There is a confusing patchwork of Federal and State laws and regulatory guidance governing the use of Supplemental Needs Trusts in the Medicaid context. This article is intended to collect some of these authorities in one place.
One of the prerequisites for using a Supplemental Needs Trust is that the beneficiary must be disabled. These references provide the rules for determining whether an individual is disabled, as well as the process for disability determinations made for purposes of using an SNT. Many of these references are also applicable to individuals requesting disability determinations for purposes other than an SNT, such as obtaining more favorable budgeting rules in the SSI-related category.
NEW February 2019 - The State Dept. of Health finally released an Informational Notice --OHIP 0119 - called "Explanation of the Effect of Trusts on Medicaid Eligibility." Development of this notice was required by a DECEMBER 18, 2017 - state law requiring that applicants and recipients who have a spend-down be notified about the availability of using an SNT to reduce excess income. Unfortunately, the new Notice falls short in clearly explaining the availability of SNTs to reduce the spenddown. See this discussion and letter from the NYSBA Elder Law Section to the NYS DOH.. 8/7/2019.
Also, the February 2019 state directive GIS 19 MA/04 - Clarification of Policy for Treatment of Income Placed in Medicaid Exception Trusts that issued this Information Notice states, "If a trust is established by an agent acting under a Power of Attorney (POA), the powers granted under the POA must include permission to gift assets." Elder law attorneys have asked the State to revoke this requirement because it violates state law. See more here.
Although it is the local Department of Social Services (or in other states, the state Medicaid agency) that makes the disability determination for purposes of SNTs, most of the standards used are from Federal law. The definition of "disability" used by the Federal Social Security Administration for purposes of SSDI and SSI is adopted by the State-run Medicaid program. Thus, it is useful to make reference to the Federal standards when trying to establish that an individual is eligible to use an SNT for Medicaid purposes.
Social Security Act
This is the Federal statute that establishes the Social Security Administration and all of the benefits SSA administers, including SSDI and SSI. It contains the basic legal definition of disability.
21st Century Cures Act - enacted Dec. 13, 2016 - corrects what was widely believed to be a drafting error in the previous law, which only allowed a parent, grandparent, legal guardian, or a court to create a first party supplemental needs trust. Under the new law, individuals with disabilities who have the requisite capacity will be able to create special needs trusts for themselves rather than having to rely on others to do so. Amends Section 1917(d)(4)(A) of the Social Security Act (42 U.S.C. 1396p(d)(4)(A)). While a bill is pending in NYS legislature to implement the law in NYS, a directive issued by the NYS Dept. of Health on May 22, 2017 -- GIS 17 MA/008: Policy Change for Trusts Established for Disabled Individuals Under Age 65 -- PDF -- states, "Effective immediately, in the case of a certified disabled Medicaid applicant/recipient, districts must not consider as available income or resources the corpus or income of a trust established by such disabled individual when he or she was under 65 years of age, provided the trust otherwise complies with the “exception trust” provisions set forth in Administrative Directive 96 ADM-8, “OBRA ’93 Provisions on Transfers and Trusts.”
Code of Federal Regulations
These are the regulations promulgated by SSA to implement its mandate under the Social Security Act. These regulations have the force of law.
Social Security Administration "Bluebook" - Listings of Impairments
This manual contains all of the medical criteria for determining whether an individual's impairments meet one of the "listings" on step three of the sequential evaluation process. These are technically an Appendix to the Code of Federal Regulations, and therefore have the same legal weight.
A Disability Claimant's Capacity to do Past Relevant Work (SSR 82-62)
This ruling from the Social Security Administration discusses how to determine whether a claimant has past relevant work, and whether he or she has the residual functional capacity to return to past relevant work on step four of the sequential evaluation. Because these rulings are considered sub-regulatory guidance, they do not technically have the force of law.
Evaluation of Disability and Blindness in Initial Claims for Individuals Aged 65 or Older (SSR 03-3p)
This ruling from SSA discusses special rules and profiles for determining disability in claimants over age 65.
SSA POMS SI 01120.203 - Exceptions to Counting Trusts Established on or after 1/1/00
This section of the Program Operations Manual System, the guidance provided to SSA staff, contains rules and procedures for determining whether SNTs are disregarded for purposes of SSI. Some of these policies may also be applicable to Medicaid.
N.Y. Social Services Law § 366(2)(b)(2)(b)(2)(iii)
This N.Y. State statute codifies the exemption of SNTs from income and assets for disabled individuals, and imports the Federal definition of disability.
