Public benefits are divided into two main categories, (1) needs-based and (2) entitlement. Needs-based public benefits include Supplemental Security Income (SSI) and Medi-Cal (Medicaid), while entitlement benefits include Social Security Disability Insurance (SSDI) and Medicare.
SSI is a benefit program available to low-income individuals who are disabled, blind, or elderly and have limited income and few assets. SSI eligibility rules form the basis for most other government program rules, and so they become the central focus for much special needs trust planning and administration.
Medi-Cal is available to those who meet financial eligibility requirements rather than being based on the age of recipient (such as for Medicare), and it covers all necessary medical care.
SSI and Medi-Cal planning consists of using the rules of the Social Security Administration and the California Department of Health Care Services to create a future plan which allows individuals to maximize their benefits by staying within available asset limits. This can be accomplished by utilizing a Special Needs Trust (SNT) or transferring, re-titling, and spending down assets.
Assets held in an SNT are not counted as the public benefit recipient’s assets for eligibility purposes and thus preserve eligibility. However, even when preservation of public benefits is not of primary importance, it may still be prudent to prepare and fund an SNT. Medicare does not pay for all types of medical care. Sometimes, traditional Medi-Cal will be needed right away or is expected in the future, so planning with an SNT would still be needed. Moreover, an SNT is a fully discretionary spendthrift trust.
This means that assets are placed in other people’s hands to be managed. This can be of great comfort to the family of a person with a disability who may be susceptible to influence by others or may not be able to manage his or her own inheritance.
* The information presented on this website is general in nature and does not constitute legal advice. You should consult an attorney for advice on your specific situation