527           SPECIAL NEEDS AND POOLED TRUSTS

A Special Needs Trust (SNT ) and a Pooled Trust are very similar. Both trusts allow the beneficiary to control the amount of both income and resources that are used to determine Medicaid eligibility. Only the payments made from the trust are countable income. Resources held in the trust are exempt while the trust is in place.

527 A.      COMMON TRUST PROVISIONS

A Special Needs Trust and a Pooled Trust have the following in common:

1. The beneficiary must be determined disabled using Social Security criteria.  

Note:  

This can be verified by the receipt of SSDISocial Security Disability Insurance or a State Only Disability Determination; and

2. The trust may contain the assets of the beneficiary, but may include income the beneficiary receives after the trust is established.

527 B.      SPECIAL NEEDS TRUSTS (SNT )

In addition to the common trust provisions in (A) above, an SNTSpecial Needs Trust must meet the following criteria:

1. The disabled beneficiary must be under age 65 at the time the SNTSpecial Needs Trust is established;
2. The trust is established for the sole benefit of the beneficiary by the individual, a parent, grandparent, legal guardian of the beneficiary, or a court;
3. Upon the death of the beneficiary, the State receives all amounts remaining in the trust, up to an amount equal to the total amount of medical assistance paid on behalf of the beneficiary.

Any augmentation of a Special Needs Trust that occurs after the beneficiary reaches age 65 is not covered by this exception.

527 C.      POOLED TRUSTS

In addition to the common trust provisions in (A) above, a Pooled Trust must meet the following criteria:

1. The trust is established and managed by a non-profit entity for the benefit of more than one beneficiary;
2. A separate account is maintained for each beneficiary of the trust, but for purposes of investment and management, the funds in each account are pooled together;
3. Each account in the trust is established solely for the benefit of the beneficiary by the beneficiary, the parent, grandparent, legal guardian of the beneficiary, or a court; and
4. Upon the death of the beneficiary, the non-profit entity may retain a portion of the beneficiary’s trust account (for the purposes of maintaining the Pooled Trust for all beneficiaries). All amounts remaining in the beneficiary’s trust account not retained by the non-profit entity must be paid to the state up to an amount equal to the total amount of medical assistance paid on behalf of the beneficiary.  

527 D.      INCOME AND RESOURCES

Use the Income policy described for QITQualifying Income Trust ’s for the treatment of income placed into an SNTSpecial Needs Trust or Pooled Trust if the income placed in the trust belongs to the beneficiary. If the income belongs to someone else, income going into the trust is exempt as income to the beneficiary.

Resources placed in an irrevocable SNTSpecial Needs Trust or Pooled Trust count as resources in the months prior to the month they are placed into the trust. Once a resource is placed in an irrevocable SNTSpecial Needs Trust or Pooled Trust, that resource is exempt. However, a transfer of assets at less than fair market value may occur unless the transfer is specifically exempted under the Transfer of Assets Section 554 or the resource placed in the trust can be used for the benefit of the beneficiary to purchase items and services for the beneficiary at fair market value.

527 E.      CASH ASSISTANCE PROGRAMS

A trust that meets the Medicaid criteria for a Special Needs or a Pooled Trusts is an exempt resource for APAAdult Public Assistance and SSISupplemental Security Income purposes. However, any money distributed directly to the APAAdult Public Assistance or SSISupplemental Security Income recipient from the trust counts as income. See APA Manual Section 431-2(F)(3).