525 GENERAL MEDICAID TRUST POLICY
Generally, a trust is an arrangement in which a grantor transfers resources or income to a trustee to be held, managed, or administered by the trustee for the benefit of the grantor or another beneficiary. Medicaid trust provisions that apply to trusts created on or after August 11, 1993 may be divided into two main parts:
1. General APA/Medicaid trust policy; and
2. Exceptions to the general Medicaid trust policy.
There are a variety of reasons why a trust is established and there are different types of trusts. General APA/Medicaid trust policy applies to a trust written for purposes other than providing for the Medicaid eligibility of the grantor or beneficiary. See APA Manual Section 431-2(F).
The kind of trust that a caseworker is more likely to see is a trust that is specifically intended to limit the applicant or recipient’s income and/or resources for the express purpose of Medicaid eligibility. If written and administered correctly, these ”Medicaid Qualifying Trusts” will qualify for exceptions to the general trust policy, and are described in the following sections:
1. Qualifying Income Trusts (see Section 526);
2. Special Needs Trusts (see Section 527); and
3. Pooled Trusts (see Section 527).
The rules in this manual apply to trusts established after August 11, 1993. If a trust was established before August 11, 1993, different rules apply, which are not included in the manual.
If you encounter a trust that was established prior to August 11, 1993, email the Program Officer at dpapolicy@alaska.gov for guidance.
525 A. DEFINITIONS RELATED TO TRUSTS
Annuity: An annuity is a right to receive fixed, periodic payments, either for life or for a term of years. See Section 554(K) for treatment of an annuity.
Beneficiary: A beneficiary is an individual designated by the trust instrument as benefiting from the trust. Commonly, the Medicaid applicant or recipient is the beneficiary.
Corpus: The principal amount of a trust.
Grantor: A grantor is the individual who creates the trust. An individual should still be considered a grantor if their spouse or some other person or entity, with the legal authority to act on their behalf, acts at the direction of the individual to create the trust with income or resources that belong to the individual. A grantor may also be the beneficiary of a trust.
Irrevocable Trust: A trust that does not empower the beneficiary with the ability to revoke the trust in any way and use the principal for his or her own support and maintenance.
Payment: A payment is a disbursement from the trust that benefits the party receiving it. Payments may be in cash or in kind (e.g., the right to use property, such as a home).
Revocable Trust: A trust that the beneficiary can revoke, or request the trustee to revoke, in order to access the principal.
Trust: An arrangement in which a grantor transfers resources or income to a trustee to be held, managed, or administered by the trustee for the benefit of the grantor or another beneficiary. There must be a trust instrument or agreement valid under Alaska Statutes. Trust provisions also apply to legal instruments or devices similar to trusts.
Trustee: A trustee is an individual, individuals, or entity that manages a trust or similar legal device and has a duty to act for the benefit of the trust’s beneficiary.
525 B. GENERAL TRUST PROVISIONS
Some trusts are established by a third party with assets that did not belong to beneficiary at the time it was established, such as a trust created by will from the assets of a relative. Follow policy at APA Manual Section 431-2(F) to determine countable income and resources for one of these trusts.
For all other trusts that do not meet one of the Medicaid exceptions, use the following policy:
The entire principal counts as a resource;
A payment from the trust made to or for the benefit of the beneficiary is income to the beneficiary; and
A payment not made for the benefit of the beneficiary is a transfer of asset for less than fair market value. See Subsection D below.
Note:
Use a 60-month look-back period for a transfer of asset from a revocable trust.
2. If the trust is irrevocable:
The principal of the trust does not count as a resource, but a payment that could be made from the trust to or for the benefit of the beneficiary is a countable resource;
A payment from the trust to or for the benefit of the beneficiary is income to the beneficiary; and
A payment made from the trust that is not for the benefit of the beneficiary, is a transfer of asset for less than fair market value.
Note:
There is a 36-month look-back period for transfer of assets from an irrevocable trust. If the trust provides that a payment cannot be paid to or for the benefit of the individual, there is a 60-month look-back period. See Subsection D.
A payment from the trust is counted as income if it is paid directly to the beneficiary, paid to someone acting on behalf of the beneficiary, or is used to purchase something from which the beneficiary receives some benefit.
If the trust provides that a payment can be made to or for a beneficiary at a future date or under a prescribed set of circumstances, the potential payment is considered an available resource. This is true even if the payment is available in the distant future or only in circumstances unlikely to occur. These future payments are not transfers of assets at less than fair market value; they are payments that could be made for the purpose of determining available resources.
Example:
A trust established with money that is set aside for an eight-year old Medicaid beneficiary’s college education, is considered an available resource now.
Note:
If you encounter a situation where application of trust policy conflicts with the transfer of assets policy contained in the Transfer of Assets Section 554, the trust policy supersedes the Transfer of Assets policy. Please contact the Program Officer when this situation occurs for further guidance.
525 D. TRANSFER OF ASSETS FROM A TRUST
The use of a trust may involve a transfer of assets for less than fair market value. See Section 554 to determine who is subject to transfer of asset rules. A transfer of asset for less than fair market value may occur when a portion of the trust cannot be paid to or for the benefit of the beneficiary.
The date that portion of the trust is considered to be transferred is the date the trust was established or the date on which payment to the beneficiary was foreclosed, whichever is later. A 60-month look-back period is used.
Any addition to the trust that cannot be paid to or for the benefit of the beneficiary that occurred after the first transfer is considered a new transfer of asset for less than fair market value.
States cannot apply trust policy if it would cause an undue hardship on the beneficiary, such as a beneficiary being forced to go without life-sustaining services. If a beneficiary is denied Medicaid or determined liable for cost of care due to application of Medicaid trust policy, the beneficiary must be informed about the possibility of an undue hardship exemption.
The Program Officer makes the hardship exception determination on a case specific basis. The caseworker must submit a written statement from the beneficiary or the beneficiary’s representative indicating how the beneficiary’s life or health would be endangered. Please email any hardship requests to hss.dpa.policy@alaska.gov.
|
|
||
|
|
|