1. Presents SETTLING THE PERSON WITH A DISABILITY’S LAWSUIT: USING (d)(4)(A) and (d)(4)(C) Special Needs Trusts With Attorney Sharon L. Pope Sponsored by: October 15, 2014

2. Settlement Planners Basic Toolbox PUBLIC BENEFITS SCREENING TOOL SPECIAL NEEDS PLANNING KNOWLEDGE MEDICARE SET-ASIDE ARRANGEMENT (On Jan. 7, 2015 tune into the Webinar with Attorney Jason Lazarus, “Establishing and Administering Medicare Set-Aside Arrangements”)

3. Public Benefits Screening Tools Verifying Benefits You can ask the plaintiff’s attorney or the plaintiff what public benefits he or she is receiving or has applied for. But will they know the difference between SSDI, SSI, Medicare, and Medicaid? You must verify these benefits with proof. Do not accept the word of these parties as this public benefit area of law is very confusing to litigators, understandably so. They need your help with this first step. Develop a screening tool you can send right away to determine if this plaintiff really needs a special needs trust.

4. Special Needs Planning Is Special Needs Planning necessary if the plaintiff has severe disabilities and relies on the income or the medical care offered by his or her needs-based public benefits? More discussion on this later. What needs-based benefits would be lost if a settlement is paid directly to the plaintiff? - Medicaid and Supplement Security Income (SSI).

5. Public Benefit Comparisons Needs-Based Public Benefits Entitlement Public Benefits Other Benefit Programs SSI and Medicaid, including Medicaid waiver programs. SSDI (social security disability insurance) and Medicare. Section 8, Housing Vouchers, Veteran Benefits and Food Stamps.

6. Medicaid and Supplemental Security Income (SSI) are the 2 significant needs- based benefits in danger Medicaid: The loss of Medicaid can be devastating because Medicaid may be the only medical insurance the plaintiff will either qualify for or offer the daily help the plaintiff needs. SSI: This is a monthly income a person with disabilities may receive from social security.

7. Medicaid Medicaid programs have income and asset limitations. Most States have an asset limit of $2,000.00, others even a smaller amount of assets. States will vary in the rules for Medicaid as well. These are very complex rules. Medicaid coverage can be quite extensive including home care services, medical, dental, and prescription drugs, for example. The value of these services can range from a few thousand dollars a month to thousands every month.

8. Supplemental Security Income This is a monthly income from social security due to this individual’s disabilities and inability to engage in work. A typical individual may be an 18 year old diagnosed with Autism and developmental delays and is unable to be gainfully employed. But there are certainly many other examples. The asset limit for SSI is $2,000.00 for a single person.

9. SSI Provides a Cash Grant for Food & Shelter to Disabled, Blind and Aged 65+ In 2014, the SSI federal maximum monthly payment is $721 for an individual. Where is SSI Law? The law can be found in the following places: 42 U.S.C. §§ 1381 – 1383f 20 C.F.R. §§ 416.101 – 416.2227 http:// policy.ssa.gov/poms.nsf

10. Preserving Benefits If plaintiff needs either or both of these needs-based benefits, what can you do to preserve these and receive the benefit of a settlement? A special needs trust will preserve these benefits while allowing the plaintiff to benefit from the settlement.

11. Special Needs Trusts (SNTs) There are 2 basic types of self-funded SNTs (d)(4)(A) SNTs. Sometimes referred to as payback trusts or litigation SNTs. (d)(4)(C) SNTs. Also called pooled trusts and these are payback trusts also. Assets in either of these SNT’s is not counted for Medicaid or SSI.

12. (d)(4)(A) SNT This trust is authorized by 42 U.S.C. Sec. 1396p(d)(4)(A) and has the following requirements: Grantor/Settlor: Must be established by a parent, grandparent, legal guardian, or court. Beneficiary: For the sole benefit of the person with a disability under the age of 65 and funded with this individual’s assets. Disability: The individual must be disabled according to the criteria under SSI. Payback Provision: Upon the death of the individual, the state shall have the right to recoup from the remaining assets of the trust an amount equal to the Medicaid benefits that it has paid on behalf of the disabled party during his or her lifetime.

