Special Needs Trust Notification Requirements

Co-Author

Published

Sep 27, 2023

A binder with Medicaid printed on the cover sitting on a desk next to a stethoscope, glasses, pens and a book

Overview

In order to maintain Medicaid or other government benefits, such as SSI, state Medicaid agencies require notification that assets are being transferred and a Special Needs Trust is being created. State Medicaid agencies also require notification of any amendment to said Special Needs Trust. When filing the required notice, it is wise to make the state Medicaid agency’s job easy by tailoring the transmission letter to address the critical elements of the qualification.

The following sample letter provides an easy-to-use template to assist in satisfying state Medicaid notification requirements and facilitating a quick and easy approval.

Sample Letter

Re: [Trust Name]

Sirs and Madams:

This correspondence serves as a fulfillment of the ongoing notification requirements related to the attached [Trust Name] (hereinafter referred to as “Trust”), established to satisfy the requirements of the Social Security Act for protecting the Beneficiary’s government benefits received pursuant to 42 USC §1396p(d)(4)(A).

Summary of Information:

Beneficiary Name: [Beneficiary Name]
Beneficiary DOB: [Beneficiary DOB]

The Trust Assets are Not an Available Resource:

The Trust meets the requirements of a first-party Special Needs Trust located at 42 USC §1382b(e)(5) and implementing Social Security Administration policies set forth in the Program Operations Manual System (hereinafter referred to as “POMS”) at SI 01120.203.B treating assets as exempt if held in trusts that comply with 42 USC §1396p(d)(4)(A). The POMS set forth its procedure for developing Medicaid trust exceptions to resource counting at POMS SI 01120.203(D)(1). The Trust fully satisfies the eight-step procedure as follows:

1. The Trust is established with the assets of an individual under age 65 at the time of establishment and funding, as the Beneficiary was born on [Date]. POMS SI 01120.203B.1.b.

2. The Trust is established with the assets of a person with a disability as defined by 42 USC §1382c(a)(3) as the Beneficiary is disabled [Describe Disability]. POMS SI 01120.203B.1.d.

3. The Trust is established for the sole benefit of the person with a disability, and the Beneficiary is the Trust’s sole Beneficiary as set forth in the Trust document.

4. The Trust is established by [Name].

5. The Trust provides specific language to reimburse all State Medicaid agencies up to an amount equal to the total medical assistance paid on behalf of the Beneficiary under any State’s Medicaid plan as set forth in this Trust document.

6. The Trust is not a countable resource under POMS SI 01120.200D.1.a and b because:

The Beneficiary does not have legal authority to revoke or terminate the Trust.
The Beneficiary cannot direct the use of Trust principal for his/her support and maintenance.
The Trust is completely discretionary and does not provide for mandatory distributions to the Beneficiary, and as such, the beneficial interest in the Trust has no value.

7. The Trust is irrevocable and, by its expressed terms, does not provide the Beneficiary the right to revoke or terminate the Trust and then meet their needs for food or shelter or to direct the use of the Trust principal for their support or maintenance.

8. Accordingly, the Trust meets all the requirements for the special needs trust exception.

Transfers to Trust are Exempt

As applicable, the Trust is intended to satisfy the requirements of the Social Security Act for excluding certain transfers of assets, including transfers to trusts, from causing SSI ineligibility for the transferor. It therefore meets the requirements of the Social Security Act at 42 USC §1382b(c)(1)(C)(ii)(IV) and implementing Social Security Administration policies at POMS SI 01150.121(A)(3) as an exception from disqualification because the transfers are of resources being transferred to a trust created pursuant to 42 USC §1396p(d)(4)(A). This Trust benefits only the Beneficiary at the time the Trust is established or at any time for the remainder of the Beneficiary’s life (pursuant to POMS SI 01120.201(F)(2)). Accordingly, the transfer of assets to this Trust is not disqualifying.

Conclusion

The notification process is a necessary part of creating a Special Needs Trust. Providing a simple and concise communication to the state Medicaid agency can help ensure that trusts are approved.

Additional Information

For more detailed information on Special Needs Trusts, the applicable fees, and how they can impact government benefits, visit www.easternpointtrust.com. We can provide solutions tailored to your situation and fully transparent information about trust administration.

Finally, remember that special needs trust administration is a complex process that requires attention to detail, a strong understanding of financial and legal concepts, and a commitment to acting in the best interests of the trust’s beneficiaries. By educating yourself about the process and seeking professional advice when needed, you can help ensure that your SNT serves its intended purpose and provides for your loved ones in the most effective manner possible.

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