SPECIAL NEEDS TRUSTS UPDATE AND OTHER BENEFIT ISSUES

Post-resolution Topics Government benefits Subrogation Structures Allocation among claims Probate approval 468b Settlement Funds

ADDRESS THESE ISSUES EARLY Avoid overwhelming your clients at the time of settlement The client needs time to consider the advantages and disadvantages of their options Optimize position of clients for settlement After an injury, clients need help with numerous issues, including health insurance, available benefits to help pay the bills and provide needed services You need to know your client’s thoughts about importance of maintaining benefit eligibility versus retaining control over the funds They need to understand the structured settlement as an option You may be able to get benefits in place prior to settlement that maximizes the value of the settlement to the client

CASE EXAMPLE 32 year old quadriplegia from MVA Married, 2 kids, wife is pregnant Advice sought as soon as case filed Case settled for $7 million Without lead time, all would have to go into a special needs trust to maintain Medicaid eligibility With lead time, we were able to get the client qualified for Medicaid quickly by setting up a special needs trust immediately and transferring existing assets into trust. We got the client on the Medicaid waiver program, so any allocation to his wife for her loss of consortium claim did not affect his eligibility We allocated a larger amount than we might otherwise have to the consortium claim, and the wife agreed to pace the funds in an irrevocable trust which provided that if she divorced or left the client, she would be entitled to a fixed sum with the remainder to stay in the trust for the benefit of client and the children.

PROTECT YOURSELF! Ensure that the client is advised about Protecting his benefit eligibility Ability to structure the settlement Document in your file and have the client sign acknowledgement

WHAT BENEFITS ARE THE CLIENT (AND FAMILY MEMBERS) RECEIVING? SSI/SSD/SS Medicaid/Medicare/Private insurance/BCMH TANF/Food stamps HUD subsidized housing VERIFY!

IMPORTANCE OF VERIFYING BENEFITS For preservation of benefits For subrogation issues Remember that an individual who is eligible for and receiving Social Security Disability Insurance (SSDI) will be Medicare-eligible within 24 months and Medicare may have a claim for reimbursement if the case has not settled prior to that date.

PRESERVATION OF BENEFITS

BENEFITS NOT BASED ON FINANCIAL NEED Social Security Disability Income (SSDI, CDB, DAC) Medicare Social Security (retirement) These are not need-based benefits Receipt of a settlement will not affect these benefits There is information in the handout which addresses eligibility for SSDI, CDB and DAC SSDI is available 5 months after the person is disabled. Children disabled prior to age 22 get DAC or CDB benefits when a parent retires, dies or becomes disabled Medicare kicks in 24 months after SSDI begins. This is why COBRA benefits have an extension period for persons who are disabled – ensure that your client files the necessary notices to get this extension if they want/need the COBRA benefits until Medicare is available Shorter waiting period end stage renal disease, one month for Amyotropic Lateral Sclerosis (Lou Gehrig’s disease)

NEED-BASED BENEFITS Supplemental Security Income (SSI) Medicaid BCMH Section 8 or other subsidized housing TANF/Food stamps Utility assistance

SUPPLEMENTAL SECURITY INCOME Income stream for disabled person to provide food and shelter Countable resources < $2,000 Income levels Deeming

MEDICAID Federal/state program Administered by county Job and Family Services offices Countable resources < $1,500 Provides health coverage to those otherwise uninsurable Waiver programs provide home health care

EXCLUDED RESOURCES: Home if legal ownership interest One vehicle Burial plot Irrevocable prepaid burial plan Household goods and personal effects

DEEMING OF INCOME AND RESOURCES Parents to child under age 18 Spouse to spouse No deeming for waiver or institutional Medicaid Important to understand. If we do a special needs trust for a child or spouse and allocate funds to other family members for consortium or loss of services claims, the disabled individual can lose benefits because of the funds received by the other family members Often one child is disabled but all the other family members are on Healthy Family Medicaid

VALUE OF BENEFITS SSI - $603/month Medicaid medical/hospital care prescriptions basic dental/vision residential/institutional HCBS Waiver- up to $14,400 per month

WHEN TO CONSIDER THE SNT: Person w/ disability is receiving assets such as a personal injury settlement Person with assets becomes severely disabled Not appropriate for welfare-based Medicaid benefits

SPECIAL NEEDS TRUST Established by parent grandparent guardian court For beneficiary - disabled, under 65 Payback provision

POOLED TRUST LIKE SNT EXCEPT: can be established by disabled person can be over 65 managed by non-profit association assets pooled for investment individual accounts maintained no payback if assets remain in the trust

POOLED TRUST $5000 minimum Use when: No parents, grandparents or court Small settlement No family member to serve as trustee

POOLED TRUSTS IN OHIO CFMF/Fifth Third Bank Ohio Community Pooled Trust Ohio Pooled Trust

ALTERNATIVES TO SNT Over 65 can’t use SNT Pooled trust (for now) Allocation to other claims Structured settlements Traditional Medicaid planning techniques Transfers Purchase of exempt assets

MEDICARE AND MEDICAID SUBROGATION ISSUES

GENERALLY Verify benefits Notify early to be aware of subrogation amount Medicare usually will not start for 29 months after the injury Ensure expenses are result of the injury in question

MEDICAID Information form and release www.ohiotort.com Notify and involve in mediation or hearing to approve settlement Lien cannot be totally rolled over into a special needs trust No provision for procurement costs

MEDICAID Negotiation with estate recovery office yields best results Bob Byrne (614)-466-7867 rbyrne@ag.state.oh.us

MEDICARE MSP for Oho – Administar Federal Reduction for pro rata share of procurement costs Repayment within 60 days of receipt of settlement Waiver/compromise

STRUCTURED SETTLEMENTS

COMMON PROBLEMS WITH STRUCTURES Too little cash up front Immediate needs Corporate fiduciary Estate taxes No attention to benefits received by others in household Special Needs Trust issues

PROBATE APPROVAL Minor Incompetent Fees Special Needs Trust If an attorney fee in a malpractice action exceeds the limits on damages for non-economic loss set forth in statute medical, dental, optometric, chiropractic Must make application to Probate court of county in which civil action brought or settlement entered