We recently were asked whether there were any special protections in federal or state public benefits law that would prevent Special Needs Trust assets and income distributions from them, from being counted in the disabled beneficiary’s ability to pay alimony and child support to his wife and children.

Our response is found here.

 The Chicago Regional Chief Counsel Precedent issued in May, 2010, restricts the use of “Retained Funds” after the member/beneficiary has died.

This decision represents “current policy, albeit unwritten” according to the head of the SSA office that drafts POMS in conversation on March 17, 2011. A similar decision was issued in New Jersey last summer. Another was applied by the San Francisco Regional Office against a pooled trust in Arizona. However, contemporaneously, there had been a proposed POMS on this subject last summer that was not issued – yet. Accordingly, SSA Regional Offices have been advised by the national office to consult the national office, and not apply this “precedent” below without consultation. However, in March, 2011, the San Francisco SSA Regional Office applied the policy to an Arizona trust. 

Thus, the safest route is to draft pooled trusts to comply with the standards on retained trusts delineated in the following opinion. Basically, the analysis indicates that the national office believes that the retained funds belong to the pooled trust (to be used for other members of the pooled trust), and do not belong to the sponsoring non-profit agency. 

Thus, the common practice of using retained funds to make “grants” to other agencies or the courts for the benefit of “disabled persons” in general, is not allowed under SSA’s view of the difference between d4A individual SNTs and d4C pooled SNTs].

Pooled Special Needs Trusts in three states – Minnesota, Arizona, and New Jersey – in three different regions of the country, have had their pooled trust disqualified based on the same analysis as in the Chicago Regional Office’s “Regional Chief Counsel Precedent” below. Note that in the body of the report, we find the language,

“However, we have recently received guidance from the Office of Income Security Programs (OISP) that funds retained by a pooled trust may be used only for the benefit of beneficiaries with accounts in the pooled trust. This means that the use of retained trust assets to add new trust beneficiaries (section 7.3B) and to aid disabled individuals generally (section 7.3C, D) are not acceptable under POMS SI 01120.203(B)(2)(g). Second, section 7.8 of the Trust appears to permit the Trust to avoid reimbursing Medicaid if the remainder beneficiaries agree to forego any distributions from the Trust. This provision is inconsistent with POMS SI 01120.203(B)(2)(g), which requires that, aside from certain allowable expenses, any amounts in the IBA not retained by the Trust must be used to reimburse the State for Medicaid.”

The language of the decision and the conversations with the national office in Baltimore are consistent. This is a problem to be aware of.

So what’s one to do? First, consider amending the language of the pooled trust so that it is consistent with the principles in this RCC Precedent, or at a minimum, is silent on what the pooled trust intends to do with any retained assets. There is nothing in the statute or existing POMS that requires that there be a statement that describes what happens to retained assets. There is nothing in the national POMS 8-step Action Checklist for SSA staff reviewing pooled SNTs that would lead the staff to question the retained asset provisions in a pooled trust.

Secondly, or perhaps, most importantly, do not let the time deadlines to appeal adverse decisions pass. The SSA procedure here is that some client member/beneficiary of the pooled trust will receive a Notice of Planned Action and then a Determination that the funds in their pooled trust account are “countable resources” and SSA is terminating the client’s SSI benefits effective “X” date, including retroactively back “X” number of years. The client has to act quickly and file a “Request for Reconsideration” checking the box in the middle of the form that indicates that they want a Formal Conference. The time limit is 65 days from the date of the SSA determination. If the client appeals within 10 days, SSA may continue their benefits pending the Reconsideration determination. If the Reconsideration is denied, the client can file a Request for Hearing before an SSA Administrative Law Judge – again, within the time limits stated above.

The “guidance” from national SSA is not based, in my opinion, on the d4C pooled trust statutory language. Congress did not limit how the retained funds could be spent, and did not clearly define whether the funds belonged to the sponsoring non-profit, or must stay in the trust for the benefit of other current members of the pooled trust. The argument that SSA is acting outside its authority is not a slam-dunk, however, because other parts of the Social Security Act give the Commissioner of Social Security extremely broad powers to carry out the purposes of the Act without specific or detailed direction from Congress.

If the ALJ hearing is lost, there is an appeal on the record to the Appeals Council in Falls Church, Virginia, and if denied there, to the U.S. District Court, Court of Appeals and the Supreme Court.

Our office would be interested in representing claimants on this issue anywhere in the country, or in assisting local counsel in other states who wish to challenge SSA’s new “guidance” on retained funds. Contact us at 727-330-7895 or David@LillesandLaw.com or Jessica@LillesandLaw.com.

David and Jessica Lillesand

There may be an answer for significantly disabled people who have been, up until now, unable to purchase private health insurance.  Due to recent health care legislation passed by Congress, as of August 1, 2010, the new high-risk pool of individuals who have pre-existing conditions can purchase health insurance.  

In 2014, the main program kicks in, entitled the Health Insurance Exchange – in which these people will participate with all healthy people. 