N. Y. Social Services Law § 366, subd. 5 (f) - Law enacted Dec. 18, 2017 - NEW LAW that requires the State Dept. of Health to "provide written notice to an applicant for or recipient of medical assistance who is or reasonably appears to be eligible for medical assistance except for having income exceeding applicable income levels ... in plain language, that in certain circumstances the medical assistance program does not count income . .. if it is placed in a trust .... The notice shall be included with the eligibility notice ...and shall reference where additional information may be found on the department’s website....” L. 2018, Ch. 475, enacting A 5175-A /S 1241-A (Search bill bill number here )
18 N.Y.C.R.R. § 360-5.2
This is the N.Y. State regulation implementing the definition of disability for purposes of the N.Y. Medicaid program.
N.Y. Medicaid Disability Manual
Although N.Y. uses the same definition of "disabled" as the Social Security Administration does for purposes of the SSI and SSDI programs, this manual goes into more detail about how the N.Y. Medicaid program determines disability.
N.Y. Medicaid Reference Guide
This enormous manual attempts to consolidate all of the rules governing New York's Medicaid program into one place, and instructs DSS eligibility workers how to implement the program. The Glossary section contains the definition of disability.
NYS Agency Directives
GIS 19 MA/04 - Clarification of Policy for Treatment of Income Placed in Medicaid Exception Trusts (Feb. 4, 2019) - States several policies including Statutory Gift Rider requirement for POAs:
the income exclusion applies only to income that is placed into the exception trust (also known as supplemental needs trust or pooled trust) during the same month in which the income is received.
"If a trust is established by an agent acting under a Power of Attorney (POA), the powers granted under the POA must include permission to gift assets." This means that the POA must include a Statutory Gift Rider (SGR) and that the SGR must be carefully drafted to specify that the agent has authority to establish and fund a supplemental needs trust including a pooled trust.
Elder law attorneys believe this requirement violates the state law governing powers of attorneys. See Letter from the NYSBA Elder Law Section to the Dept. of Health, dated 8/7/19.
Also see article by Daniel Fish in the New York Law Journal, "New Restrictive Rule Regarding Medicaid and Power of Attorney," Aug. 15, 2019 (download PDF - Reprinted with permission from the Aug. 15, 2019 edition of the New York Law Journal © 2019 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or firstname.lastname@example.org)
See more here about possible options if the POA is rejected for lack of an SGR.
Advises districts that recipient may verify past deposits at renewal, and does not have to document each deposit each month.
May qualify for Medicare Savings Program, as well as for Medicaid by depositing income into a trust; local districts "should inform the consumer that the amount deposited monthly into the trust may have to increase to avoid a spenddown. Policy regarding the Medicare Savings Program and the program requirements are provided in 00 OMM/ADM-7 “Medicare Premium Payment Program (MPPP)”.
How Do I Request that the Local Social Services District Rebudget My Income Once I have Created a Trust?
You must provide a copy of the trust to your local social services district. You must include a written statement indicating the amount of monthly income that will be placed into the trust each month.
The answer may mislead consumers into thinking they only need to send a copy of the trust to the Medicaid office in order to rebudget their case.. It does not mention that a person over age 65 must submit proof that they are disabled, requiring forms described in this article. Much more must be submitted - see this article.
GIS 17 MA/008: Policy Change for Trusts Established for Disabled Individuals Under Age 65 -- PDF -- May 22, 2017 - states, "Effective immediately, in the case of a certified disabled Medicaid applicant/recipient, districts must not consider as available income or resources the corpus or income of a trust established by such disabled individual when he or she was under 65 years of age, provided the trust otherwise complies with the “exception trust” provisions set forth in Administrative Directive 96 ADM-8, “OBRA ’93 Provisions on Transfers and Trusts.”
GIS 15 MA/013 - MBI-WPD Disability Certification and Exception Trusts PDF - This GIS implicitly states that a person whose earned income is too high for MBI-WPD can use a pooled trust or an individual supplemental needs trust (both are types of "exception trusts") to bring their income down to the MBI-WPD level -- until they reach the age of 65 and can no longer be in MBI-WPD. The GIS says that if an individual is certified as disabled for purposes of MBI-WPD, that same certification also establishes disability for use of a pooled or individual trust. This clarification was needed to avoid a catch-22: A working person cannot generally qualify as "disabled" under Social Security disability insurance rules, with some exceptions. Yet in order to qualify for MBI-WPD, one must be "disabled" and be working. Plus - one must be "disabled" under the Social Security rules to enroll in a pooled/individual supplemental needs trust. This GIS clarifies that a certification of disability meets the disability criteria for both MBI-WPD and for a supplemental needs trust.
