Individuals with disabilities require ongoing care and advocacy well into adulthood. A big part of advocating for family members with disabilities is making sure they don't miss out on the social services they'll need for the rest of their lives. A supplemental needs trust (SNT) allows New York families and guardians to create a financial safe haven for a disabled person while keeping them eligible for Supplemental Security Income (SSI) and Medicaid benefits.
An estate planning attorney can help you set up an SNT for your disabled family member. If you have questions about this type of revocable trust, reach out to a New York estate lawyer from the SCHNEIDER, GARRASTEGUI & FEDELE PLLC law firm.
Who Qualifies as a Beneficiary of an SNT and How Does an SNT Provide for Them?
According to New York State Estates, Powers and Trusts Law Section 7-1.12, the beneficiary of an SNT must be a person with “severe and chronic or persistent disabilities” which means a person “(i) with mental illness, developmental disability or other physical or mental impairment; (ii) whose disability is expected, or does, give rise to a long-term need for specialized health, mental health, developmental disabilities, social or other related services; and (iii) who may need to rely on government benefits or assistance.” The SNT provides for the beneficiary's one-of-a-kind, long-term needs and is intended to provide the highest possible quality of life for the disabled person without making the disabled person ineligible for Medicaid and other government assistance.
An SNT is a legal way for a disabled person to meet the Medicaid assets and income limitations while having surplus funds to pay for living expenses . The SNT allows disabled beneficiaries to retain or qualify for public benefits without losing their assets or reducing their monthly income. The original purpose of SNTs was to help parents care for their children with developmental disabilities. By establishing an SNT with an estate planning attorney, these disabled children could remain ineligible for public benefits while saving money in the trust.
A standard trust fund would make a beneficiary ineligible for Medicaid if it contains more money than the Medicaid limits allow. However, an estate lawyer can create an SNT that includes particular provisions that prevent it from affecting the disabled beneficiary’s public benefits.
How do SNTs Affect Medicaid?
If you are the parent of the disabled child, you may fund a lifetime SNT for your child without jeopardizing your child's eligibility for Medicaid or SSI, as long as the funds are used exclusively for the benefit of your child. If you are a friend or relative, you may contribute to the beneficiary's trust without jeopardizing the beneficiary's Medicaid eligibility, as long as the beneficiary is under the age of 65.
In New York, Medicaid is a state- and federal-funded program that provides health care to low-income residents. To qualify for Medicaid benefits, you must meet specific income and asset requirements.
As a single New York resident, you or a loved one can earn a monthly income of $934 and have a total asset amount of $16,000. If you are married and you and your spouse are applying for benefits, your household’s total income amount limit is $1,367. Assets cannot exceed $24,000 for a couple.
It is still possible for residents over 65 to qualify for Medicaid in New York if they do not meet the eligibility requirements. For instance, the Medically Needy Pathway program allows New York State residents to become eligible for Medicaid if they have excessively high medical bills.
The health care program is beneficial to many people. Still, a problem occurs when a disabled person has too much income or too many assets to qualify for the program but cannot afford to cover out-of-pocket medical expenses or home care.
Income and Asset Spend Down for Medicaid
One of the most common ways people retain their eligibility status for Medicaid is through income or asset spend down. The spend-down amount is the surplus between a disabled person’s monthly earnings or investments and the medically needy income limits of $934 for singles and $1,367 for couples.
Under the Medicaid spend-down program, a person’s excess monies can cover prescription drugs, medical supplies, and doctor visits. If a person has too many assets, they can spend down their total assets to reach the Medicaid asset limit.
How Can a Beneficiary Use a Supplemental Needs Trust?
By contacting an estate planning and trust attorney to establish an SNT, surplus assets can be shielded to reach Medicaid’s eligibility requirements without having to spend down anything. When a disabled beneficiary adds funds to the trust, they can retain most, if not all, of their income instead of paying for a portion of their care.
The beneficiary can use the money in the SNT on their monthly expenses, including rent, mortgage, and utility bills. A New York resident under the age of 65 can deposit the following into an SNT:
- Lump sums from retroactive social security awards or personal injury lawsuits
Usually, these funds would render the beneficiary ineligible for public benefits, whether or not they can afford to pay all of their bills. However, placing them into an SNT allows the beneficiary to remain eligible.
Speak With an Estate Planning Lawyer Today to Learn More About SNTs
For over 30 years, the estate planning lawyers at SCHNEIDER, GARRASTEGUI & FEDELE PLLC have been helping clients throughout Melville, New York, protect their assets and provide for their loved ones. Our practice areas include wills, trusts, probate, and Medicaid planning. If you are interested in establishing an SNT for a disabled family member, a trust lawyer from our firm can help. Schedule a consultation with a trust attorney from SCHNEIDER, GARRASTEGUI & FEDELE PLLC in Melville, New York, today by calling (631) 519-9831.
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