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Financial Planning for Disabled Individuals

Financial planning for disabled children and adults can be especially complicated when considering the high costs of medical coverage and services.  A prudent planner will be able to take advantage of public assistance programs designed to support disabled individuals.  A disabled individual in need of public benefits through needs-based programs could benefit from placing assets in a Special Needs Trust (SNT). 

An SNT is a type of trust established to hold the assets of a disabled adult or child, without interfering with their eligibility for government benefits, such as Supplemental Security Income (SSI) and Medi-Cal.  These government programs have asset and income limits for determining eligibility.  However, assets held in a qualifying SNT will be excluded when determining eligibility for the beneficiary.

Requirements for a trust to qualify as an SNT are established by Federal Law.  The trust must contain the assets of an individual who is under the age of 65 and considered disabled for SSI purposes; there are no limitations as to what types of assets can be used to fund the trust.  The trust must be established for the benefit of such individual through the actions of the individual, a parent, a grandparent, a legal guardian, or by court order.  Finally, the trust must have a Medi-Cal reimbursement clause which provides that the state will be reimbursed with assets remaining in the trust upon the death of the individual up to an amount equal to the medical assistance paid on behalf of the individual under a state Medicaid plan.[1]

As of July 2022, the state of California loosened its eligibility requirements for Medi-Cal by raising the asset limits.  An individual can have up to $130,000 in assets while a couple can have up to $195,000 in assets.  The asset limits for SSI remain at $2,000 for an individual and $3,000 for a couple.  However, both programs continue to exclude one home (used as a primary residence), one vehicle, household and personal items, a life insurance policy up to $1,500, certain prepaid burial plans, and assets held in a qualifying SNT.[2] 

Both SSI and Medi-Cal also have monthly income rules to determine eligibility.  Different types of income will dictate income limits and the affects on eligibility.  Disbursements from a SNT are not always counted as income for eligibility purposes.  Disbursements used to pay for goods and services not being provided by a public assistance program will not be considered income.  To maximize available benefits, a trustee should ensure disbursements are utilized to supplement the benefits provided by government programs.

Care should always be taken when making long-term financial decisions, but those decisions can be particularly more complicated for a disabled individual.  The best approach is to consider all available resources and review current eligibility rules.  For assistance with these decisions and/or establishing a SNT, contact the attorneys at Berliner Cohen, LLP.


[2] See Medi-Cal Programs – Qualifications at a Glance – 2023 (Medi-Cal (for People with Medicare) - California Health Advocates (