CONGRESS PASSES “SPECIAL NEEDS TRUST FAIRNESS ACT”

The U. S. Senate recently passed H.R. 34, which included a much needed but simple addition to the existing OBRA 1993 statute, which established Medicaid pay-back trusts for the benefit of persons with disabilities.  A Medicaid “Pay-Back” Trust allows a disabled person who is receiving public benefits, such as SSI and/or Medicaid benefits, to place excess funds in a Medicaid Pay-Back Trust without those funds or assets being treated as “excess resources” resulting in a loss of SSI and/or Medicaid. 

The original “(d)(4)(A)” statute [a recitation of a part of the Congressional Act authorizing such trusts, e.g., 42 U.S.C. 1396p(d)(4)(A)], allowed the establishment of such a trust only by a “parent, grandparent, guardian, or the court” and did not authorize the disabled individual him or herself to establish such a trust even if competent to do so.

Apparently there was an unfair or naïve assumption that all disabled persons lacked the capacity to establish a trust on their own, or there simply was a drafting oversight by Congress in the original statute.

The new “Fairness in Medicaid Supplemental Needs Trusts” Act only adds two substantive words to the existing statute; it adds “the individual” to the list of persons authorized to establish a (d)(4)(A) MedicaidPay-Back Supplemental Needs Trust, in addition to a parent, grandparent, guardian, or the Court.

This simple change will eliminate the burden and expense associated with having to go through court proceedings if there was no parent or grandparent available or willing to establish a (d)(4)(A) trust for the benefit of a disabled adult.

The new Act reads as follows:

(a)  In General.—Section 1917(d)(4)(A) of the Social Security Act (42 U.S.C. 1396p(d)(4)(A) is amended by inserting “the individual,” after “for the benefit of such individual by”.

(b)  Effective Date.—The amendment made by subsection (a) shall apply to trusts established on or after the date of the enactment of this Act.

The House of Representatives previously passed this statute and now, with Senate approval and President Obama’s anticipated signing of the bill, a hurdle has been removed for competent disabled persons being able to establish, by themselves, a Medicaid Pay-Back Supplemental Needs Trust to promote their welfare and benefit their lives. 

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