1. Mandy Stokes SSI Policy Expert Philadelphia Regional Office Social Security Administration July 2016

2. GENERAL RULE Trusts established on or after January 1, 2000, holding the assets of anyone receiving SSI are countable regardless of: The purpose of the trust, Whether the trustee has or exercises any discretion under the trust, Any restriction on when or whether distributions may be made, or Any restriction on the use of the distribution.

3. SPECIAL NEEDS TRUST Established by a parent, grandparent, legal guardian, or a court, and Established with assets of an individual under age 65 who is disabled, and Intended for the sole benefit of the individual, and Contains a provision stating that, upon the death of the of the individual, an amount up to or equaling the total amount of medical assistance paid on behalf of the individual will be reimbursed to any applicable State.

4. "POOLED" TRUST Established and managed by a non-profit association, and Separate accounts maintained for each beneficiary, and Be for the sole benefit of the disabled individual, and Established by the individual, parent, grandparent, legal guardian, or court, and Contains a provision that for any amounts not retained by the trust, any State receives the amount remaining in the account up to the total amount of medical assistance paid on behalf of the individual.  NOTE: There are no “age” restrictions for pooled trusts but transfer of assets would apply.

5. SUPPLEMENTAL NEEDS TRUST It is not what the trust is called, but the funding source that decides how it is viewed for SSI purposes. Assets placed in a trust that are not the recipient's (exclusively a third party's assets) Disbursements subject to the trustee's discretion Not a countable resource to the trust beneficiary. This is true for trust established either before or after January 1, 2000.

6. EMPTY TRUSTS NO LONGER VALID IN REGION III Region III - Delaware, District of Columbia, Maryland, Pennsylvania, Virginia and West Virginia. For a trust to be permissible under the exceptions of Social Security Act § 1917(d)(4)(A), the parent or grandparent that establishes the trust will have to “seed” it with their own money before transferring the individual’s money to the trust. Empty trusts are no longer considered valid; simply transferring the individual’s money to the trust without first seeding the trust would be considered equivalent to the individual establishing the trust on their own.

7. KNOW YOUR TRUST Review the trust documents periodically Must have an identifiable residual/contingent beneficiary (in some states Medicaid is a creditor) Labeled as a special needs trust, is not enough for SSI purposes Look at the basic information to confirm that the Medicaid exception is meet Recognize that “older” trusts may need amendments since there have been “clarifications” over time

8. 90-Day Amendment Period A previously exempted trust is provided a 90-day amendment period. If the trust still fails to meet the requirements after the expiration of the 90-day amendment period, we prospectively count the trust as a resource under normal resource counting rules. This applies to: 1. Travel expense provisions in SI 01120.201F.2.d. 2. Early Termination provisions in SI 01120.199 3. Null and Void or savings provisions in SI 01120.227 A newly formed trust or a trust never “exempted” by SSA does not receive this amendment period. It is countable until it is amended to meet the Medicaid exception.

9. MEDICAID PAYBACK State(s) providing medical assistance must be listed as the first payee Not limited to any particular State: Clearly covers multiple states Each state shall receive its proportionate share of the total amount of Medicaid to be reimbursed. Not limited to any particular period of time: after the trust is established (often found in older PA trusts) I mplementation of the 1993 Omnibus Budget reconciliation Act.

10. ADMINISTRATIVE EXPENSES Permitted prior to Medicaid reimbursement: Taxes due from the trust to the State or Federal government after the death of the beneficiary; and Reasonable fees for administration of the trust estate such as an accounting of the trust to a court, completion and filing of documents, or other required actions associated with the termination and wrapping up of the trust. Not permitted: 1) payment of debts owed to third parties; 2) funeral expenses; and 3) payments to residual beneficiaries.

11. LIFETIME TERMINATION Termination while the individual is alive - the assets must be paid only to the beneficiary to meet the sole benefit provisions, after the required reimbursement to the State (s). Pooled trusts - early termination clause may allow for a transfer of the beneficiary’s assets from one Section 1917(d)(4)(C) to another Section 1917(d)(4)(C) trust.

