What role do supplemental needs trusts play in Medicaid planning?
Medicaid planning for individuals with disabilities often involves careful financial structuring to maintain eligibility for benefits.
Supplemental Needs Trusts (SNTs) offer an important tool for protecting assets while ensuring continued access to Medicaid.
Preserving Medicaid eligibility
Medicaid has strict income and asset limits. Holding funds in a Supplemental Needs Trust allows individuals with disabilities to keep assets without exceeding Medicaid’s thresholds. The trust ensures these funds do not count as part of the individual’s resources, preserving eligibility for vital health care benefits.
Enhancing quality of life
Funds in an SNT can cover expenses not provided by Medicaid, such as transportation, education, or recreational activities. These payments improve the individual’s quality of life without jeopardizing their eligibility for essential medical services.
Types of supplemental needs trusts
Massachusetts law recognizes two primary types of SNTs: first-party and third-party trusts. A first-party trust uses the individual’s own funds, such as a personal injury settlement or inheritance, and must include a Medicaid payback provision. Third-party trusts are funded by someone else, like a parent or grandparent, and do not require repayment to Medicaid.
Providing long-term stability
An SNT allows families to plan for a loved one’s future by ensuring financial resources are available to meet their needs. The trust remains intact regardless of changes in the beneficiary’s life circumstances, offering long-term support and security.
Supporting independence and well-being
Supplemental Needs Trusts play a key role in Medicaid planning by protecting assets and enhancing the lives of individuals with disabilities. Properly using an SNT helps ensure stability and access to resources that promote independence and well-being.