However, as a stopgap for persons with disabilities or other pre-existing conditions, the legislation provided that by April 30th, 2010 the state governors had to elect to either run a no-pre-existing condition health insurance program themselves, or elect to have the federal government do it via the U.S. Department of Health and Human Services.  Governor Charlie Crist advised that Florida would opt for the federal plan, and not administer this by the state-run Department of Children and Families. 


The program set to begin on August 1, 2010 is called the “Pre-existing Condition Insurance Program” (PCIP).  It requires that the person have pre-existing conditions that caused him or her to be rejected by at least one insurance company, and have been without health insurance for 6 months. 


To be eligible for this coverage:

  1. You must be a citizen or national of the United States or lawfully present in the United States. You must provide a copy of a document that confirms your citizenship, such as a copy of your U.S. Passport, a copy of your birth certificate, a copy of your certificate of citizenship, or a copy of your naturalization certificate. By August 15th, 2010, we will have a system in place to match your information with the records of another Federal agency and will no longer require you to document your citizenship. We thank you for your patience.
  2. You must have been uninsured for at least the last six months.
  3. You must have had a problem getting insurance due to a pre-existing condition. For more details, download the Application Form to the right.
  4. For children under age 19 or persons who live in Massachusetts only: You must have been quoted a premium of 200% or more of the Pre-Existing Condition Insurance Plan premium for your state. To find out if the premium you were offered is twice as much as the Pre-Existing Condition Insurance Plan premium go to “Find Your State”. Premium rates will not be available until July 15, so if you send an application before rates are available, that determination will be made for you.



The application form is available ONLINE, and after August 1st, a person can actually apply online and not have to download and submit the form by mail.


The cost in Florida for someone over age 55 would be $773 per month.  It may seem high, but when compared to private health insurance for healthy individuals of the same age, it is actually comparable or lower.    And, of course, uninsured people can use up most of their resources paying fee-for-service rates if their medical costs are high.  Medical debt is the number one reason for bankruptcy in the United States.


Here’s some more info from the PCIP website:


Pre-Existing Condition Insurance Plan (PCIP): Florida

PCIP will cover a broad range of health benefits, including primary and specialty care, hospital care, and prescription drugs. All covered benefits are available for you, beginning on your coverage effective date, even if it’s to treat a pre-existing condition – there are no waiting periods.

The monthly premiums for your state are:











In addition to your monthly premium, you will pay other costs. Covered in-network services are subject to a $2,500 annual deductible (except for preventive services) before the plan starts to pay benefits. Once you’ve met the deductible, you will pay a $25 copayment for doctor visits, $4 to $30 for most drugs at a retail pharmacy for the first two prescriptions and 50% of the cost of the prescriptions after that. If you use mail order, you will pay $10 for generic drugs or $75 for brand drugs on the plan formulary for a 90 day supply. You will pay 20% of the cost of any other covered benefits received from a network provider. Your out-of-pocket costs cannot be more than $5,950 per year. However, your out-of-pocket costs may be higher if you go outside the plan’s network. See below for a benefits summary.

If you apply for PCIP coverage, you will be billed for the premium once your application is approved. You will need to send in your payment in order for your coverage to be effective. Please do not send in the premium before you are billed.



Here’s some more from the website – Questions and Answers:


Questions and Answers

What is a pre-existing condition?

A pre-existing condition is a condition, disability or illness (either physical or mental) that you have before you enrolled in a health plan.


Will the Pre-Existing Condition Insurance Plan (PCIP) be available in every state?

Yes, every state will have a plan that offers comprehensive health coverage for uninsured Americans with pre-existing conditions. The program name, start date, and other plan details may vary depending on which state you live in and whether the program is run by the state or the Department of Health and Human Services. Check out the State Plans page to learn more about how the Pre-Existing Condition Insurance Plan works in your state.


When will my coverage be effective?

If you live in a state where the U.S. Department of Health and Human Services is running the program, you can apply and enroll starting July 1, 2010. Coverage will begin August 1 if you apply and are approved for enrollment by July 15th. Generally, a completed application received on or before the 15th of the month will go into effect on the first day of the next month. A completed application received after the 15th of the month will go into effect on the first day of the following month. 

In all other states, coverage should be available by the end of the summer but the exact start date will vary by state. Check out the State Plans page to learn more about when the Pre-Existing Condition Insurance Plan begins in your state.


May I apply for the Pre-Existing Condition Insurance Plan if I have existing health coverage?

You are not eligible unless you have been without health coverage for at least the last six months. For example, if you have Medicare or TRICARE, you shouldn’t apply. If you are uninsured and have been told that you may be eligible for other coverage programs like Medicaid and the Children’s Health Insurance Program, you should check out those programs first, as they may better meet your needs. If you have job-based coverage, or individual insurance coverage, you aren’t eligible to apply.


May I apply for the Pre-Existing Condition Insurance Plan if I have COBRA or other continuation of coverage?

No, even if your COBRA or other continuation of coverage is about to run out, you won’t be eligible until you have been uninsured for at least the last six months, and meet other eligibility criteria.


What health care providers are in the network?

The Pre-Existing Condition Insurance Plan will have provider networks that include a full range of services and specialists.


What do I do if I can’t afford these premiums?

