What Is the Role of a Special Needs Trust or Supplemental Needs Trust in Maryland Medicaid Planning?

What Is the Role of a Spe…

When an elder requires long-term care, Medicaid may provide financial benefits to help pay the high cost. In some cases, it is necessary to use special strategies and tools to be eligible for Medicaid benefits and preserve assets to the maximum extent possible. In Maryland, one tool that may help an elder become eligible for Medicaid benefits is a Special Needs Trust or Supplemental Needs Trust.

At The Law Office of Henry Nash in Rockville, Maryland, our practice includes elder law, Medicaid planning, and estate planning. We often use a Special Needs or Supplemental Needs Trust to assist a disabled elder in meeting Medicaid eligibility requirements.

Medicaid Planning in Maryland

Medicaid is a federal and state program that provides a range of financial benefits, including payment of long-term care costs for elders who meet the strict eligibility criteria. Medicaid rules and regulations differ from state to state — and so does the name of the program. In Maryland, the Medicaid program is called Medical Assistance. The terms Medicaid and Medical Assistance are interchangeable in Maryland.

Medicaid planning is part of long-term care planning. This focused planning preserves an elder’s assets to the greatest extent possible, while using available strategies and tools to meet Medicaid income and asset eligibility requirements.

In appropriate circumstances, Maryland Medicaid planning may include using a Special Needs Trust or Supplemental Needs Trust to help a disabled elder qualify for Medicaid benefits. When the trust meets legal requirements, it can enable the elder to become eligible for Medicaid benefits in situations where otherwise they would not meet the strict eligibility requirements.

What Is a Special Needs or Supplemental Needs Trust?

The terms Special Needs Trusts and Supplemental Needs Trusts are used interchangeably. They describe a specific type of trust, created pursuant to complex federal and state legal requirements.

The State of Maryland specifically declares in legislation that it is state policy “to encourage the use of a special needs or supplemental needs trust by an individual of any age with disabilities to preserve funds to provide for the needs of the individual not met by public benefits and to enhance quality of life.” As such, these types of trusts are an essential part of Medicaid planning for disabled elders in Maryland.

To use a Special Needs Trust or and Supplemental Needs Trust as part of Medicaid planning, a senior needs to be disabled under Maryland law. The statute defines that term as follows:

"Disabled" means the inability to perform any substantial gainful activity by reason of a 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 12 months.

A properly drafted Special Needs or Supplemental Needs Trust allows a disabled elder to receive benefits from the trust in addition to Medicaid benefits. The goal of the trust is to maximize benefits and preserve assets, while maintaining Medicaid eligibility. The trust can pay for care not provided by public benefits, such as:

  • Personal items and services
  • Housekeeping
  • Telephone and cable service
  • Repairs and maintenance
  • Dental care, eye glasses, hearing aids
  • Elective surgery
  • Private room in a nursing home
  • Travel and transportation
  • Funeral and burial expenses
  • Legal expenses

By making these additional benefits available, a Special Needs or Supplemental Needs Trust preserves the disabled elder’s assets, while also greatly enhancing his or her quality of life. In addition, creating the trust effectively removes the assets from the elder’s countable Medicaid assets, which enables the elder to meet Medicaid eligibility requirements.

How To Establish a Supplemental Needs Trust or Special Needs Trust

There are different types of Special Needs or Supplemental Needs Trusts. For a detailed description of the types, please refer to our article, Special Needs Trusts for the Benefit of Disabled Persons.

Determining the appropriate type of trust is a task that requires special knowledge and experience. The trust must meet very specific legal criteria. These trusts also are subject to detailed administrative and reporting requirements.

A Special Needs or Supplemental Needs Trust should be created as part of comprehensive Medicaid planning and estate planning, not as an isolated action on its own. Medicaid rules and regulations are extremely complex.

No matter how you decide to proceed, you should never create any kind of trust, including a Special Needs or Supplemental Needs Trust, using an online service or a form that someone gives you. Signing any legal document without consulting with an experienced attorney is a serious mistake. If you think this type of trust can help you or your loved one, it is essential to talk with an experienced Medicaid planning attorney.

Regardless of whether you anticipate needing long-term care in the future, talking with an elder law and estate planning attorney is an essential step to take as you grow older. A careful plan can protect you during your lifetime, preserve your assets, and provide for your family after your death.

Talk With an Experienced Rockville, Maryland Medicaid Planning Attorney

Attorney Henry Nash has extensive experience helping elders and their families work through the complex laws and concerns inherent in all types of elder law matters, including estate planning and Medicaid planning.

At The Law Office of Henry Nash, we work with clients in Rockville, throughout Montgomery County, and elsewhere in Maryland. We also assist out-of-state clients who have loved ones residing in the state. If you have any questions or concerns about any issues relating to elder law, we welcome you to call us at (301) 998-6111 or contact us through our online form.