by DiAnn Davies Baxley, MAR, and Anna Zendell, MSW, Center on Developmental Disabilities, University at Albany, School of Social Welfare, New York
The federal Omnibus Act of 1993, also called the OBRA-93 Act, is federal legislation that affects how people with disabilities, including dual diagnoses, can have supplemental, also called special, needs trusts and still qualify for Medicaid benefits. The Foster Care Independence Act of 1999 is federal legislation affecting how people with disabilities can have trusts and still qualify for Supplemental Security Income (SSI).
Defining Supplemental Needs Trusts
A supplemental needs trust (SNT) is a legal document that provides a supplemental source of funds for individuals with disabilities. Trusts enable individuals to remain eligible for need-based government benefits, including SSI or Medicaid. An SNT is not counted as a resource for SSI and Medicaid's purposes. Specific trust wording precludes beneficiaries from any legal say in how the money is spent. Trustees manage the SNT's and decide how to spend the money to meet the person's needs. Trustees should understand SNT policy, money management, have a qualified attorney to consult with, and hold beneficiaries' best interests paramount.
Purpose of Trusts
The purpose of an SNT is to enhance the quality of life of individuals with disabilities. The trust can purchase additional support services, therapies, private health insurance, and care not (or inadequately) covered by Medicaid, but that are important to the beneficiary's well-being. Additionally, an SNT can pay for anything beyond food, clothing and shelter such as vacations, magazine subscriptions, and recreation. As of 1999, SSI allows for home ownership purchases through a trust to be executed under certain circumstances provided the trustee holds the title to the home (POMS SI 01120.200). However, as with any phase of setting up a trust, one should not proceed without consulting an attorney specializing in SSI/Medicaid/estate law.
Three Types of Trusts
A Third Party or Escher SNT is set up and funded by a donor/grantor who may be a parent or other person with no legal duty to support the disabled individual. Once a trust is established, anyone can gift or leave money for the benefit of the person to the trust (Davies-Baxley, 2001).
An OBRA-93 Payback SNT is a trust established by a parent, grandparent, legal guardian or court, but which is funded with the assets of a beneficiary under age 65. When the beneficiary dies, the State has a right to be "paid back" out of the remainderman of the trust for Medicaid expenditures given to the beneficiary (Davies-Baxley, 2001).
Pooled Trusts are trusts that, by law, are established and maintained by a not-for-profit organization. These trusts allow families to pool their resources with other families to maximize the investment and streamline management of the trust. Beneficiaries of these trusts usually receive earnings based on their share of the principal. A "sponsor" (the person who creates the trust) signs a sponsor agreement with the not-for-profit establishing an individual trust account. There are two basic forms of pooled SNT's, OBRA-93 Trusts (first party trusts) and Third Party Trusts. Check state laws and a qualified attorney regarding payback of State Medicaid and pooled trusts (Davies-Baxley, 2001).
Importance of Trusts
Individuals with dual diagnoses are living well into retirement years and are much more involved in the community. Government benefits and entitlements cover only basic needs. Families provide so many of the extras that bring meaning and quality to the lives of their child with disabilities. The best way to ensure that these "extras" and any other future needs are met is for families to set up a trust and start saving. Agencies and providers can be pivotal in assisting families in this endeavor.
Davies-Baxley, D., ed. (2001). Frequently asked questions about supplemental needs trusts. New York: New York State Trust Task Force.
Social Security Administration. (2004). Program Operation Manual. SI 01120.200 Trusts Established Prior to 1/1/00, Trusts Established by Third Parties and Trusts Not Subject to Section 1613(e) of the Social Security Act. Retrieved from: http://policy.ssa.gov/poms.nsf/36f3b2ee954f0075852568c100630558/ae1777ed62e2fd6d85256e310077d992/
The ARC of the United States. (2002). Pooled trust programs for people with disabilities: a guide for families. Silver Springs, MD: The ARC of the United States.