the website of
Lisa Nachmias Davis,
Attorney at Law

PLANNING FOR THOSE WITH SPECIAL NEEDS
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Tip:  Read the MANY useful articles in the Voice, publication of the Special Needs Alliance - you can also subscribe to receive it by email

A family member's special needs may place an enormous financial and emotional strain on the individual and his or her family. 

A person whose needs arise out of a disability occurring during adulthood needs access to all available entitlement benefits--whether Social Security disability or Supplemental Security Income, state supplemental assistance programs, Medicare and Medicaid (Title XIX), property tax exemptions or income tax deductions--and must plan for his or her family at the same time.  A person with a mental illness arising during young adulthood may face special financial hardship, as government benefits do not adequately meet these needs.  The parents of a child whose needs arise out of a developmental disability may be especially concerned that after they are gone their child will still be protected as they have protected the child during their lifetimes.  In each case, the family will want to balance the desire to meet the special needs of one family member while still treating the rest of the family fairly. 

What are the answers to these problems?

Assistance in obtaining all available entitlement benefits. 

Estate planning with "special needs trusts" to benefit the disabled person without affecting entitlements or depleting family resources for non-disabled family members. 

Involvement in settlement negotiations or damage litigation of lawsuits arising from a disabling injury, to ensure that entitlements are preserved and taxes saved before the ink has dried. 

Guidance through court procedures such as the Connecticut probate court proceedings for conservatorships  and for appointment of guardians of mentally retarded persons. 

Help locating private and non-profit sources of assistance including determining appropriate Medicare supplemental insurance. 

Planning for disabled individuals and their families requires a thorough knowledge of the law of entitlements (Social Security Disability, SSI, and state programs, as well as Medicaid and Medicare), as well as more traditional familiarity with tax law, the law of trusts, estates and probate, conservatorships and guardianships, and real estate law. A typical plan for an individual with a disabled family member might require drafting a Will and/or trust agreement, durable powers of attorney, living will and related documents, and designations of conservator in the event of future incapacity (for the individual) and "standby guardian" (for a developmentally disabled family member). Quite often, the plan will involve a special needs trust for the family member with special needs, and then coordinating the plan to direct all payments for that individual's benefit through the trust. The plan will generally require evaluating the effect on Title XIX eligibility of planned gifts to family members and rights under Social Security or Medicare. Finally, when planning has not been done, it may be necessary to establish a so-called "OBRA '93" or "payback" trust to enhance the quality of life of the disabled person, while maintaining eligibility for benefits. The disabled client and his or her family must be sure that his or her attorney is knowledgeable in all of these areas.

"Blog" of News Items (before they invented blogs)

Not new -- NAMI's useful "Special Needs Estate Planning System" introduction to special needs trusts, with a host of useful pointers for those planning to establish a trust for a loved one.  Walk through it (and consider a donation to NAMI).

Discount for NAMI-CT members.  As a supporter of NAMI,the National Alliance on Mental Illness, and especially, as a board member of the Connecticut chapter of NAMI (NAMI of Connecticut), I am now (March, 2010 - ) offering a 10% discount on legal services to members of NAMI-Connecticut.  This discount applies to my own legal fees, not necessarily all fees at Davis O'Sullivan & Priest LLC.  If you aren't a member, I'll help you join.

Those High-Risk Pools You've Heard About.  As we await much-needed health care / health insurance reform, we hear about "high-risk pools" for those unable to obtain private insurance.  Guess what -- we already have that in Connecticut!  True, there is a "pre-existing condition" exclusion for a year if you don't come to the HRA coverage out of a group plan or comparable government benefit coverage.  And the premiums are age-rated, so older folks will find this very expensive. But Health Reinsurance coverage in CT is a real option for those with some ability to pay for coverage who can't find it privately.  Click HERE for more information (on my links page).

