US Code on First-Party Trusts

Self-Settled SNT Under 42 U.S.C. Section 1396p(d)(4)(A)

 Federal statutory requirements for a self-settled, first-party “(d)(4)(A)” SNT:

•  Specifies permissible Settlors (see infra at page 16)

•  Beneficiary is “disabled” under 42 U.S.C. Section 1382c(a)(3)(A), i.e. “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months” (or if the Beneficiary is a child, has such an impairment which results in “marked and severe functional limitations”)

•  SNT is irrevocable and for the sole benefit of the Beneficiary

•  Beneficiary is under age 65 when SNT is established and funded, i.e. no additions are permitted after age 65

•  Upon the death ofthe Beneficiary, medical assistance providers (i.e. Medicaid, but not SSI) will be reimbursed up to the total amount of medical assistance benefits paid on behalf of the Beneficiary during his lifetime (thus also known as a “pay-backtrust”)

•  Courts have been split as to the scope of the “total amount” concept. See e.g. In the Matter of Ruben N. v. Elizabeth T. (N.Y. App. Div., 2d Dept., 55 A.D.3d 257, September 16, 2008), which initially held that Medicaid should be paid back only for assistance paid after the SNT was established. In the Matter of Abraham XX, Deceased v. State of New York (11 N.Y.3d 429 (2008) next held that Medicaid should be paid back for assistance paid even before the SNT was established. Subsequently, the earlier opinion and order in Ruben N. were recalled and vacated, citing Abraham XX, allowing the State to recover the cost of care provided over the course of the plaintiffs entire lifetime. In the Matter of RubenN. v. Elizabeth T., N.Y. App. Div., 2d Dep’t., No. 2006-05776, 2010 N.Y. Slip Ope 02152, March 16, 2010.

•  New POMS provisions issued after the first two of the decisions noted above take the position that Medicaid’s pay-back “cannot be limited to the period after establishment of the trust.” See POMS SI 01120.203.B.l.h.

•  Case law requirement: In the context of a personal injury claim that yields a recovery for the Beneficiary of a (d)(4)(A) SNT, before the SNT may be funded, Medicaid must first be reimbursed for those benefits paid prior to the establishment of the SNT for medical care necessitated by the wrongful acts that generated the recovery. This “pre-trust lien” may be satisfied only from that portion ofthe recovery that is specifically allocable to past medical expenses and costs. See Arkansas Dep’t of Health & Human Services v. Ahlborn, 547 u. S. 268 (2006).

•  Transfers of a Beneficiary’s assets to a (d)(4)(A) SNT are not penalized for purposes of means-tested benefits. See 42 U.S.C. Sections 1396p(c)(2)(B)(IV) and 1382b(c)(1)(C)(ii)(iv).

•  Assets held in a (d)(4)(A) SNT are not deemed to be available resources to the Beneficiaryfor purposes of means-tested benefits. See POMS SI 00120.200 and 01120.203, and Section 2346 ofthe Georgia Medicaid Manual in the Appendix.