DSS-486T (revised 6/2012)(ATTACHMENT I) or Medical Statement of Disability, which is completed and signed by the treating physician, describing diagnoses, symptoms, functional limitations, and medical history and; NOTE: The form revised in June 2012 shortens this form from the former 25-page form two a 2-page form, which will be less intimidating to doctors. The old form consisted of numerous attachments that elicited information about the different body systems, such as a musculoskeletal or cardiac impairments. Those former attachments, while burdensome, were helpful to show the criteria for "meeting the listings"-- Step Three in the sequential evaluation process described below. While no longer required, you might find some of these attachments helpful as a guide for the physician to provide information about particular conditions. Click here for the old 486T.
LDSS-1151 (revised 6/2012)(ATTACHMENT II) Disability Questionnaire – completed by client or her advocate or family member, describing the disabled child’s education, work history, and functional limitations.
LDSS-1151.1 (6/201)(ATTACHMENT III) Disability Questionnaire Continuation Sheet - provide names, addresses of all medical providers and hospitals where care received in order for State to obtain medical records.
New Transmittal Sheet (ATTACHMENT IV) to be used by the local DSS when forwarding a disability determination request to the Disability Review Team
Purposes of Medicaid Disability Reviews (GIS 06 MA/005)
Pooled Trusts and Disability Determinations for Individuals 65 Years of Age and Over (05 OMM/INF-1)
This Informational Letter from the N.Y. Dep't of Health to the local departments of social services gives instructions on how to process disability determinations for individuals using Pooled Trusts.
2018-06-25 Deferral of SNT's Submitted with Invalid Power Of Attorney. Elaborates on Alert of 2017-07-26 (below) Trusts. This directive says if an SNT is submitted that is signed with a POA without authority to establish a trust, it will be deferred, with opportunity for applicant to execute a new POA, presuming capacity to do so. It is unclear if the approval will be retroactive to initial submission of SNT.
2018-04-26 Disability Form Completion when Submitting Pooled Trusts over age 65 --Reminder to submit completed LDSS-1151 (revised 6/2012) with pooled trusts for those over age 65, or under 65 if they are not receiving SSD/SSI benefits. Implies that must complete Work History section even if work done more than 15 years ago, but don't have to enter physical demands of job if more than 15 years ago. Says should not cross out entire work section even if no work done in last 15 years.
July 26, 2017 HRA Medicaid Alert - Powers of Attorney and Substantial Gift Riders: Powers of Attorney executed after Sept. 1, 2009 must include a Statutory Gift Rider (SGR) along with the POA form. HRA will reject the trust as invalid without this rider. Under state law, a POA must be executed at the same time as the SGR. Therefore, if there is no SGR, either the POA must be re-executed as new or the applicant, if s/he has capacity, can sign a new joinder agreement directly. At least one pooled trust -- CDR-- will amend an existing trust if provided with the re-executed documents. Then that re-approved trust should be sent to HRA with the request for approval.
NOTE: NYLAG Evelyn Frank Legal Resources Program and some elder law attorneys dispute HRA's view that a Statutory Gift Rider is necessary in order to establish a Pooled Income Trust. Contact email@example.com for more information. See article by Daniel Fish in the New York Law Journal, "New Restrictive Rule Regarding Medicaid and Power of Attorney," Aug. 15, 2019 (download PDF - Reprinted with permission from the Aug. 15, 2019 edition of the New York Law Journal © 2019 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or firstname.lastname@example.org)
Pooled Trust Submissions (Medicaid Alert 4/26/2006)
This Medicaid Alert discusses the documentation required for pooled trusts on initial application and recertification.
Disability Determinations for Individuals with a Pooled Trust (Medicaid Alert 7/7/2005)
This Medicaid Alert specifies the procedures used in New York City for pooled trust cases.
Supplemental Needs Trusts Excluded from MA Eligibility Budgeting (NYC Medicaid Facts Alert May 2004)
Reminds staff that income contributed to a pooled trust is exempted from the eligibility computation.
This article was authored by the Evelyn Frank Legal Resources Program of New York Legal Assistance Group.