WAG 07-02-16
The following trusts are exempt:
Self-Sufficiency Trust Fund is a trust created by a not for profit corporation for the purpose of providing for the care, support or treatment of one or more individuals with a developmental disability
Irrevocable Trust established for an individual under age 65 who is disabled as determined by the Social Security Administration, or DHS's Client Assessment Unit (CAU). The trust is exempt if:
- the trust is created on or after 08/11/93; and
- the trust is created for the benefit of the individual by a parent, grandparent, legal guardian or court; and
- the trust contains language which states any amount remaining in the trust (up to the amount paid by Medicaid) will be paid to HFS at the time of death.
If the trust contains proceeds from a personal injury award, any HFS or DHS charge must be satisfied first from the award before the trust is treated as an exempt resource.
Effective 07/01/12, the trust remains exempt after the person reaches age 65 but any resources added to the trust after the person reaches age 65 is considered a transfer for less than fair market value unless the person is a ward of the county public guardian or the State guardian.
Example: Pam lives in a nursing facility and has been adjudicated disabled by SSA since birth. Her parents set up an irrevocable trust and funded it with proceeds from a settlement. The LTC hub sends a copy of the trust to HFS OIG LTC-ADI. HFS OIG reviews the trust and notifies the LTC hub that the trust is exempt. When Pam is 35 years old her dad receives an inheritance from his grandfather and puts the money into the irrevocable trust. The additions to the trust are not subject to resource transfer policy because Pam is not over 65 years old.
Pooled Trust is an irrevocable trust established for an individual of any age who is disabled, as determined by the Social Security Administration or DHS CAU. The trust is exempt if:
- the trust is created on or after 08/11/93; and
- the trust is created and managed by a nonprofit organization; and
- a separate account is maintained for each individual, but for management purposes the trust pools funds; and
- the account is set up for the benefit of the individual by the individual, a parent, grandparent, legal guardian or a court; and
- the trust contains language which states any amount remaining in the trust (up to the amount paid by Medicaid) that is not retained by the trust for reasonable administrative costs related to resolving the affairs of the subaccount will be paid to HFS at the time of death.
If the trust contains proceeds from a personal injury award, any HFS or DHS charge must be satisfied first from the award before the trust is treated as an exempt resource.
Effective 07/01/12, the trust remains exempt after the person reaches age 65 but any resources added to the trust after the person reaches age 65 is considered a transfer for less than fair market value unless the person is a ward of the county public guardian or the State guardian.
Example: Tom is determined disabled by SSA and moves to a nursing facility when he is 60 years of age. A disability pooled trust is established. The LTC hub sends a copy of the trust to HFS OIG LTC-ADI. HFS OIG reviews the trust and notifies the LTC hub that the trust is exempt. At age 70 Tom receives $10,000 from the sale of home he jointly owned with a brother. Tom adds the $10,000 to the trust. Because a resource (cash) is added to the trust after age 65, the $10,000 is considered a transfer for less than fair market value. The LTC hub calculates the penalty period beginning with the date the $10,000 is added to the trust.
Note: An exception would apply if Tom was a ward of the county public guardian. In that circumstance, the deposit after age 65 would be considered a transfer for fair market value.
HFS 3703 Report of OBRA/Irrevocable Pooled Trusts
Form HFS 3703 is completed for a person with an irrevocable trust containing provisions for the "payback" of medical assistance costs upon the person's death.
The completed form provides BOC with the name of the person who has the trust, the date the trust was created, and the name and address of the trustee.
BOC initiates recovery action of the trust proceeds.
