Pooled Special Needs Trust Planning What Families Need to Know

Transcription

1 Pooled Special Needs Trust Planning What Families Need to Know Presented by: Joanne Marcus, MSW Executive Director Commonwealth Community Trust

2 2 About Commonwealth Community Trust (CCT) Nonprofit Pooled Trust Administrator since 1990 Serving over 1,300 Beneficiaries Nationwide

3 3 What is a Pooled Special Needs Trust? A cost effective and convenient way to set aside and preserve funds that will be used to enrich the quality of life for an individual with special needs Provides SSI and Medicaid benefits protection Important planning option for people with special needs who do not receive public benefits but must have a trust to manage funds When would I need a Pooled Special Needs Trust?

4 4 Personal Injury 30 year old woman sustains a spinal injury that leaves her disabled Receives a personal injury settlement of $50,000 Now possesses more than $2,000 in countable assets which disqualifies her for Medicaid and SSI (means tested government benefits) Solution FIRST PARTY POOLED SPECIAL NEEDS TRUST Not a countable asset for Medicaid and SSI eligibility

5 5 Inheritance Teenage boy sustains spinal cord and cognitive function injuries playing football Parents want to ensure that his inheritance will be prudently managed when they are gone Solution THIRD PARTY POOLED SPECIAL NEEDS TRUST Peace of mind regarding financial future

6 6 Public Benefits Problem Individuals who receive needs based government benefits (Medicaid, SSI), may lose or not qualify due to a personal injury settlement, monetary gift, or inheritance

7 7 Public Benefits Primer Supplemental Security Income : SSI Benefit received if one is disabled but hasn t worked enough quarters for SSDI A monthly monetary allowance that is intended to pay for food and shelter Needs tested benefit for the disabled who are impoverished Adults are eligible if they are disabled, have no more than $2,000 in countable resources, AND are below 133% of the federal poverty income level. Minors have the same eligibility PLUS the parents deemed income.

8 8 Public Benefits Primer Social Security Disability Insurance SSDI or SSD A monthly benefit from SSA Based on a worker s social security withholdings while working just as social security benefit at retirement is based on withholdings Adults are eligible for SSDI if disabled before retirement age AND accumulated enough quarters of withholdings based on age Government s version of disability insurance Worker gets out based on what is paid in

9 9 Public Benefits Primer Medicaid Federal health program for the disabled, aged and blind Administered by the States For simplicity-eligibility for Medicaid is the same as SSI Cap on resources and income Medicare Federal health program for people who are 65 or older and the disable who are receiving SSDI and have received SSDI for 24 months Can be dual eligible

10 10 Public Benefits Primer Disability as defined by the Social Security Administration (SSA) Source: Social Security Handbook (disablity.gov)

11 11 A Pooled Special Needs Trust Organization Non-profit organization Provide specialized SNT administration Funds are professionally managed Trained staff that is sensitive to people living with special needs and their family members

12 12 Pooled Trust Funds, Fund Management and Fees Funds (cash assets only) are pooled for investment purposes Each Beneficiary has his/her own sub account Lower fees and minimum funding Minimum funding for CCT is $5,000 Annual administration fee.84% Expertise to manage small and large accounts.

13 13 Two Types of Pooled Special Needs Trust Third-Party Pooled Special Needs Trust Grantor can be a parent, family member or third-party individual(s). Funds from family member(s) or friend(s) for the Benefit of the Beneficiary in Estate Plans, Life Insurance Policy, Investments, Retirement Accounts or other assets. Revocable or Irrevocable NOT subject to Medicaid payback No Age Limitation First-Party Pooled Special Needs Trust Grantor can be the Beneficiary, the Beneficiary s Guardian, parent, or grandparent, or Court. Funds belong to the Beneficiary, usually from a personal injury or workers compensation award, direct inheritance, the beneficiary s own funds or Social Security back payment. Irrevocable Subject to Medicaid payback Age Limitation: A transfer of assets penalty may apply if the Beneficiary is 65 years old or older (varies by state).

