Trustees: Don’t Give a Debit Card to a Beneficiary of a Medicaid Pay-back Trust!

On July 27, 2015, a Federal District Court in Pennsylvania (Elias v. Colvin, 2015 WL 4529877, M.D. Pa July 27, 2015) ruled that if an individual can direct the use of a trust’s corpus (i.e., principal) the trust should be deemed an available or countable resource to the individual for purposes of SSI (Supplemental Security Income) purposes.

 

In this case, the individual beneficiary was provided a debit card allowing her direct access to her first party Special Needs Trust (SNT) (i.e., a Medicaid Payback Trust).  This direct access ended when the trusteeship changed, perhaps indicating that a more enlightened Trustee took over management of the Trust.  The Social Security Administration (SSA) ruled that the debit card granted the beneficiary access to her trust and, therefore, caused the trust to be deemed an available resource to her, thus, causing a loss of her SSI, and a demand for repayment by the SSA for over $18,000 was asserted against the beneficiary.  The decision of the SSA was upheld on an appeal to the Federal District Court.  This case once again warns the Trustees of the major error caused when a beneficiary of a first party Medicaid payback trust is given a debit card tied to the trust account, allowing access to trust assets by the beneficiary. 

Curtis J. Shacklett, Esq.
Barber & Bartz, P.C.
525 S. Main St., Ste. 800
Tulsa, OK 74103-4511
Telephone: (918) 599-7755
Facsimile: (918) 599-7756
Email: cshacklett@barberbartz.com
Website: www.barberbartz.com

OKLAHOMA CONVERTS FROM A "209-b" STATE TO AN "SSI" STATE

Oklahoma has changed its status from what has been known as a “209-b” state to conform with the SSI criteria effective March 1, 2015.  A handful of states originally opted not to follow the SSI qualification criteria in evaluating income limitations as well as resource limitations when an applicant applied for Medicaid benefits.  Those fewer states were called “209-b” states.  This was permitted under federal law.  Some have considered the SSI criteria more “liberal” than the 209-b rules in some ways, but perhaps not in other ways.  Oklahoma’s adopting the SSI criteria will help simplify the past regimen of attempting to qualify for both SSI and Medicaid with slightly different rules.  Now those qualifying income/resource rules should coincide.  One change is that disbursements from a trust to purchase clothing will no longer be deemed “income” to the recipient.  This has long been a problem for Trustees needing to periodically purchase clothing for a beneficiary.  Disbursements for food or shelter will continue to be treated as “income” to the beneficiary and therefore could be problematic depending on the income category of the beneficiary.

Curtis J. Shacklett, Esq.

Barber & Bartz, P.C.

525 S. Main St., Ste. 800

Tulsa, OK 74103-4511

Telephone: (918) 599-7755

Facsimile: (918) 599-7756

Email: cshacklett@barberbartz.com

Website: www.barberbartz.com