 2 4 5