Archive for December, 2016

Special Needs Trusts are now Easier to Create

Posted on: December 16th, 2016 by Mark R. Friedman

This past Tuesday, President Obama signed into law the 21st-century Cures Act.  This new law is broad and sweeping, and passed with bipartisan support.  It includes funding for new medical research, Vice President Biden’s “cancer moonshot” program to find a cure for cancer, and, critically for our work, passage of the Special Needs Trust Fairness Act, which remedies a long-standing problem with special needs trusts.

There are two kinds of special needs trusts (SNT’s) – first-party special needs trusts, and third-party special needs trusts.  For first-party SNT’s, the trust is funded using the beneficiary’s own money.  In other words, a person with disabilities is putting his own money in trust.  With third-party SNT’s, the money comes from someone else, a third party.  For example, if parents want to leave money to their child with disabilities when they pass away, their will should include a third-party SNT.  By contrast, if a person with disabilities wins money in a lawsuit, that’s his own money and it should be held in a first-party SNT.

SNT’s must comply with Medicaid and Social Security regulations in order for the beneficiary to qualify for disability benefits.  There are much more stringent requirements on first-party SNT’s than on third-party SNT’s.  First-party SNT’s must comply with 42 USC 1396p(d)(4).  That provision said that, for the most common type of first-party SNT, the trust must be established by a parent, grandparent, guardian or court.

This meant that the beneficiary could not establish his own trust, even if he had capacity to do so.  Oftentimes, beneficiaries would have to go to court to establish a first-party SNT, increasing the cost and difficulty of doing so.  This requirement always seemed arbitrary, unnecessary and unfair, and the recent 21st-century Cures Act eliminated it.  Beneficiaries can now establish their own first-party SNT’s.  This is a positive step for our clients, and we look forward to using this provision to help our clients protect their eligibility for Medicaid, SSI and other disability benefits.

Medicaid Increases Spousal Asset Limit

Posted on: December 5th, 2016 by Mark R. Friedman

If a person applies for long term care Medicaid (such as in a nursing home or assisted living facility), and his spouse still lives independently in the community, then even though the Medicaid applicant must have assets under $2,000, the community spouse may be able to keep some of the couple’s assets.  The idea is to avoid impoverishing the community spouse, and forcing that spouse to go on Medicaid as well.

Generally, the community spouse is allowed to keep one home that she lives in, one vehicle that she uses, and half of the assets the couple owned when the other spouse became institutionalized (e.g., entered care in a nursing home).  However, there are limits on the “half of the assets” prong – a ceiling and a floor.  That ceiling and floor gets changed occasionally, based on the federal poverty rate.

The Centers for Medicare and Medicaid Services just updated those figures for 2017.  Under Community Spouse Resource Standards, you can see that the new minimum is $24,180, and the new maximum is $120,900.  In other words, if one spouse goes into long term care and applies for Medicaid, the other spouse should be able to keep a minimum of $24,180, and may be able to keep up to a maximum of $120,900 (depending on assets when the other spouse became institutionalized).

This is an increase from 2016’s standards, and a positive development for our clients.

In addition, the SSI maximum benefit is increasing slightly to $735 (which New Jersey also increases slightly).  The substantial gainful activity limit is also increasing modestly, which will make it easier for folks to qualify for disability benefits.   The community spousal housing allowance has increased modestly as well, which means community spouses are able to keep more of their institutionalized spouse’s income.

Overall, these figures are an improvement for our clients who seek Medicaid and other benefits.  If you’re interested in Medicaid or other benefits, we can explain how they apply to your situation if you call or email us.

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Homepage photo: Cows grazing at Meadowbrook Farm, Bernardsville, NJ by Siddharth Mallya. October 23, 2012.
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