People with disabilities are frequently enrolled in the Medicaid program. This is a government health insurance program, but you do not automatically qualify because you are disabled. To qualify for Medicaid, you have to be able to prove that you have a significant level of financial need.
Many individuals with disabilities also rely on the Supplemental Security Income program. The purpose of this program is more or less self-explanatory. SSI is a source of income for disabled people who cannot earn much if anything because of their limitations.
Because these programs are designed to help financially needy individuals, an improvement in financial status could render a benefit recipient ineligible. This type of improvement could take place if a disabled person was to receive a personal injury settlement.
Self-Settled Special Needs Trusts
Under these circumstances, the proceeds from the personal injury case could be used to create a self-settled special needs trust. These trusts are sometimes called first party special needs trusts.
The government benefits do not provide an individual with a disability with everything that he or she may want or need. These unmet needs could be satisfied through the utilization of the funds in the trust. A trustee would handle the assets in the trust; the beneficiary could not directly spend the money.
As long as the actions of the trustee are within the government benefit rules, eligibility for Medicaid and SSI would not be interrupted.
When a self-settled special needs trust has been established, the assets are protected from the Medicaid program during the life of the beneficiary. However, the state is required to seek reimbursement from the beneficiary’s estate after his or her death. As a result, the state could ultimately absorb assets that remain in the first party special needs trust after the passing of the beneficiary.
It is also possible to create a third party special needs trust. The funding for this type of trust would come from someone other than the beneficiary.
The same situation would be in place regarding the ability of the trustee to use assets in the trust to satisfy the beneficiary’s unmet needs, but there is a significant difference. Medicaid would not seek reimbursement from the estate of the beneficiary when the funding came from a third party.
Special Needs Planning Report
Our firm has prepared an in-depth report that puts the subject of special needs planning under the microscope. This report will answer most of your questions, and it is being offered free of charge right now.
To obtain your copy of this comprehensive report, visit this page and follow the simple instructions: Free Report on Special Needs Planning.
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