Medicaid is a government-run health insurance program. The program is administered by the federal government along with each respective state government. There are federal guidelines, but the exact way that the program is administered will vary on a state-by-state basis.
The Medicaid program is only available to people who can demonstrate significant financial need. There are Medicaid recipients who are healthy, but many disabled people are enrolled in the Medicaid program. People with special needs may receive treatment and medical care that can cost millions of dollars over a lifetime, so the Medicaid benefits are invaluable.
There is another government program that is available to those with financial need called Supplemental Security Income. This program will provide monthly income for those who qualify. Many people with special needs rely on Medicaid along with Supplemental Security Income.
Special Needs Trusts
You have to be careful when you have someone with a disability on your inheritance list. If you have an heir who is receiving government benefits like Medicaid and Supplemental Security Income, consider the possible implications.
As we have explained in the previous section, these programs are only available to people who meet the eligibility requirements. People with significant resources cannot qualify for Medicaid and Supplemental Security Income.
Let’s say that you were to draw up a last will. You leave everyone that you love an inheritance, including a family member who has a disability. This person is enrolled in the Medicaid program, and he or she receives Supplemental Security Income on a monthly basis.
The significant inheritance is obviously going to impact this person’s financial profile. As a result, eligibility for these need-based government benefits could be lost.
You can react to this scenario by making your disabled heir the beneficiary of a special needs trust. These trusts are alternately referred to as supplemental needs trusts.
The beneficiary cannot actually handle the funds that have been conveyed into the trust. When you create the trust agreement, you name another party as trustee to administer the trust.
There are certain needs that may not be met by the government benefits. The trustee may use assets that have been conveyed into the trust to satisfy these supplemental needs. These expenditures do not jeopardize government benefit eligibility.
A special needs trust can be a good solution if you have a person with a disability on your inheritance list.
Free Report on Special Needs Planning
In this post we have provided some basic information about special needs trusts and government benefit programs that are important to disabled individuals.
To learn more about special needs planning, download our in-depth report. It is being offered free of charge, and you can obtain access to your copy through this link: Special Needs Planning Report.
Parman & Easterday