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Monday, February 11, 2013

Helpful News for Trustees and Beneficiaries for Special Needs Trusts

Last fall the Social Security Administration quietly released the text of changes to the Program Operations Manual System -- the POMS. Though described as "clarifications" by Social Security, they were actually far-reaching changes that would have driven up the cost of trust administration, complicated the lives of beneficiaries and provided no additional protection for anyone involved.

Lawyers, trustees and advocates raised objections, and thankfully Social Security listened. Last week another set of changes were announced and the news is entirely good for everyone.

First, a word about POMS. This not very well known set of rules has far-reaching effect. It is a manual of instructions for Social Security eligibility workers, explaining how to treat all manner of documents, transactions and information obtained in the course of eligibility applications and reviews. You can look at the POMS online, but you will quickly see that it is a complicated, detailed and tightly-written set of rules.

The POMS is not law. It is not even a set of regulations governing Social Security eligibility. It has no legal force, and so one might think it is not important. Actually, it is more important than the law, at least in day-to-day decision-making. It is the document Social Security eligibility workers look to when faced with any wrinkle, confusion or question.

The changes last fall addressed several sections of the POMS dealing with how to treat expenditures from special needs trusts. Some of the changes focused on just "self-settled" special needs trusts, others included expenditures by "third-party" special needs trusts and perhaps even payments by family members or others who try to help recipients of Supplemental Security Income (SSI).

Among the changes posted last fall:

  • When family members paid for items for a trust beneficiary -- like medical supplies, clothing, transportation or pretty much anything else -- reimbursement from a trust would be treated as income to the beneficiary, even though nothing ever went through the beneficiary's hands or account. The same would have been true for trust payments to the family member's credit card.
  • Payments for caregiving could not be made to a family member unless the family member was certified in some way. (This change actually wouldn't have made much difference in Arizona, since a variation of this rule is already in place for Arizona Medicaid -- AHCCCS/ALTCS -- recipients.)
  • Travel expenditures for third persons to visit a trust beneficiary would have been prohibited in pretty much all circumstances.

What changed? Social Security initially removed the change governing travel, and then indicated that the others were under review. Reportedly the high-level reconsideration included senior staff and even out-going Social Security Commissioner Michael J. Astrue (who had already submitted his resignation from that post, to be effective February 13, 2013). Commissioner Astrue wanted the reconsideration completed before the end of his tenure, so Social Security moved very quickly to make changes.

Last week one of the reviews got completed, and the reimbursement policy changed. Not only did it change -- it actually changed to make good sense. Now POMS section SI 01120.200 E.1.d, "Reimbursements to a third party," reads:

"Reimbursements made from the trust to a third party for funds expended on behalf of the trust beneficiary are not income.

"Existing income and resource rules apply to items a trust beneficiary receives from a third party. If a trust beneficiary receives a non-cash item (other than food or shelter), it is in-kind income if the item would not be a partially or totally excluded non-liquid resource if retained into the month after the month of receipt. If a trust beneficiary receives food or shelter, it is income in the form of in-kind support and maintenance (ISM)."

Similar changes have been made in another, related section, SI 01120.201 I.1.f.

What does it mean?

  •  It means that an arrangement used by trustees all over the country, though without any specific authorization, has now been formally blessed by Social Security.
  • It means that the trustees of special needs trusts can reimburse family members who buy clothing, bedding, diapers, supplements, medical devices, transportation services, furniture -- all manner of items -- without risking loss of benefits from Social Security.
  • It means that all of those things can be done without limiting or losing benefits from AHCCCS and ALTCS (Arizona's version of Medicaid). It means that a system that worked well, was responsible and cost-effective, is now available again to trustees, beneficiaries and family members.

Word is that the other changes are in the works for release this week. Here's hoping all the changes will be as thoughtful and responsive to practical realities.


Monday, January 21, 2013

Can A Special Needs Trust Pay for things such as Credit Card Bills or Security Deposits?

   Administering a "special needs" trust can be a challenge. The rules often seem vague, and they occasionally shift. What may seem like a simple question might actually involve layers of complexity. Sometimes expenditures might be permissible under the rules of, say, the Social Security Administration, but not acceptable to AHCCCS, the Arizona Medicaid agency -- or vice versa. Trustees work in an environment of many constantly-moving parts.

Take these two examples:

Example 1:  Being the trustee of a Self-Settled Special Needs Trust for a sister. Can you pay her credit card bills?

Maybe (don't you just love lawyers' answers?). Let's break the question down a little bit.

    First, identify the trust as "self-settled." That means the money once belonged to your sister (it might have been an inheritance, or a personal injury settlement, or her accumulated wealth before she became disabled). That also means the rules are somewhat more restrictive.

We will assume that the bills are for a credit card in her name alone. If the card belongs to someone else, the rules may be different. Not many special needs trust beneficiaries can qualify for a credit card; when they can, it can be a very useful way to get things paid for (as you will soon see).

The next question requires a look at the trust document itself. It might be that it prohibits payments like the one you would like to make. That would be uncommon, but not unheard of. We will assume that the trust does not expressly prohibit paying her credit card bills.

What benefits does your sister receive? Social Security Disability and Medicare: Not a problem.But if it is Supplemental Security Income (SSI) and AHCCCS (Medicaid) there could be a problem.

