The Effect on SSI If an SNT Pays for the Beneficiary’s Caregivers or Companions (Including Family Members)

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<img alt="The Effect on SSI If an SNT Pays for the Beneficiary’s Caregivers or Companions (Including Family Members)" src="https://cdn.elderlawanswers.com/common/uploads/photos/17899-Mother and daughter.jpg" style="float:right; height:138px; margin-left:10px; margin-right:10px; width:200px" />Special needs trusts are designed to improve the quality of life of the beneficiary while preserving his or her eligibility for Supplemental Security Income (SSI) and other means-tested benefits. As the funds held in an SNT are not counted as a resource in determining SSI eligibility, the beneficiary may, in the discretion of the trustee, use the funds to pay for certain expenses and maintain SSI benefits. Caregiver and companion services are often critical to a beneficiary’s long-term well-being and can constitute a significant expense. For many years, the Social Security Program Operations Manual System (POMS) did not expressly authorize the payment of such expenses from an SNT. Therefore, the Social Security Administration (SSA) was skeptical as to whether such payments were valid or should be counted as a resource. Further, family members often provided caregiver or companion services and were in the best position to understand and meet the daily needs of the disabled individual. While agencies providing such services could be more expensive and less effective in rendering adequate care, SSA was skeptical of payments made to family members as possibly violative of the sole benefit rule.  The sole benefit rule was based on the SSA’s determination that a first-party SNT had to be established solely for the benefit of the beneficiary. “Sole benefit” was narrowly defined and meant that a third party (such as a family member) could not also benefit from a distribution from the SNT. If the sole benefit rule were violated, the beneficiary’s SSI eligibility could be negatively affected. While trustees could argue that such payments were permitted under one of the two exceptions to the sole benefit rule -- namely limited disbursements for third-party payments that resulted in the SNT beneficiary’s receiving goods or services (other than food or shelter) -- there was no guarantee that a particular SSA field office would agree. Thus, trustees had to proceed with caution or risk jeopardizing the beneficiary’s benefits. POMS Revision Relaxes Sole Benefit Rule In 2018, the Social Security Administration revised its rules, as set forth in the POMS regarding the establishment and administration of SNTs. See POMS SI 01120.200 – 01120.203 and POMS SI 01130.470. Many of the changes were substantive, including changes to the sole benefit rule and its corollary, the payment of companion services and caregiving expenses by family members and others. When the POMS was revised, the sole benefit rule was substantially relaxed. Now, an SNT distribution must benefit primarily (not exclusively) the beneficiary and may also benefit others collaterally. The sole benefit rule would now be violated if the third party used or benefitted disproportionally from the goods or services. Along with the relaxation of the sole benefit rule was the expansion of the third-party payment exception to include distributions for companion services and caregiving. Such distributions are now not only allowed but also include incidental expenses incurred by the companion or caregiver. In addition, in determining whether or not SNT disbursements for companion services and caregiving are appropriate, the SSA field offices are directed to limit the scope of their inquires in various areas, including the individual’s medical training or certification, evidence of a business relationship, and reasonableness of compensation. While SSA’s inquiries may now be limited in scope, “it is still a good idea to obtain a letter from the beneficiary’s physician documenting a need for a caregiver or companion … [to] provide the support needed to protect the trustee from attacks on the exercise of his or her discretion.” (Urbatsch, Kevin and Fuller, Michele, Administering the California Special Needs Trust, Bowker, 2020.) Perhaps most significant of all was the revision to the POMS expressly allowing for family members to be compensated as caregivers or companions even if they would otherwise provide such services free of charge. In fact, the POMS directs that payments for companion services and caregiving be applied uniformly no matter who is providing the service.  This is an important change with a direct impact on SNT beneficiaries because it enables family members to be compensated for their efforts without jeopardizing the beneficiary’s SSI eligibility. Equally important is the fact that the revisions to the POMS provide clarity that should, in turn, create uniformity in the SSA’s decision-making and enable trustees to perform their functions and make disbursements for caregiver and companion services with confidence for the long-term support of SNT beneficiaries.   Questions? Call us: (866) 296-5509

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The Effect on SSI If an SNT Pays for the Beneficiary’s Caregivers or Companions (Including Family Members) Special needs trusts are designed to improve the quality of life of the beneficiary while preserving his or her eligibility for Supplemental Security Income (SSI) and other means-tested benefits. As the funds held in an SNT are not counted as a resource in determining SSI eligibility, the beneficiary may, in the discretion of the trustee, use the funds to pay for certain expenses and maintain SSI benefits.

