1. PLANNING FOR A SPECIAL NEEDS FAMILY MEMBER
Jefferey M. Yussman
6500 Glenridge Park Place
Suite 7
Louisville, KY

2. Why Consider a Special Needs Trust for a Disabled Family Member?
Failure to do so may cause a loss of:
SSI
Medicaid
Medicaid Waivers
Other Government Assistance or Grants

3. What is SSI?
A means-tested Social Security benefit that provides income to certain aged, blind and disabled people.  The purpose of the SSI program is to provide certain individuals with income to be used primarily for food and shelter.  In 2018, the maximum amount of SSI for an individual is $750 per month. 
In KY, receiving ANY SSI (even $1) automatically qualifies the disabled person for Medicaid

4. Who Qualifies for SSI? A Person Who is: Disabled or Blind
Has Limited Income (Parents’ Income “Deemed” to Child)(See Later Slide on Income Calculations)
Limited Resources (under $2,000 of Non-Exempt Assets)(Home, Car, Personal Property are Exempt)

5. What is Considered a Disability for a Child?
Child has a medically determinable physical or mental impairment (including an emotional or learning impairment), that:
Results in marked and severe functional limitations; and
Can be expected to result in death; or
Has or can be expected to last for a continuous period of not less than 12 months.

6. What is Considered a Disability for an Adult?
A person who cannot engage in any substantial gainful activity (SGA) because of a medically-determinable physical or mental impairment that is expected to result in death, or
that has lasted or is expected to last for a continuous period of at least 12 months.

7. What is Medicaid?
Insurance coverage for basic medical and hospital care, as well as prescription drugs and long-term care services.   In addition, Medicaid will pay for rehabilitative services, therapy (occupational and physical), and for care in either an individual’s home, a group home or nursing facility, through a “Medicaid Waiver,” and may provide services to support individuals with disabilities in the community.

8. What is a Medicaid Waiver?
Medicaid waiver programs provide those with disabilities the opportunity to secure the care and supports they need while living in the community rather than in an institutional facility.
Each waiver has its own set of criteria and provides its own schedule of available services.
Examples of Medicaid Waiver programs in Kentucky may be found at
Search for “Medicaid Waivers”

9. What Waivers are Available in KY?
Michelle P (MP)
Supports for Community Living (SCL)
Home and Community Based Services (HCBS2)
Various Other Specialized Waivers (including brain injury waivers)

10. How Do You Apply for SSI? Go to SSA.gov and Start Application
Will be Followed by Phone Interview w/SSA
Provide Much Detail Regarding Disability
Complete all Required Consent Forms
Think like a Lawyer (Organize and Persuade)
If Denied, Immediately Pursue Review Rights

11. ONCE YOU RECEIVE SSI, YOU AUTOMATICALLY QUALIFY FOR MEDICAID THEN YOU CAN APPLY FOR A MEDICAID WAIVER OR GET ON A MEDICAID WAIVER WAITING LIST (MAYBE EVEN GET WAIVER IF A MINOR AND NOT RECEIVING SSI DUE TO DEEMING OF PARENTS’ INCOME)

12. PLANNING TO PROTECT SSI AND MEDICAID ONCE RECEIVED; POTENTIAL OPTIONS:
Third Party Special Needs Trust
First Party Special Needs Trust
ABLE Account
Pooled Special Needs Trust

13. WHAT MAY A SPECIAL NEEDS TRUST OR ABLE ACCOUNT BE USED FOR
WHAT MAY A SPECIAL NEEDS TRUST OR ABLE ACCOUNT BE USED FOR? Essentially anything except food or shelter (because SSI is “means-tested”) Should be paid Directly to Provider, Rather than to the Disabled Person Payment Categories are Very Broad, but rules must be followed closely DISABLED PERSON LIVING AT HOME SHOULD PAY RENT OR WILL LOSE $250 PER MONTH OF SSI!