12. Null and void clauses are not recognized for SSI purposes. Does not “cure” any defects while preserving the remaining provisions nor prevent the trust from being found invalid by removing the offending sections. For example, “no reimbursement or payment is authorized to the extent it limits or disqualifies the trust for the exemption provided in the applicable federal and state regulations.” NULL AND VOID CLAUSES

13. PAYMENTS INTO A TRUST Even if the trust were to meet the Medicaid exception, monthly payments into the trust may be considered income even if paid directly to the trust unless the payment has been irrevocably assigned to the trust (usually annuities). Certain payments are non-assignable by law and, therefore, are income to the individual entitled to receive the payment under regular income rules. They may not be paid directly into a trust, but individuals may attempt to structure trusts so that it appears that they are so paid. Non-assignable payments include: Temporary Assistance to Needy Families (TANF)/Aid to Families with Dependent Children (AFDC); Railroad Retirement Board-administered pensions; Veterans pensions and assistance; Federal employee retirement payments (CSRS, FERS) administered by the Office of Personnel Management; Social Security Disability/Auxiliary and Supplemental Security Income payments; and Private pensions under the Employee Retirement Income Security Act (ERISA)

14. TRUST DISBURSEMENTS Cash payments are income. Gift cards and gift certificates are generally considered cash equivalents. Payments to a third party for food or shelter are in ‑ kind income, limited by the presumed maximum value (PMV). The PMV for calendar year 2016 and continuing is $264.33. Payments to a third party who provides services or items other than food or shelter is not income. Note: For SSI purposes, "shelter items" are rent, mortgage, property taxes, heating fuel, gas, electricity, water, sewerage, and garbage collection service.

15. DISBURSEMENTS – NO IMPACT Purchase directly household cleaning items, paper products, and other non-food items (no cash), Clothing items, Home repairs or upkeep (lawn cutting, etc.). Directly pay to vendor: phone and cable bills, prescription and nonprescription items, car insurance, Car repairs or maintenance, etc.

16. SOLE BENEFIT PROVISIONS The following disbursements or distributions are considered to be for the sole benefit of the trust beneficiary: Payments to a third party that result in the receipt of goods or services by the trust beneficiary; Payment of third party travel expenses which are necessary in order for the trust beneficiary to obtain medical treatment; and Payment of third party travel expenses to visit a trust beneficiary who resides in an institution, nursing home, or other long-term care facility (e.g., group homes and assisted living facilities) or other supported living arrangement in which a non-family member or entity is being paid to provide or oversee the individual’s living arrangement. The travel must be for the purpose of ensuring the safety and/or medical well-being of the individual.

17. SOLE BENEFIT PROVISIONS **AWAITING POMS** Payment of companion services when the third party is providing a service under a business relationship would not violate the sole benefit policy. Companion services that require payment of travel expenses to accompany the trust beneficiary have to meet the sole benefit requirements (i.e., provide services or assistance that are necessary due to the trust beneficiary’s medical condition, disability, or age). The provision of services must be a business relationship; that is, the third party must provide services and be paid wages reported to IRS. The family member may be an employee of the trust, self employed as a care provider paid by the trust or working for an agency that provides services. Still awaiting this clarification to be placed into POMS.

18. Deeming Considerations If the trust “employs” a parent, any wages or self employment earnings will impact the SSI individual if they are under age 18. A portion of the earnings are “deemed” to the child. The following chart shows when, based on the gross earnings amount, benefit reduction begins and when benefits are ceased if there is no other income. It does not take into account any other income received by the child, such as child support, Social Security benefits or in-kind support and maintenance.

19. Parent’s Wages and SSI Deeming Chart

20. PURCHASE OF HOME OR AUTOMOBILE If the trust purchases durable items, e.g., a car or house, either the beneficiary or the trust must be the owner (A car title may show the trust as a lien holder). Failure to do so constitutes a possible transfer of resources for SSI purposes or loss of Medicaid exception. For the home, the beneficiary is considered to be living in his/her own home based on having an equitable ownership and consequently cannot rent.

21. REIMBURSEMENTS Effective with a change on February 4, 2013, trustees are now permitted to reimburse third parties for items purchased for a trust beneficiary, including the third- party’s credit card. Any impact on the SSI recipient depends on the item(s) that were originally purchased. For example, a coat would have no impact; Purchase of a computer, videos, etc., no impact. However, if food and/or shelter is purchased, this is charged as in-kind income which is capped at the presumed maximum value (PMV) using date when received by the claimant. In 2016, this is $264.33.