13. (d)(4)(C) Pooled SNT The pooled trust is authorized by 42 U.S.C. Sec. 1396p(d)(4)(C) and has the following requirements: Grantor/Settlor: Must be established by a parent, grandparent, legal guardian, court, or by the individual. Beneficiary: A sole benefit trust for a person of any age. Trustee: A non-profit organization and managed by this non- profit organization. Payback provisions: These may vary from state to state but often Medicaid gets paid back 1st then the pooled trust can retain the remaining amount, if any.

14. Let’s Take the Case of Charles Patton Mr. Patton is 42 years old and permanently disabled as a result of a very serious accident. He is a recipient of SSI and Medicaid. His personal injury attorney is about to settle his case for $3.5 million and after liens, fees, and expenses, he will net $1.8 million. This is much less than hoped for. Due to his injuries, he will need 24 hour care at home. These care services and other medical expenses will be approximately $12,000.00 monthly.

15. How Much is SSI and Medicaid Worth? What’s the Loss if he accepts the money? Mr. Patton’s life expectancy is 31.4 years. SSI @ $721.00 monthly x 12 months x 31.4 years = $271,672.80 (without any increases) Medicaid waiver program: $6,000.00 monthly x 12 months x 31.4 years= $949,536.00 (without any increases) Total = $1,221,208.80 lifetime loss

16. The Big Question: What Can the Trustee Pay for? Just about anything but this does depend on which needs-based benefits were retained by the plaintiff. The overall purpose of the SNT is to pay for supplemental items not covered by the benefit retained. For example, if prescription drugs are covered by Medicaid, then the trustee should not pay for prescription drugs.

17. SSI In-Kind Support & Maintenance The only 10 “food and shelter” items are: 1.Food 2.Mortgage (including property insurance as required by lender) 3.Real property taxes 4.Heating fuel 5.Gas 6.Electricity 7.Rent 8.Water 9.Sewer 10.Garbage removal

18. Issues with SSI Income Deemed Income = Someone else’s income deemed to individual. Same household with a duty to support. Parents assets deemed to a child under age 18. Same as to spouses. In-kind support and maintenance Actual receipt of food or shelter or something that can be used to get food or shelter (clothing no longer included) reduces SSI dollar for dollar, after the first $20. ISM: Reduces benefit dollar for dollar up to a presumed maximum value (pmv) of 1/3 the benefit. Trustee pays rent to landlord for example.

19. 3 Examples of Planning with SSI Payments Trustee provides $800 of additional support so he is able to pay for his utilities. A cash distribution of $800 per month results in the following: Instead, if the trustee pays $800 towards his utilities directly instead of distributing cash to him, the result is only a reduction of his SSI, as seen below. If the trustee instead of using the $ 800 to subsidize utilities, purchases other items (that are not food and shelter), we have this result: His SSI is reduced dollar for dollar when Mr. Patton receives a cash distribution in excess of $20/ month. He looses his SSI payment for that month. His SSI is reduced dollar-for- dollar up to 1/3 of presumed maximum value, after the first $20. SSI is only reduced; not eliminated. This is in-kind support and maintenance. SSI payment stays in tact for that month. Mr. Patton receives a benefit from the SNT, but his cash assistance isn’t reduced or eliminated.

20. Do All Persons with Disabilities Need Special Needs Trusts? No. Special Needs Planning is required when: Plaintiff is a minor or an adult with severe disabilities who relies on Medicaid for medical care, and/or relies on SSI for income. Or plaintiff would benefit from Medicaid and SSI, if eligible.

21. Alternatives to SNT’s Estate Planning, including transfer of assets (gifting). Spend down assets on exempt items. Affordable Care Act –tune into the program on Nov. 12 with David Lillesand.

22. The Power of the SNTs Retain important needs-based benefits at the same time getting the benefit of the settlement proceeds. These needs-based benefits help the plaintiff stretch the dollars in order to live as comfortably as possible for as long as possible.

23. Questions? Attorney Sharon L. Pope Special Needs Planner & MSA Certified Consultant sharon@ctseniorlaw.com 860-236-7673 www.ctseniorlaw.com Thank you

24. Support (866) 296-5509 support@specialneedsplanners.com