14. WHAT IS A THIRD PARTY SPECIAL NEEDS TRUST (TPSNT)?
A form of discretionary, spendthrift, trust designed to preserve a disabled person’s eligibility for government benefits. Distributions from the trust are intended to supplement public benefits, not supplant them.
Usually created by:
An Estate Plan, or
A Trust Set Up and Funded During Lifetime
NO REPAYMENT REQUIRED TO MEDICAID AT DEATH

15. WHAT IS A FIRST PARTY SPECIAL NEEDS TRUST (FPSNT)?
Works just like a TPSNT during lifetime, except
REQUIRES REPAYMENT TO MEDICAID AT DEATH FOR ANY MEDICAID RECEIVED DURING BENEFICIARY’S ENTIRE LIFETIME

16. WHY CREATE A FIRST PARTY FPSNT?
Protects Proceeds from Unplanned Inheritance
Protects Proceeds from a Lawsuit Award
Protects Assets Received in Divorce
Protects other Non-excluded Resources Over $2,000
WORKS LIKE AN INTEREST-FREE LOAN DURING LIFETIME MEDICAID RATES MAY BE LOWER THAN FULL RATES

17. WHAT IS AN ABLE ACCOUNT
An ABLE (“Achieving a Better Life Experience Act”) (529A) account is one exception to the $2,000 resource limitation. Allows a person who was disabled prior to age 26 to set up an excludable account for SSI and Medicaid purposes. Account must be used for “Qualified Disability Related Expenses” (broader than permitted SSI expenses) and will grow tax free. Beneficiary may have only one account and no more than $15,000 may be placed in the account in any given year, although 2017 Tax Act also allows some earned income to be placed in account. Any money left in the account at death must be used to repay Medicaid for any benefits the beneficiary received AFTER AGE 26. If account exceeds $100,000, beneficiary’s SSI will be suspended, but she will not lose Medicaid benefits. Kentucky has partnered with Ohio in creating its ABLE accounts, but not limited to using Kentucky’s plan. Kentucky information may be found at Also consult for detailed information about ABLE and shop plans at

18. WHAT IS A POOLED SPECIAL NEEDS TRUST (PSNT)
WHAT IS A POOLED SPECIAL NEEDS TRUST (PSNT)? Sanctioned by Federal Law Usually Used for Smaller Amounts Administered Under a Master Trust Agreement formed by a Non-Profit Entity Works like a FPSNT during person’s lifetime: Special Needs Person (beneficiary) has a “sub-account” At Beneficiary’s death, Medicaid may be Repaid or Funds may be Retained in the PSNT. Excess paid to Medicaid may be split between PSNT and family members (depending on how master trust reads)

19. EFFECT OF INCOME ON SSI?
Generally, paying for food or shelter will reduce SSI, but only to max of $250 per month.
First $20 of SSI is considered an allowance
Unearned income, cash or equivalents given to beneficiary reduces SSI
$ for $ (no limit on reduction)
First $65 of gross earned income is exempt, then every $2 of gross income reduces SSI by $1
Effect: Person may earn up to $1,583 per month in 2018 and still receive
$1 of SSI, and thus keep Medicaid.

20. EXAMPLE OF EARNED INCOME
Gross Monthly Wages* $1,583
SSA Does Not Count First $
Subtotal $1,563
SSA Does Not Count first $65 of Wages
$1,498
SSA Does Not Count ½ This Amount
Net Amount of Earning Reducing SSI $
Remaining of Max $750 SSI Allocation
for Month Based on $1,583 of Gross Wages $
RESULTS IN CONTINUATION OF MEDICAID ELIGIBILITY
*Wages should be to reported to SSA within 6 days of month’s end

21. WHAT IS THE DISABLED CHILD BENEFIT
WHAT IS THE DISABLED CHILD BENEFIT? A person who was disabled prior to age 22 may start drawing on his parent’s Social Security account when parent retires or dies. Results in: Potentially more Social Security income, which is Not Means-Tested, and Qualify Family Member for Medicare within 24 months of DCB Application (Make sure Medicare knows DCB has started or been applied for) May also continue Receiving Medicaid or Waiver

22. WHAT TO DO FOR FAMILY MEMBER WITH SPECIAL NEEDS:
Plan, Plan, Plan
Get Expert Advice
Learn and Follow the Rules