If you have limited income and resources, you may be eligible for the Medicaid program in your state. If you are seeking insurance coverage for your child, go to www.insurekidsnow.gov to learn more about children’s health insurance in your state.



Finally, we noted that Florida rates are around 40% higher than comparable programs in other states.  This may benefit disabled persons considering a move to another state.

Congratulations and a  big thank you to our Florida Congressmen, Ander Crenshaw and Kendrick Meek, who have introduced legislation to allow families to plan for their loved ones with some significant tax saings.   Information on the bill follows.  To see the bill in its entirety, click on H.R. 1205.

Disability Savings Accounts

The bipartisan Achieving a Better Life Experience Act of 2009 (ABLE Act), H.R.1205/S. 493, was introduced in both the House and Senate on February 26.  The bills would allow individuals and families to establish special accounts for meeting the future needs of children and adults with disabilities.  Funds in the accounts and expenditures which meet the requirements of the bills would not affect the individuals’ eligibility for federal benefits.  Using these accounts, parents would be able to save funds for a child’s future in a manner similar to the special "529 accounts" currently used to save for a child’s future educational expenses.  The House bill was introduced by Rep. Ander Crenshaw (R-FL) along with Representatives Patrick Kennedy (D-RI), Cathy McMorris Rodgers (R-WA), and Kendrick Meek (D-FL).  The Senate bill was introduced by Senator Robert Casey, Jr. (D-PA) along with Senators Sam Brownback (R-KS), Richard Burr (R-NC), Christopher Dodd (D-CT), Orrin Hatch (R-UT), and Edward Kennedy (D-MA).  The bills were referred to the House Ways and Means and the Energy and Commerce Committees and to the Senate Finance Committee.  The Arc and UCP worked with the sponsors and with other supporting organizations on development of the bills.

Special Needs Trusts in Florida and around the nation will be impacted by the new POMS on Special Needs Trusts issued in January.  The March meeting of the Academy of Special Needs Planners will have top experts discussing the changes, and other important information on Special Needs Trusts.  If you are an attorney, plan to attend.  You can register at the Academy’s website, http://www.specialneedsplanners.com/

The Social Security Administration published new POMS, the staff operating manual, on Special Needs Trusts.  As Chair fo the Special Needs Trust Committee of the Florida Bar’s Elder Law Section, I have set a meeting to review the new POMS in detail for March 19th, in Tampa.

Here’s a "CLEAN COPY" of the new 2009 POMS on Trusts.

I also prepared a word-by-word analysis of the 2009 changes from the original 2001 POMS.  Deletions are indicated by striking through the word, and additions by underlining.  See "THE CHANGES HERE."  See also the  5 PAGE MEMORANDUM that highlights the changes.

Generally, the POMS are claimant friendly, although attorneys who do not follow them closely, can cause some significant problems for their clients.  The new POMS specifically approve of child support Special Needs Trusts and Alimony Special Needs Trusts, which will go a long way in ehlping to resolve family law disputes where continued health insurance is an issue.

The Social Security Administration (SSA)  has provided attorneys and the general public with very useful information on their analysis of Special Needs Trusts – are you eligible or ineligible if you have such a trust.  There are a lot of ways that attorneys can inadvertently cause a Special Needs Trust to be found in violation of the many SSI resource rules.  While Special Needs Trusts are perfectly legal and will keep SSI benefits for disabled persons, simple drafting errors by attorneys can result in loss of SSI and Medicaid health insurance.

Fortunately, SSA is trying to help clients stay eligible by educating the public and attorneys.

Unfortunately, although the Regional Chief Counsel opinion letters, called "Precedents" in SSI-speak, are availabe as a category on the Internet in the POMS, they are poorly organized and not indexed.

The good news:  attached is a LENGTHY ANALSYS OF THE RCC OPINION LETTERS issued between 2006 through 2008, with a table that summarizes the issues and the holding, and an 18 page explanatory text of the "Top Ten Things Learned by Reviewing RCC Opinion Letters" and a 6 page chart, as well as the RCC opinion letters themselves.  The total package is 176 pages. 

A lot of people in general, and professionals (attorneys, CPAs, financial planners, social workers, and others) confuse Social Security Disability Benefits (SSDI) and SSI Disability Benefits.  Also, receipt of SSDI triggers Medicare health insurance, and SSI triggers Medicaid.

It is important to understand the differences.  Social Security Disability Insurance benefits can be paid to millionaires.

SSI disability benefits are paid to individuals who are disabled, but also meet two financial eligibility tests, less than $2,000 of countable resources (assets) and low monthly income.  Although the $2,000 limitation seems harsh, SSI does not count a home of any value, one car of any value, the contents of the home, personal effects such as clothing and jewelry, and extra cash held in a Special Needs Trust.

To aid in seeing these relationships, we created a Matrix with updated 2009 eligibility figures.

We’ve updated our Q and A BOOKLET with the most common questions and answers on Special Needs Trusts as a method to legally shelter, with governmental approval, funds from personal injury awards and from inheritances.

Email us at Lillesand@bellsouth.net if you have additional questions or need more general information.