Caregiver and companion services are often critical to a beneficiary’s long-term well-being and can constitute a significant expense. For many years, the Social Security Program Operations Manual System (POMS) did not expressly authorize the payment of such expenses from an SNT. Therefore, the Social Security Administration (SSA) was skeptical as to whether such payments were valid or should be counted as a resource.

Further, family members often provided caregiver or companion services and were in the best position to understand and meet the daily needs of the disabled individual. While agencies providing such services could be more expensive and less effective in rendering adequate care, SSA was skeptical of payments made to family members as possibly violative of the sole benefit rule.

The sole benefit rule was based on the SSA’s determination that a first-party SNT had to be established solely for the benefit of the beneficiary. “Sole benefit” was narrowly defined and meant that a third party (such as a family member) could not also benefit from a distribution from the SNT. If the sole benefit rule were violated, the beneficiary’s SSI eligibility could be negatively affected.

While trustees could argue that such payments were permitted under one of the two exceptions to the sole benefit rule -- namely limited disbursements for third-party payments that resulted in the SNT beneficiary’s receiving goods or services (other than food or shelter) -- there was no guarantee that a particular SSA field office would agree. Thus, trustees had to proceed with caution or risk jeopardizing the beneficiary’s benefits.

POMS Revision Relaxes Sole Benefit Rule

In 2018, the Social Security Administration revised its rules, as set forth in the POMS regarding the establishment and administration of SNTs. See POMS SI 01120.200 – 01120.203 and POMS SI 01130.470. Many of the changes were substantive, including changes to the sole benefit rule and its corollary, the payment of companion services and caregiving expenses by family members and others.

When the POMS was revised, the sole benefit rule was substantially relaxed. Now, an SNT distribution must benefit primarily (not exclusively) the beneficiary and may also benefit others collaterally. The sole benefit rule would now be violated if the third party used or benefitted disproportionally from the goods or services.

Along with the relaxation of the sole benefit rule was the expansion of the third-party payment exception to include distributions for companion services and caregiving. Such distributions are now not only allowed but also include incidental expenses incurred by the companion or caregiver.

In addition, in determining whether or not SNT disbursements for companion services and caregiving are appropriate, the SSA field offices are directed to limit the scope of their inquires in various areas, including the individual’s medical training or certification, evidence of a business relationship, and reasonableness of compensation. While SSA’s inquiries may now be limited in scope, “it is still a good idea to obtain a letter from the beneficiary’s physician documenting a need for a caregiver or companion … [to] provide the support needed to protect the trustee from attacks on the exercise of his or her discretion.” (Urbatsch, Kevin and Fuller, Michele, Administering the California Special Needs Trust, Bowker, 2020.)

Perhaps most significant of all was the revision to the POMS expressly allowing for family members to be compensated as caregivers or companions even if they would otherwise provide such services free of charge. In fact, the POMS directs that payments for companion services and caregiving be applied uniformly no matter who is providing the service.

This is an important change with a direct impact on SNT beneficiaries because it enables family members to be compensated for their efforts without jeopardizing the beneficiary’s SSI eligibility. Equally important is the fact that the revisions to the POMS provide clarity that should, in turn, create uniformity in the SSA’s decision-making and enable trustees to perform their functions and make disbursements for caregiver and companion services with confidence for the long-term support of SNT beneficiaries.