14 14 Responsibilities of the Pooled Trust Administrator Review and make disbursement decisions Management and investment of trust funds Reports to Social Security Administration and Medicaid Provides financial statements online or by mail Annual distribution of Schedule K-1 tax form for each Beneficiary s sub-account Court qualification and court accounting, when required

15 15 What can the trust pay for? Examples include, but are not limited to: Medical and Dental Services not covered by insurance Eyeglasses, Hearing Aids and Prosthetic Devices Home Modifications, Repairs and Upkeep Computer and Internet Services Pre-paid Burial Expenses Assistive Technology Education Expenses Caregiver Expenses Clothing Transportation Home Furnishings

16 16 Are any distributions prohibited? Distributions must be for the sole benefit of the beneficiary If receiving SSI, distribution cannot be for food or shelter or in cash Medicaid has their own rules that vary state to state

17 17 Reviewing Disbursement Requests 1. For a Beneficiary receiving SSI and/or Medicaid, will the request jeopardize benefits? 2. Is the request for the sole benefit of the Beneficiary? 3. Are there adequate funds in the trust to cover the request? 4. Is the request prudent?

18 18 Disbursement Procedure Submit Payment Request Form Disbursements payable to: Vendors Advocate for approved reimbursements No cash payments to a Beneficiary who receives SSI/Medicaid as it would jeopardize benefits Credit Card option

19 19 Benefits of a Pooled Special Needs Trust Benefit #1 Oversight and Objectivity Professional Trust Administration ensures trust is: 1) used for sole benefit of beneficiary 2) spent prudently 3) properly managed/invested

20 20 Benefits of a Pooled Special Needs Trust Benefit #2 Public Benefits Eligibility / Protection IMPORTANT! To qualify for these benefits, an individual cannot have over $2,000 in countable assets (as of 2017). The Pooled Trust Administrator is knowledgeable about the rules regarding Medicaid and SSI.

21 21 Benefits of a Pooled Special Needs Trust Benefit #3 Affordable, comprehensive and specialized trust services Specialization in working with individuals with special needs and their representatives Lower trust administration and investment fees Disbursement decisions that follow the sole benefit rule

22 22 Benefits of a Pooled Special Needs Trust Benefit #4 Advocacy / Instructions (Letter of Intent for Third Party Trusts) Establishing a pooled special needs trust is an opportunity to seriously consider how a loved one s life may change in the future, and to provide information about his or her care, living arrangements and other needs.

23 23 Next Steps Determine what resources will fund the trust. Meet with an estate planning attorney who is familiar with special needs planning if a special needs trust will be a part of a will or estate plan. Update all beneficiary designations and notify anyone who may leave the individual with special needs an inheritance or monetary gift. Revisit the trust periodically or if family situation changes.

24 24 Pooled Special Needs Trusts and ABLE Distributions from a PSNT to an ABLE are permitted by the Social Security Administration ABLE Account Pooled Special Needs Trust Annual contribution $14,000 from all sources each year No limit Maximum total contribution Varies with each state s ABLE program No limit Age of onset of disability requirement? Yes, before age 26 Set up costs Lower fees Higher fees No Who can set up? Investment decisions Medicaid payback? Disqualify for SSI based on account balance? The Beneficiary or designated Beneficiary s parent, legal guardian, or agent acting under power of attorney. Can be changed twice a year Yes Yes, if account exceeds $100,000 Third-Party: Grantor can be a parent, family member or other third-party individual(s). First-Party: Grantor can be the Beneficiary, the Beneficiary s Guardian, parent, or grandparent, or Court. Investments are pooled and professionally managed No, for Third-Party Yes, for First-Party No

25 25 Benefits of Working with CCT 27 Years of Experience Available nationwide Affordable fees and low minimum funding requirement with no maximum Knowledgeable about protecting Medicaid and SSI Prompt handling of disbursements Informative and user-friendly website:

26 Thank you to United Spinal Association for allowing us to present this topic to your membership. For questions or more information, contact: Joanne Marcus, MSW Executive Director (804)