Great New QMB rules!!  "QMB" is a benefit for low-income individuals who receive Medicare.  An individual receives Medicare after 24 months of eligibility for Social Security Disability Income (SSDI) (or sooner, with some disabilities).  However, Medicare has many gaps and deductibles and the "Part B" (doctor) coverage costs $96.40/month or more.  QMB takes care of this.  QMB is a "Medicare Savings Plan" that pays the Medicare Part B premium and also pays the copays and deductibles for care from health care providers that participate in Medicaid.  Someone eligible for QMB is automatically  eligible for the Low-Income Subsidy for Medicare Part D (the prescription drug benefit under Medicare) -- which means no premium is paid for the standard prescription drug plan coverage, copays are small or nonexistent, and the "doughnut hole" in coverage -- where some Medicare Part D members must pay up to $3,000 or more for drugs -- does not exist.  The point is that starting October 1, 2009, there is no asset test for QMB (in Connecticut) and no estate recovery -- no obligation to repay benefits -- from the recipient's estate at death.  In Connecticut, any single person receiving Medicare who has income of $1,778.91 or less (2009 figures) is eligible.  Check for updates on the figures at www.CTElderLaw.org.  The point is -- if an individual has Medicare, and lives in the community, (s)he may not need to worry about complying with the strict income and asset limits of the Medicaid program in order to get medical care and almost all prescriptions covered.   No more need to worry about the "spend-down" -- no more need to worry about staying under $1,600 per month.  You apply for QMB with a super-simple form:  click HERE (PDF file, fillable).  If you are already on Medicaid and eligible for QMB, your case worker should automatically put you in for QMB.  For the list of "benchmark" Part D (prescription) plans, click HERE to get the PDF file. Caution:  don't necessarily drop your supplemental insurance if you have it -- doctors CAN discriminate and decide not to accept you if they don't participate in Medicaid or even if they do but don't want to accept what the QMB pays.

New articles written for the Special Needs Alliance newsletter,the Voice.  I was fortunate to be asked to join the Special Needs Alliance four years ago, in 2006 - a national network of attorneys who work with special needs trusts and help disabled individuals and their families.  A couple of years ago, as a contributor to Exceptional Parent magazine on behalf of the Special Needs Alliance, I was finally able to summarize my thoughts on the difficult issues of choosing a trustee for a special needs trust and taking care that you really understand what you are signing, in my article Absolute Discretion: Understanding the Trustee Provisions in Your Child's Special Needs Trust. This year, my partner Shawn O'Sullivan and I wrote a concise summary on the way these trusts are taxed, "Taxes and Special Needs Trusts." Sign up to receive the Voice on the Alliance's website. 

A COURT DECISION, Corcoran, explains how trust language can cause the trust beneficiary to lose government benefits.  This decision relies in part on a STATE LAW that has now been in effect for a few years.  The short summary:  if a trust is for someone's "support" then no matter what else the trust says, the trust will be treated as available and affect benefits.  If it doesn't say "support"and the beneficiary has no right to require the Trustee to use the funds for support or medical expenses, and the trust is not established by the beneficiary or spouse, it should not affect benefits, and can remain in place to improve the beneficiary's quality of life as discussed in my article,"How Should the Family of a Disabled Individual Design an Estate Plan?  Part I.

BAD NEWS FOR THOSE ON STATE SUPP:  Parkhurst v. Department of Social Services is a BAD CASE for someone living in a group home or "residential care home" or otherwise receiving State Supplement benefits.  The decision says that if someone sets up an "OBRA '93" payback trust -- described in my article Part II. -- funding of the trust is a TRANSFER under the state supp. program and will cause a potential loss of benefits if you are already a recipient or apply within 2 years; and at the same time the trust is an AVAILABLE ASSET that may cause loss of benefits if the trust assets still remain.  This means that if you have an accident and bring a lawsuit, you may not get much benefit out of the proceeds unless the proceeds are substantial. 

