About the Author: Thomas D. Begley, Jr. has over 40 years of experience in Elder Law, Medicaid Planning, Special Needs Trusts, Disability Law and Personal Injury Consulting. He is a Fellow of the National Academy of Elder Law Attorneys and a past president and founding member of the Special Needs Alliance. For more information, please visit http://www.begleylawyer.com.
Frequently, in the settlement of a personal injury case, the plaintiff is receiving a large settlement. Often, the same plaintiff has significant financial and medical needs that can be met through public benefits. The purpose of a Special Needs Trust is to enable the disabled beneficiary to enjoy the proceeds of the personal injury settlement while at the same time maintaining important public benefits, such as SSI and Medicaid. Some public benefits are means-tested, which means that there are income and asset limits. Other public benefits are not means-tested, which means that the injured plaintiff can have money.
Which public benefits are means-tested?
- Supplemental Security Income (SSI): SSI is an income stream. In 2013, the income will be $710 per month. In addition, some states provide a supplement. There is an asset limit of $2,000 for an individual and $3,000 for a married couple. Unearned income reduces the benefit dollar-for-dollar. Earned income reduces the benefit by one dollar for every two dollars earned after $85 per month. Until a child is 18, the income and assets of a parent are deemed to the child.
- Medicaid: Medicaid provides broad medical coverage for recipients. Medicaid covers not only acute care, but also chronic care. It should be noted that most private insurance covers acute care with limited, if any, coverage for chronic care. The income and asset limits tend to be the same as for SSI. In many states, if an individual receives SSI, they automatically receive Medicaid.
- Medicaid Waiver: Most states have Medicaid Waiver programs that provide coverage similar to basic Medicaid. Many states have an income cap. In 2013, the income cap is $2,130 per month. Most Medicaid Waivers have an asset limit, but they vary significantly from state-to-state and from program-to-program.
- SNAP (Food Stamps): SNAP provides an Electronic Benefit Transfer (EBT) card to pay for food. The amount depends on household income. There is an assets limit of $2,000 or $3,000, if elderly. Income varies with the size of the household. All household members' income is counted.
- Federally-Assisted Housing: This is sometimes known as Section 8. This program provides subsidized rent. The rent is capped at 30% of family adjusted income. There is no asset text. Income must be at or below the Regional Maximum. This varies from region to region.
- Group Homes: Many states have group homes for disabled persons. Generally, Medicaid pays for these group homes. The income and asset tests tend to be the same as general Medicaid.
- Children's Health Insurance Program (CHIP): CHIP provides medical assistance to low- and middle-class individuals. The recipient need not be disabled. Only three states have an asset test. There is an income limit that varies from 90% of the federal poverty limit to 350%.
If an individual is receiving public benefits that are means-tested, a Special Needs Trust is required.
Public Benefits That are Not Means-Tested
Certain public benefits are not means-tested. These include:
- Social Security Disability Insurance (SSDI): SSDI is a monthly cash benefit. The amount depends on the amount paid into the Social Security system. There are no income or asset tests.
- Medicare: Medicare provides medical coverage for hospital, out-patient, and prescription drugs. Generally, Medicare is limited to acute care. There are premiums, deductibles, copays, and maximums per spell of illness. There are no income or asset tests.
If a person is receiving public benefits that are not means-tested, no Special Needs Trust is required.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).