<img alt="The Effect on SSI If an SNT Pays for the Beneficiary’s Caregivers or Companions (Including Family Members)" src="https://cdn.elderlawanswers.com/common/uploads/photos/17899-Mother and daughter.jpg" style="float:right; height:138px; margin-left:10px; margin-right:10px; width:200px" />Special needs trusts are designed to improve the quality of life of the beneficiary while preserving his or her eligibility for Supplemental Security Income (SSI) and other means-tested benefits. As the funds held in an SNT are not counted as a resource in determining SSI eligibility, the beneficiary may, in the discretion of the trustee, use the funds to pay for certain expenses and maintain SSI benefits. Caregiver and companion services are often critical to a beneficiary’s long-term well-being and can constitute a significant expense. For many years, the Social Security Program Operations Manual System (POMS) did not expressly authorize the payment of such expenses from an SNT. Therefore, the Social Security Administration (SSA) was skeptical as to whether such payments were valid or should be counted as a resource. Further, family members often provided caregiver or companion services and were in the best position to understand and meet the daily needs of the disabled individual. While agencies providing such services could be more expensive and less effective in rendering adequate care, SSA was skeptical of payments made to family members as possibly violative of the sole benefit rule.  The sole benefit rule was based on the SSA’s determination that a first-party SNT had to be established solely for the benefit of the beneficiary. “Sole benefit” was narrowly defined and meant that a third party (such as a family member) could not also benefit from a distribution from the SNT. If the sole benefit rule were violated, the beneficiary’s SSI eligibility could be negatively affected. While trustees could argue that such payments were permitted under one of the two exceptions to the sole benefit rule -- namely limited disbursements for third-party payments that resulted in the SNT beneficiary’s receiving goods or services (other than food or shelter) -- there was no guarantee that a particular SSA field office would agree. Thus, trustees had to proceed with caution or risk jeopardizing the beneficiary’s benefits. POMS Revision Relaxes Sole Benefit Rule In 2018, the Social Security Administration revised its rules, as set forth in the POMS regarding the establishment and administration of SNTs. See POMS SI 01120.200 – 01120.203 and POMS SI 01130.470. Many of the changes were substantive, including changes to the sole benefit rule and its corollary, the payment of companion services and caregiving expenses by family members and others. When the POMS was revised, the sole benefit rule was substantially relaxed. Now, an SNT distribution must benefit primarily (not exclusively) the beneficiary and may also benefit others collaterally. The sole benefit rule would now be violated if the third party used or benefitted disproportionally from the goods or services. Along with the relaxation of the sole benefit rule was the expansion of the third-party payment exception to include distributions for companion services and caregiving. Such distributions are now not only allowed but also include incidental expenses incurred by the companion or caregiver. In addition, in determining whether or not SNT disbursements for companion services and caregiving are appropriate, the SSA field offices are directed to limit the scope of their inquires in various areas, including the individual’s medical training or certification, evidence of a business relationship, and reasonableness of compensation. While SSA’s inquiries may now be limited in scope, “it is still a good idea to obtain a letter from the beneficiary’s physician documenting a need for a caregiver or companion … [to] provide the support needed to protect the trustee from attacks on the exercise of his or her discretion.” (Urbatsch, Kevin and Fuller, Michele, Administering the California Special Needs Trust, Bowker, 2020.) Perhaps most significant of all was the revision to the POMS expressly allowing for family members to be compensated as caregivers or companions even if they would otherwise provide such services free of charge. In fact, the POMS directs that payments for companion services and caregiving be applied uniformly no matter who is providing the service.  This is an important change with a direct impact on SNT beneficiaries because it enables family members to be compensated for their efforts without jeopardizing the beneficiary’s SSI eligibility. Equally important is the fact that the revisions to the POMS provide clarity that should, in turn, create uniformity in the SSA’s decision-making and enable trustees to perform their functions and make disbursements for caregiver and companion services with confidence for the long-term support of SNT beneficiaries.

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This Internet Listing Agreement (the "Agreement") is made by and between WealthCounsel, LLC, with offices located at 3 2nd Street, Ste. #501, Jersey City, New Jersey, USA, 07302, a Nevada limited liability company (the "Company") and the subscribing law firm (the "Firm"). The term "Firm" includes each individual attorney listed on the Firm's Web Page (as defined below) on the Company's Website (as defined below).

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The Effect on SSI If an SNT Pays for the Beneficiary’s Caregivers or Companions (Including Family Members)

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