To qualify for the special needs trust exception, the individual whose assets were used to establish the trust must be disabled for SSI purposes under section 1614(a)(3) of the Act as of the date on which the trust’s resource status could affect the individual’s SSI eligibility.
In cases where you need to develop for disability, obtain a disability determination from the disability determination services (DDS) following procedure in SI 01150.121D.2. Develop disability as of the date on which the trust’s resource status could affect SSI eligibility.
If DDS determines that the trust beneficiary was:
disabled as of the date the trust's resource status could have affected SSI eligibility, the special needs trust meets the disability requirements for exception; or
not disabled as of the date the trust's resource status could have affected SSI eligibility, evaluate the trust under instructions in SI
01120.201. Since the trust provisions take precedence over the transfer provisions (see SI 01120.201D.5.), depending on the terms of the trust, the trust may count as a resource or the transfer penalty may apply (see SI
Example Scenario 1:
Mark, a special needs trust beneficiary whose trust was established in 2015, applies for SSI Aged benefits in 2019. Even though disability is not a requirement for SSI Aged benefits, we must develop disability as of Mark's SSI application date in 2019 for purposes of the Medicaid trust exception.
Example Scenario 2:
Sally has a special needs trust that was established in 2010 when she was 10 years old. At the time, she was not eligible for SSI Child benefits because of her deeming parents' income and resources. However, she applies for SSI Adult benefits in 2018. We must develop disability as of Sally's SSI application date in 2018. 2010 is not relevant because the trust did not present as a resource issue until the SSI application date in 2018.