TN 10 (06-96)
SI 01730.048 Medicaid Trusts
Section 1917(d) of the Social Security Act
Social Security Act as added by the Omnibus Budget Reconciliation Act of 1993 and Sections 1613(c) and 1634(a) of the Social Security Act;
Regulation 20 CFR 416.2145
The SSACT has been amended to delete the former Medicaid qualifying trust (MQT) provision for trusts established on or after August 11, 1993, and to replace it with a more comprehensive provision.
Under section 1902(k) of the SSACT, replaced effective October 1, 1993, for trusts established on or after August 11, 1993, an MQT is a trust or similar legal device established (other than by a will) by an individual (or spouse) under which the individual may be the beneficiary of all or part of the payments from the trust. The amount from the MQT deemed available to the individual is the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the individual by the trustee.
2. Medicaid Trusts
Medicaid trusts consist of any type of trust established by an individual on or after August 11, 1993 made up in whole or in part of assets (resources and/or income) of the individual and which are created by a means other than by will. A trust is considered established by an individual if established by the individual, the individual"s spouse, or a person, including a court, or administrative body with legal authority to act for the individual or spouse or who acts at the direction or request of the individual or spouse.
A Medicaid trust can be either a revocable or irrevocable trust or a legal instrument or device similar to a trust. There are certain specific exceptions to this provision.
C. Policy — effect on medicaid
1. Before October 1993
Prior to October 1, 1993, existence of an MQT could result in Medicaid ineligibility by the State agency counting resources from the trust as described in SI 01730.048B.1. above. This rule still applies to trusts established before August 11, 1993. Waiver of this rule is possible when there has been a State determination of “undue hardship.”
2. October 1993 On
Effective October 1, 1993, trusts and similar legal instruments of various types established August 11, 1993, or later which meet the definition of Medicaid trusts in B.2. above can affect eligibility for Medicaid. (See also SI 01730.046D.3. above.)
The principal of a revocable trust is considered a resource to the individual. Payments from the trust to or for the benefit of the individual are considered income to the individual. Any other payments are considered assets disposed of by the individual.
If there are any circumstances under which payment from an irrevocable trust could be made to or for the benefit of the individual, the portion of the principal from which (or income on that principal) payment to the individual could be made is considered resources. Payments from the trust or income on the trust for the benefit of the individual are income. Payments for any other purpose are considered a transfer of assets by the individual. Any portion of the trust or income on the trust from which no payment could be made under any circumstances to the individual is considered to be transferred assets on the date the trust was/is established. If, however, the access by the individual was “blocked” later, the date of the transferred assets will be the date that access was "blocked" (foreclosed).
Exception from this rule is possible under one of several specific statutory provisions and also may occur when an individual establishes, pursuant to procedures developed by the State, that application of the provision on Medicaid trusts would work an undue hardship on the individual as determined on the basis of criteria established by CMS.
D. Policy — new exceptions
The statutory exceptions from the Medicaid trusts provision effective October 1, 1993, may affect the eligibility of certain SSI beneficiaries for Medicaid. Those exceptions are applicable to:
Trusts established for the benefit of a disabled individual under age 65 containing assets of the individual by a parent, grandparent, legal guardian of the individual or a court, if the State will receive all amounts remaining in the trust upon the death of the individual up to an amount equal to the total medical assistance paid on behalf of the individual;
Trusts containing the assets of a disabled individual that are established and managed by a nonprofit association, if a separate account is maintained for each beneficiary of the trust and the account for the benefit of the disabled individual is established by a parent, grandparent, legal guardian of the individual, a court, or the individual. Upon the death of the individual, funds remaining in the individual"s account not retained by the trust are paid to the State in an amount equal to the total medical assistance paid on behalf of the individual; and
“Income” trusts established for the benefit of an individual in a State which makes Medicaid available to individuals with incomes at or below a “special income level” (up to three times the FBR) but does not make Medicaid available to medically needy individuals for nursing facility services (see SI 01715.005B.2.b. and C.1. for an explanation of the special income level and medically needy coverage group). “Income” trusts are trusts composed only of pension, Social Security and other income to the individual (and accumulated income in the trust). These trusts may be excepted if upon the death of the individual, funds remaining in the trust are paid to the State in an amount equal to the total medical assistance paid on behalf of the individual.
E. Procedure — development and documentation, section 1634 states
When you discover a trust, follow the procedures in SI 01120.200 to determine if the trust is countable for SSI purposes. If the individual resides in a section 1634 State, do not attempt to determine whether the trust is countable or excludable for Medicaid purposes or whether counting it as income and/or resources and/or treating it as a transfer might be waived by the Medicaid State agency.
Copy any trust information provided. Follow regional and local procedures for where to send this information; if none are available, send to the same State agency address used for copies of the SSA-8019-U2.
Existence of a Medicaid trust will result in a referral of the case to the Medicaid State agency for a Medicaid eligibility decision. Explain to the individual that the Medicaid State agency will determine Medicaid eligibility.
NOTE: Posteligibility discovery of a Medicaid trust in a section 1634 State will not result in a correct automated paragraph. Suppress any automated notice and prepare the manual notice using Medicaid paragraph 1147 in NL 00804.110. See NL 00801.010C. for notice suppression references.
1. Paper environment
Code a “Q” and the date of discovery of the trust or similar legal instrument or device in the Third Party Liability (PT) field of the Supplemental Security Record.
The “Q” will post on the SSR from the Trust (RTRS) page discussed in MSOM INTRANETSSI 013.005 Trust.