Nationwide Effect of Funding Pooled SNT’s after age 65 With Michele P. Fuller August 24, 2016

1. Nationwide Effect of Funding Pooled SNT’s after age 65 With Michele P. Fuller August 24, 2016

2. Overview • Brief review of pooled SNTs • Funding pooled SNT’s over age 65 • Case law and policy regarding same • When and how to use a pooled SNT for persons over age 65 • Alternatives for planning

3. Presumptions • Working knowledge of: • Government benefits: SSI/Medicaid and SSD/Medicare and dual-eligible • Income and resource limits of means-tested government benefits • Elements of a d4A and d4C special needs trust

4. Who may need this planning? • Anyone who will need assistance to remain in the community • Anyone who will or likely require placement in a protective environment

5. Types of Special Needs Trusts

6. Pooled trust overview • Creature of both state and federal law • Title XIX of the Social Security Act • States administer the Medicaid program pursuant to their agreement with the federal government • State Plans must comply with federal law and regulations • Generally, any trust where Grantor retains a beneficial interest is a countable resource • Exceptions: OBRA Act of 1993 • (d)(4)(A), (d)(4)(B), and (d)(4)(C)

7. (d)(4)(C) Special Needs Trusta.k.a. Pooled Trusts • Authorized by 42 U.S.C. §1396p(d)(4)(C) and has the following characteristics: • Irrevocable • Established and managed by a non-profit association. • Separate account is maintained for each beneficiary; pooled for purposes of investment and management • Established by the individual, parent, grandparent, legal guardian, or by a court. • Residual funds after death are retained by the trust or repaid to the State for medical assistance paid on behalf of the beneficiary.

8. Joining a Pooled Trust 65+ • Language of (d)(4)(A) (Payback Trusts) is clear: cannot be funded by someone over 65. • But (d)(4)(C) does not contain any age restriction – • State practices vary – may eventually be a Supreme Court or Congress issue. • Some allow by statute • Medicaid policy regulations • Some allow by practice • HCFA Transmittal No. 64-restricted use to those under 65

9. Veteran’s Administration • VA Office of General Counsel Opinion, VAOPGCPREC 33-97, dated August 29, 1997 • OBRA trusts are countable assets when applying for Improved Pension • No distinction between 1st and 3rd party SNTs • National Defense Authorization Act of 2015/Disabled Military Child Protection Act-allows someone to name a payback SNT for a disabled child to receive pension benefits.

10. SSI recipient funding a pooled trust over age 65 • SI 01120.203 NOTE: There is no age restriction under this exception. However, a transfer of resources to a trust for an individual age 65 or over may result in a transfer penalty (see SI 01150.121). • -SI 01150.121.A.3. states that transfers to a d4A or d4C trust are exceptions to transfer penalties if under age 65

11. Case law • In Re: Pooled Advocate Trust: S.D. amended policy to trigger divestment penalty. http://caselaw.findlaw.com/sd-supreme-court/1597399.html • Center for SNT Administration v. Olson,: Court found HCFA 64 persuasive http://caselaw.findlaw.com/us-8th-circuit/1598933.html • Lewis v. Alexander: State cannot be more restrictive than federal law, but…http://www2.ca3.uscourts.gov/opinarch/113439p.pdf

12. When does it make sense to use a pooled SNT for those over 65? • Get beyond 60 month look-back period • If nursing home care is needed: • In states where there is no divestment • If there is a divestment, trigger it: D>C-I (not great) • If in-home care is needed: • Medicaid waiver services • PACE (Program of All-inclusive Care for the Elderly) • http://www.npaonline.org/pace-you

13. PACE • Delivering all needed medical and supportive services, a PACE program provides the entire continuum of care and services to seniors with chronic care needs while maintaining their independence in their home for as long as possible. • Services include the following: • adult day care that offers nursing; physical, occupational and recreational therapies; meals; nutritional counseling; social work and personal care; • medical care provided by a PACE physician familiar with the history, needs and preferences of each participant; • home health care and personal care; • all necessary prescription drugs; • social services; • medical specialties, such as audiology, dentistry, optometry, podiatry and speech therapy; • respite care; and • hospital and nursing home care when necessary.

14. PACE • Can be paid for privately (MI=$4,000/m) • No divestment penalty • Must live in a PACE area and be appropriate level of care

15. Benefitting the Beneficiary • Maintains important asset: the home • Mortgage or line of credit • Taxes • Insurance • Utilities • Maintenance or improvements • Repairs • ADA modifications • Receive rental income

16. Benefits to the Beneficiary • Supplemental care needs-key to aging in place • Clothes • Bed holds • Fiduciary and legal fees • Purchase exempt assets

17. Alternative planning methods • Gift to a person with disabilities-d4A or d4C SNT • Spend down: credit cards, mortgages, improvements to property,, etc. • Purchase exempt assets: car, pre-pay services, pre-paid funeral • Half-a-loaf planning • Promissory note

18. QUESTIONS?

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