Introduction
Personal injury attorneys frequently call our office and ask who qualifies for a special needs trust. There are 3 requirements for an individual to be eligible for a special needs trust:
- The client must be 64 years old or younger.
- The client must be deemed disabled by the Social Security Administration. The client should be receiving either Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).
Medicaid Payback Provision
If a client qualifies for a special needs trust and elects to establish a special needs trust, it is important to keep in mind that the trust must include a Medicaid payback provision. One of the reasons the government allows for special needs trusts is because there's a Medicaid payback provision. Medicaid has a right to be reimbursed for all the medical expenses it has incurred on behalf of the beneficiary of the special needs trust (assuming there are funds left in the trust when the trust is terminated).
Once Medicaid's payback provision has been satisfied, then the remaining funds can go to other beneficiaries that the client may want to name. But Medicaid is named as the primary residual beneficiary of a special needs trust and will receive a reimbursement from the trust when the client passes away or the trust is terminated.
Conclusion
Special needs trusts are a great solution to help people preserve their Medicaid and SSI benefits. Many clients, through a special needs trust, can ensure that their settlement funds can be used for their supplemental needs like clothing, transportation, vacations, and other eligible expenses (read more about special needs trust spending rules).
If you’re interested in a special needs trust for your client, give us a call. We can talk to you and your client about all the eligibility requirements and the Medicaid payback provision — and ensure your client understands the implications and benefits of establishing a special needs trust. We can help you navigate this with expert government benefits planning.
