Today, February 8, 2013, the Social Security Administration made a significant change in policy. The change loosens the restrictions on trustees of special needs trust. Special needs trusts are created to hold assets of an individual with a disability. When designed properly, these trusts prevent the assets held within from being counted as resources for Medicaid eligibility. These trusts require attention to detail in both drafting and administration.
The trustee of a special needs trust should restrain from distributing money directly to the individual receiving government benefits. Such a distribution could result in loss of Supplemental Security Income and Medicaid. Trustees pay for goods and services need by disabled beneficiaries directly, which allows the beneficiaries to benefit from the resources of the trust without counting the disbursements as income. While having the trustee pay for goods and services directly is ideal, it is rarely practical.
The announcement today provides a new method of paying for the needs and desires of a disabled beneficiary. The Administration has published authority on the use of third parties to make trust expenditures. Under this method, a family member or friend of the disabled beneficiary purchases the goods and services for the disabled beneficiary and then is reimbursed by the trustee of the special needs trust. While this method has been previously utilized, today’s pronouncement provides additional assurance that it will be respected by SSA. This is another step in increasing independence for people with disabilities.