When you establish a trust for a client to preserve their SSI and/or Medicaid benefits, the next questions are: What can the trust be used for on behalf of the client and what are the restrictions on expenses with the trust?
In general terms, clients can use the trust for anything that the beneficiary needs except for food and shelter expenses. Food and shelter expenses are covered by SSI — for which the client receives $783 a month (as of 2020). The Social Security Administration does not allow clients with a special needs trust to use money in the trust for what it already pays for through SSI.
Some of the items included in shelter expenses are rent and basic utilities, including sewer, water, electricity, and gas. The client must use their SSI payment for these recurring expenses (and cannot use the funds in the special needs trust for these items).
Here are some examples of expenses that a special needs trust can cover:
- Medical and dental expenses not covered elsewhere (hearing aids, dental work, eyeglasses, etc.)
- Special equipment like wheelchairs or specially-equipped vans
- Therapy or rehabilitation services
- Training and education
- Travel, which can include the cost of a companion
- Recreation and entertainment (summer camp, movies or social events, videos, sports equipment)
- Electronic equipment and appliances, computers
- Payments for a companion
- Legal or guardianship expenses
- Burial expenses
It’s important to remember that the beneficiary of the special needs trust cannot have direct access to the funds within the trust. This is one of the requirements that allow the funds within the special needs trust to be considered an exempt asset for Medicaid and SSI.
A third-party trustee is responsible for distributions from the trust. So, while a special needs trust is not as accessible as a debit card that can be swiped for any purchase, it’s the closest thing that these clients have in most cases.
In sum, a special needs trust can generally be used for anything that is for the benefit of the beneficiary with the major exception of food and shelter expenses.