SSI, Medicare, Maine Care Questions
Is there a connection between public benefits, such as SSI and Medicaid (called Maine Care in Maine), and income or assets owned?
If I give my child with a disability money while I am alive or under my Will after I die, is it going to cause problems with my child's SSI or Medicaid coverage?
Some parents who are aware of this problem do not leave an inheritance to their child with a disability. Instead, they give the child’s share to a brother, sister or other family member with an informal understanding that it will be used to benefit the disabled child. Unfortunately, the assets intended to benefit the disabled child might not be used for that purpose. For example, if the family member who receives the disabled child’s share should become divorced or dies early or goes into bankruptcy, the funds intended to be used for the disabled child might be lost. Even if such terrible things do not occur, there is also the possibility that the family member who holds the funds might not know about the eligibility requirements for SSI and Medicaid and might mistakenly disqualify the disabled child for SSI and Medicaid in the course of giving the child too much money or paying for services or goods for the child.
What services are not provided by public benefit programs?
How can I provide my child with some money for financial security and not jeopardize his SSI or Medicaid benefits?
Can I establish an account with the Maine Trust for People with Disabilities if my child currently is too young to qualify for SSI or Medicaid?
An account in the Maine Trust for People with Disabilities can be established for someone who is not currently receiving SSI or Medicaid, but who eventually may need to qualify for those programs in the future. For example, sometimes the needs of a disabled child may be taken care of by parents in their home so that no governmental assistance is currently needed. However, after the parents die or go to a nursing home, the disabled child might have to qualify for SSI or Medicaid to replace the services the parents were providing. An account in the Maine Trust for People with Disabilities could be set up for the disabled child now with the anticipation that it would eventually be needed.
What are the gift tax and estate tax consequences to me if I set up an account with the Maine Trust for People with Disabilities for my child with a disability and fund the account during my lifetime?
Other than establishing an account in the MTPD, what are my options for setting up a Special Needs Trust for my child with a disability?
Since 2005, the Maine Trust for People with Disabilities has been an alternative way to establish and fund a special needs account for a disabled child. The Maine Trust for People with Disabilities provides a wide range of services that meets the needs of the vast majority of families who have a disabled member. Unlike an individual Special Needs Trust, the Maine Trust for People with Disabilities is managed by a non-profit corporation dedicated to the running of the Trust. The Maine Trust for People with Disabilities is structured to provide the lowest possible overall cost for opening and managing a special needs account.
What are the primary advantages of opening an account with the Maine Trust for People with Disabilities as opposed to setting up an individual Special Needs Trust?
Lower Cost. The cost of establishing and annually maintaining an account with the Maine Trust for People with Disabilities generally is less expensive than setting up an individual Special Needs Trust. A significant reason for the lower cost is that the Maine Trust for People with Disabilities is an all-volunteer organization that does not pay a salary to any member of the organization. The lower cost of having an account with the Maine Trust for People with Disabilities means that there will be more assets available to pay for the supplemental needs of the disabled beneficiary.
Knowledge of Government Programs. An individual or bank who serves as the trustee of an individual Special Needs Trust must have a detailed knowledge of the eligibility requirements of the government programs that disabled beneficiaries rely on for support, especially SSI and Medicaid. Individuals and banks that serve as trustees of individual Special Needs Trusts often lack this knowledge, but it is part of the ordinary routine of the Maine Trust for People with Disabilities.
Continuity. The Maine Trust for People with Disabilities is sponsored and run by a Maine non-profit corporation, known as the “Maine Trust for People with Disabilities, Inc.” As a corporation, it is able to remain in existence for an indefinite period of time. Similarly, the formal trustee of the Maine Trust for People with Disabilities is Norway Savings Bank, which serves as a directed trustee and also can remain in existence for an indefinite period of time. By comparison, when an individual Special Needs Trust is established and has an individual serve as the trustee, it is possible that the individual trustee may die, become disabled or resign as trustee before the disabled beneficiary has died.
If I am an individual with a disability who has received an inheritance, insurance settlement, lottery winnings, or other funds, can I establish an account in the MTPD so that I can continue to qualify for SSI and Medicaid?
What are the key requirements to qualify to open an account with the Maine Trust for People with Disabilities?
- The beneficiary of the account must currently qualify for, or in the future must be likely to qualify for, means-test benefits under a governmental program, such as SSI or MaineCare (i.e., Maine’s version of the Medicaid program).
- The beneficiary must have a medical diagnosis of an intellectual disability or traumatic head injury.
- The beneficiary must reside in the State of Maine.
- The new account must be funded (either during life or on death) with a minimum of $10,000.
How do I open an account in the Maine Trust for People with Disabilities?
The first type of account is known as an “MTPD Trust #1” account. This type of account can be funded with the assets owned by any person except the individual with disabilities. For example, parents and grandparents can fund an MTPD Trust #1 account for a child or grandchild.
The second type of account is known as an “MTPD Trust #2” account. This type of account can be funded only with assets that are owned by the individual with disabilities who will be the beneficiary of the account. For example, an individual with disabilities who has received an inheritance or a lawsuit settlement can fund an MTPD Trust #2 account with such assets.
Both an MTPD Trust #1 account and an MPTD Trust #2 account are established by completing an application known as a “Joinder Agreement” and submitting it for review and acceptance to the Maine Trust for People with Disabilities. Copies of the Joinder Agreement can be found at the following link: http://www.themainetrust.com/Setting-Up.html.
How do I fund an account established with the Maine Trust for People with Disabilities?
“MTPD Trust #1” account: There are several ways to fund an “MTPD Trust #1” account.
- Funding During Life. Parents and others can fund the account while they are living. For example, a person who establishes an account can fund the account while he or she is still living by making gifts to the Trust account.
- Funding on Death. Parents and others can fund the account on death, such as under a Last Will and Testament or by naming the account as the designated beneficiary of a life insurance policy, annuity, IRA or 401(k) plan.
- Combination of Lifetime and Death Gifts. Parents and others can fund an account both during their lives and on their deaths. For example, parents could set up an account for a disabled child and fund it during their lives. In addition, the parents could make gifts to the account under their Last Wills and Testaments.
“MTPD Trust #2” account: Since an MTPD account can be funded only with assets owned by the disabled individual, this type of account generally is funded soon after the account is initially established. Typically such accounts are funded with assets that the disabled individual receives as an inheritance or as an insurance settlement.