    Next, we need to know what was charged to the credit card. Was it food or shelter? If it was used for meals at restaurants, or grocery shopping, or for utility bills, you probably do not want to pay the credit card bill from the trust. If you do (and assuming the trust permits it) then you will face a reduction of any SSI she receives, and possible loss of AHCCCS benefits.

Were the credit card bills for clothes, medical supplies, gasoline for her vehicle, even car repairs? There is probably no problem with paying the credit card statement. Even home repairs should be OK in most cases (just not rent, mortgage, utilities, etc. -- and the rules might be different if anyone else lives with your sister).

As you can see, what started out as a simple question turns out to have a lot of complexity. You might want to talk with a lawyer about your sister could use the credit card. When it works, though, it can be quite beneficial.

Example 2: Can a special needs trust pay the security deposit on a new apartment?

What an interesting question. We think the answer is probably "yes."

Once again we need to look at the trust document itself. Was it funded with your own money (like a personal injury settlement), or was the trust set up by a relative or friend with their own money? Is there language prohibiting payment for anything related to your apartment?

Assuming no trust language prohibits the payment, we can turn to the effect such a payment would have on your benefits. Social Security Disability and Medicare? Once again, no problem. SSI and AHCCCS/Medicaid? Your benefits might be reduced, but the payment can probably be made.

The key question is whether a "security deposit" is "rent." Arguably, it is not, rather it is an advance payment for cleaning. A special needs trust, even a self-settled special needs trust ,can pay for cleaning. Social Security's rules treat payment of "rent" as what's called "In-Kind Support and Maintenance (ISM)." This payment, we think, should not be characterized as ISM.

If it is not ISM, then it should have no effect on your SSI or your AHCCCS benefits. If it does, it might simply reduce your SSI payment (by the amount of the deposit, but capped at about $250). So long as you still get SSI it should not have any effect on your AHCCCS benefits.

Are these rules unnecessarily complicated? Yes. Does it sometimes end up costing more in legal fees to figure out what to do than it would to just pay the bills? Yes. Welcome to the complex world of Special Needs Trust Administration. Would it be possible to write simplified rules that allowed limited use of special needs trust funds while saving a bundle on administrative expenses? Yes, but please don't hold your breath while waiting for them.

 


Wednesday, January 2, 2013

The start to a new life for the Mentally Disabled

   It is a new strategy for Georgia, one of several states responding to mounting pressure from the Justice Department, which in recent years has threatened legal action against states accused of violating the civil rights of thousands of developmentally disabled people by needlessly segregating them in public hospitals, nursing homes and day programs.

   For a family with a loved one who is mentally disabled, one of the hardest decisions they will have to face is determining the proper care for their loved one. Until recently, many mentally disabled persons have been placed in hospitals to live for the rest of their lie. While they are under constant care, there are social elements that are missing when living in a hospitals. These social elements, such as sense of community, friendships, and acitivies like dancing, are essential for personal growth.

  The link below is a story that exemplifies the importance of providing better living options for those who need it most.

 

 

 

http://www.nytimes.com/2012/09/30/us/ending-segregation-of-the-mentally-disabled.html?pagewanted=all&_r=0


Sunday, July 31, 2011

Caring for Children with Special Needs: Combating Autism Reauthorization Act of 2011

 Caring for Children with Special Needs

Combating Autism Reauthorization Act of 2011

You can’t turn on the television or radio without hearing about the negotiations – or lack of negotiations- in Congress regarding the looming budget crisis.  We are all concerned about whether our elected representatives in Washington can come to a compromise that will help the country out of the current debt crisis.  Of great concern to those of us who work with families who have family members with special needs is whether, and how, the few programs left to support these families will be affected.

Assuming Congress gets through these negotiations and gets back to work on other  important issues, Congress has the opportunity to address a significant issue that the United States faces today.  That issue is that the number of persons diagnosed as being on the Autism spectrum is increasing at an alarming rate.  It is estimated that 1.5 million Americans are currently on the Autism spectrum.  That number is expected to increase by 10-17% annually. 

A growing concern is that the number of autistic children entering adulthood is also increasing rapidly.   By 2023, the number of autistic children entering adulthood is estimated to be 380,000.  The cost of care for these adults is said to be around $27 million, or about the budget of the state of Tennessee. 

On August 3, 2011, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) is scheduled to meet for hearings on the Reauthorization of the Combating Autism Act, originally passed in 2006.  The Combating Autism Act allocated $950 million dollars over the five year period for the Centers for Disease Control (CDC), National Institutes of Health (NIH), and other governmental agencies to conduct research on the autism spectrum.  The Act required the Director of NIH to develop and implement a strategic plan for autism research.  If the Act is not reauthorized by September 30, 2011, the federal commitment will disappear.

The current bill, named the Combating Autism Reauthorization Act (CARA), would allocate the federal funding of $1billion and create a National Institute of Spectrum Disorders Research within the NIH.

If CARA is not passed, research on the spectrum will likely be thrown into disorder.  We cannot afford to let this bill die.  Research into the reasons for the disorders on the spectrum, and especially research into treatment and therapies, is crucial. 

If you would like to find out more about CARA, and how you might be able to help make sure this Act is passed, see http://www.autismvotes.org/site/c.frKNI3PCImE/b.6376831/k.ACFC/CARA.htm.

 

 

 

 

 

 

 

 

 

 

 

 


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