Recent changes in the laws have added new complexities and considerations when planning for a person with a disability. Although not all are changes to trust law, many of the programmatic changes impact how we handle special needs estate planning. The most important of these changes include:
(1) the Special Needs Trust Fairness Law; (2) Medicaid expansion, which creates new opportunities to access Medicaid without resource limits, (3) Ohio’s conversion to an income-cap state, eliminating the spend-down program for folks whose income exceeds the limits, and (4) growth of ABLE accounts and clarification from the Social Security Administration regarding how these accounts can be used, allowing greater flexibility for individuals receiving need-based benefits. Additional changes are the Medicaid waiver program for individuals with severe and persistent mental illness, the total revamping of the waiting list for services through the department of developmental disabilities, expansion of Medicaid managed care, which now includes the public mental health system, and implementation of delegated nursing for individuals on DD Medicaid waivers.
Planning for families with special needs is much more than just drafting a special needs trust or a wholly discretionary trust and considering the plan complete. The law is always changing and representing families of individuals with special needs requires consideration of several unique factors related to their estate plan. These include:
A. Understanding the disability and its likely impact on the future functioning level and needs of the individual;
B. Advising families about programs and benefits available to their family member with special needs and assisting them with accessing these programs and benefits;
C. Making conscientious decisions about plans for the person with a disability to assure quality of life. Considerations include residential placement, employment, social activities, medical care, and burial arrangements;
D. Assisting the family in deciding on persons to serve as guardians/advocates when parents are no longer alive to provide supervision and ensure that services are accessed. These may be family members, friends, or professional advocacy groups;
E. Determining funding mechanisms to carry out the plan, which includes consideration of the parents’ potential long-term care costs;
F. Ensuring that funds left to benefit a person with a disability are managed properly; and
G. Avoiding loss of eligibility for government benefits, such as Supplemental Security Income, Medicaid, and similar benefits. This includes direction on how to administer trusts properly and appealing benefit denials or cuts in benefits.
Many persons with disabilities depend on government benefit programs for income, health care coverage, and residential placement. Some programs, such as Social Security Disability Insurance (SSDI) and Medicare, may be available regardless of the recipient’s unearned income or property. SSDI provides income to eligible individuals. Medicare is a health insurance program that covers a portion of hospitalization, outpatient care, and a limited number of days of nursing home care when skilled nursing care or short-term rehabilitation is needed. Eligibility for SSDI benefits and the amount of the monthly benefit are not determined using the individual’s financial assets, but by the prior work history of a claimant or a wage-earner under whose record a claimant may qualify for benefits.
Need-based programs like Supplemental Security Income (SSI) and Medicaid have strict income and asset guidelines for eligibility. Medicaid provides coverage for medical expenses, including prescription costs, in-home health care services, and payment for long-term nursing home care or residential placement. Many people receive a combination of all four benefits and additional benefits from various sources, including food stamps and housing and utility subsidies. In addition, several Developmental Disability Boards in Ohio have charged for services if the recipient is not Medicaid eligible.
Receipt of assets from any source can affect one’s eligibility for need-based programs like SSI and Medicaid. A monetary gift or an inheritance may be considered income and or a resource and disqualify an individual from receiving benefits from these very important programs. The recipient cannot simply give away the excess assets or disclaim the inheritance, as this creates a period of ineligibility for SSI and a period of restricted eligibility for Medicaid. The length of the period of ineligibility or restricted eligibility depends upon the resources transferred and, with restricted Medicaid eligibility, depends also on the Medicaid benefits the recipient is receiving.
Families planning for a child or other family member with a disability have several planning vehicles to leave assets to benefit the disabled person. These include trusts exempt by Ohio or federal statute, which have some payback provision at the death of the beneficiary, or discretionary trusts which might be considered available depending upon the language in the trust and the state administrative rules. The goal of the special needs estate plan is to sufficiently supplement the available benefits, while maintaining enough flexibility to provide for basic care, support and maintenance if benefits disappear or are not appropriate.