As the Social Security Administration continues to scrutinize distributions from special needs trusts, its interpretation of what is allowable and what is not is evolving. New Jersey attorney Thomas D. Begley, Jr., reported on the latest revelations at a session of the 2012 NAELA National Aging and Law Institute, held November 8-11 in Washington, D.C.
Co-leading a session on “Allowable Distributions for Special Needs Trusts,” Begley reminded attendees of recent changes in the Social Security Administration’s POMS, reported earlier by ElderLawAnswers, that prevent first-party special needs trusts from paying for family members to visit the beneficiary. Trusts with such provisions would be considered not to be established for the sole benefit of the trust beneficiary
The SSA also recently announced that family and non-family caregivers must be medically trained. This is actually a shift from SSA’s stance in earlier conversations officials had with Begley, in which the agency maintained that caregivers had to be medically trained, medically certified or have training approved by the state Medicaid agency. SSA has since dropped the “medically certified” and the “state Medicaid agency” criteria, Begley reported.
“What we don’t know is what kind of [medical] training do you need?” said Begley. “I don’t think they’ve figured out what they’re going to say yet, so they said use common sense.” He noted that his firm is trying to get all the family caregivers trained at an appropriate level.
A second recent change resulting from the Begley firm’s ongoing conversations with SSA officials concerns reimbursements of those spending money on behalf of a beneficiary. SSA now says that if the trust reimburses someone who has paid expenses on behalf of the beneficiary of the trust, that is unearned income to the beneficiary. Begley notes that this is not a “sole benefit of” issue but rather an income issue, so it could affect both first- and third-party trusts.
Begley offered the example of the mother of a 26-year-old beneficiary buying $400 worth of clothing for him on her own credit card. Under SSA’s new interpretation, when the trust pays Mom back, that’s unearned income to the beneficiary that could reduce his SSI payments dollar for dollar.
A way to get around the problem, Begley said, is to have the trust pay the credit card issuer directly rather than having Mom pay the credit card bill and then be reimbursed by the trust. SSA says that will work, Begley said.
The recent changes appear to be driven by financial pressure at SSA due to budgetary constraints, but Begley noted that practitioners are starting to talk about sitting down with SSA officials to explain how these changes affect clients in the real world.
Subscribe to the Knowledge Bank.