DANGER:  STATE LAWS VARY WIDELY.  Before planning for a family member who lives outside Connecticut, you MUST consult a local attorney familiar with the intricacies of benefits law and trust law in that state.  What is perfect for a trust in Connecticut can be deadly in New Jersey, or Ohio.  Do not try this at home.  You can find an attorney familiar with this are of law on the website for the National Academy of Elder Law Attorneys, naela.com.  Many elder law attorneys also practice in the area of special needs trusts.

How To Help Someone on SSI.  Did you know that when someone is receiving SSI or Medicaid, a family member can often pay for items and expenses DIRECTLY without affecting benefits?  And that a family member can even pay for FOOD, CLOTHING or SHELTER (for example, rent) and the SSI benefit will only go down by 1/3 of the maximum SSI benefit + $20?  For example, if the maximum were $600, that would be only $220.  Obviously $220 is still $220, but if the rent is $800, what makes more sense?  If the person doesn't get SSI but Social Security Disability instead, then it won't affect the Social Security Disability payment by one cent, and almost certainly the payment isn't going to affect Medicaid eligibility either. So the $800 paid to the landlord won't change a thing about the individual's benefits.  By contrast, if the family member gives the person $800 in cash, (s)he will lose ALL SSI and affect Medicaid too. Moral:  CASH HELP IS BAD.  PAYMENTS "IN KIND" ARE GOOD.
 --->  CAUTION:  These statements are generally true but may not be true in any given state; payments may also affect eligibility for benefits other than SSI or Medicaid, so when in doubt, TALK TO THE CASEWORKER. 

Announcement from the Social Security Administration:  "New Tool Helps People Complete Disability Form:  When an adult applies for disability benefits, we complete a Disability Report (SSA-3368).  The form helps us obtain information about an applicant's condition, and is the key to obtaining medical records.  Now you can get tips right over the Internet on how to best complete the 3368.  Just click on any section of the form and you'll get a "plain language" explanation of what we're looking for, why we need the information, and how your answers help us decide if you can get disability benefits.  This new tool is your key to having the Disability Report completed before your appointment.  To take a look, visit http://www.ssa.gov/disabilityformhelp/." 

 Connecticut's "Working While Disabled" Medicaid Program.  Also known as "SO-5," this sub-category of the Mediciad program in Connecticut started in 2000 and provides another alternative (besides QMB, for SSDI recipients) to help avoid the annoying "spenddown" problem.  Under SO-5, individuals with a "disabling condition" may continue to qualify for Medicaid if they are working, even with (a) income up to $75,000 per year and (b) countable assets of up to $10,000.  However, at higher levels of income they will contribute to the cost of care by paying a premium computed as 10% of income (including spousal income) exceeding 200% of the federal poverty limit.  Even self-employed individuals may qualify if they earn enough to pay self-employment tax-- $450/year. 

For further information on entitlement programs available to the disabled, send email to davis@sharinglaw.net, or write to me at the address shown.  I can only provide general information, and will not provide advice about a particular case without a formal engagement. Writing to me does not create an attorney-client relationship.

Sites and resources of interest -- click to read more.

A list of important cases, many of them relating to Supplemental Needs Trusts.

List of articles referred to on this page:

DISCLAIMER:  THIS INFORMATION IS NOT PROVIDED AS  LEGAL ADVICE AND CREATES NO ATTORNEY-CLIENT RELATIONSHIP.  NO ENDORSEMENT IS INTENDED BY ANY REFERENCES HEREIN.  PLEASE CONSULT YOUR OWN LEGAL AND FINANCIAL ADVISORS BEFORE TAKING ANY ACTION. 

I can only provide general information, and will not provide advice about a particular case without a formal engagement. Writing to me does not create an attorney-client relationship.
 

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Lisa Nachmias Davis
Davis O'Sullivan & Priest LLC
Attorneys at Law
129 Church Street, Suite 805
New Haven, CT 06510
Phone: 203-776-4400
Fax: 203-774-1060 or 776-4411
davis@sharinglaw.net