22. TRUST PAYMENT FOR SHELTER Property taxes (or other household expenses), outside in-kind support and maintenance (ISM), is capped at the PMV. Divided first by the number of months in the payment cycle and then divided by the number of household members. For example: $2,000/6 months = $333.33. If there are two household members, including the trust beneficiary then the $333.33 is divided by 2, resulting in $166.67. If only the trust beneficiary lived in the home, we would use the PMV of $264.33 which is lower than the $333.33.

23. PREPAID BURIAL ARRANGEMENT The trustee is not permitted to pay for an individual's final expenses before the State. A purchased prepaid burial arrangement while the individual is alive is an appropriate expenditure. The arrangement needs to meet certain requirements (i.e., funds irrevocably paid to the funeral director). Burial space items are excluded: plots, headstones, etc. Be aware that an irrevocable “burial reserve account” will not meet this requirement (i.e., no purchase made) and still counts as a resource for SSI purposes (up to $1,500 may be excluded).

24. REPORTING The individual receiving the SSI payment or the representative payee is required to report the trust and any trust disbursements to the local SSA office. The executed trust, settlement, Court Orders and account records, including annuities need to be provided to SSA. We verify with the trustee periodically and may ask for a record of all disbursements in a specific period. Disbursements Reported: Who it was paid to, when paid, the amount and the purpose of the payment.

25. REPRESENTATIVE PAYEE CONCERNS  It is permissible for a representative payee to transfer benefits into a trust provided: Establishing the trust is in the beneficiary's best interest; The trust is established for no other purpose than the use and benefit of the beneficiary to meet their current and reasonably foreseeable needs; and The beneficiary is the sole trust beneficiary during his or her lifetime.  Provisions cannot state that the trust is : to be used solely for extra and supplement needs, or not intended for basic support and maintenance needs nor to supplant or replace Government Benefits of any kind.  The trust must permit use for current maintenance needs not covered by public assistance or grant the trustees complete discretion regarding current and reasonable foreseeable needs. Otherwise, it clearly could leave current or reasonably foreseeable needs unmet.

26. ABLE ACCOUNTS Achieving a Better Life Experience Disabled before age 26 Entitled to disability benefits or certified that disabled and it occurred before age 26 Beneficiary of only one ABLE account Contributions limited to gift-tax exclusion (2016 - $14,000) Qualified disability expenses (QDE) related to disability Up to $100,000 is excluded for SSI Distributions are not income for SSI purposes POMS SI 01130.740 gives a full explanation

27. SSA TRUST REVIEW State review and the SSA evaluation are separate. There is no requirement that the trust be reviewed by the Philadelphia Regional Office. The local SSA office seeks a second review or concurrence via the SSI Trust Monitoring System (SSITMS) that became effective April 28, 2014. However, if the local SSA office counts a trust which you believe meets the Medicaid exception, you should immediately file a Request for Reconsideration. This will ensure that it is reviewed at the regional level by the Regional Trust Lead (RTL).

28. TRUSTS AND MEDICAID The Social Security Administration (SSA) does not administer the Medicaid program. Medicaid is not automatic based on SSI eligibility. The State may have a process in place for their review. If there is SSI, the local SSA office forwards the trust material to the state if Medicaid entitlement is under Section 1634 of the Social Security Act. The State separately evaluates the trust for Medicaid.

29. SUBMITTING A TRUST? Include beneficiary's SSN on the transmitting letter. Original copy of an executed trust is submitted to the local SSA office that services the SSI recipient. Provide the source of funding or assets, along with where they are held. No current SSI entitlement? No reason to submit the information to SSA. If submitted, they will generally be returned without a review.

30. PRIVACY Release is permitted regarding case specific information to: An authorized representative SSA-1696–U4 Appointment of Representative orSSA-1696–U4 One-time request, an SSA-3288 Consent for Release of Information signed by the individual (parent of minor) or legal guardian.SSA-3288 Please visit SSA’s website for more information www.ssa.gov/representation www.ssa.gov/representation