Trustees: Be careful on how you spend special needs trust funds

If this post caught your eye then chances are good that you have been appointed to the position of trustee for a special needs trust.  And, if that is the case, then you probably know something of the repercussions that could be involved if you spend Medicaid special needs trust funds inappropriately.  When trustees use funds held in a Medicaid special needs trust for expenses that are not approved by Medicaid, it could cause the trust beneficiary to be disqualified from his or her Medicaid/ALTCS benefit.  And, in many instances, this is one of the worst things that could happen to an individual who depends on the benefit for his or her health care.

The first thing that a trustee for a Medicaid special needs trust should understand is that funds held in the trust are set aside for certain uses, and certain uses only.  So long as the funds are only used on approved expenses, they are not counted for purposes of determining the trust beneficiary’s Medicaid/ALTCS eligibility.  If the funds are used inappropriately, however, it is possible that Medicaid will count the assets held in trust as available to the beneficiary, thereby disqualifying him or her from the benefit.

In general, funds held in a Medicaid special needs trust can be used to supplement the care that the trust beneficiary is receiving from Medicaid/ALTCS.  Allowable expenses include medical services not covered by public benefits, personal care, clothing, home repair and certain types of entertainment.  The cardinal rule is that trustees can never give Medicaid special needs trust funds outright to trust beneficiaries.  Trustees that have questions about appropriate expenditures of special needs trust funds should always consult with a special needs trust attorney before making any questionable purchases for a trust beneficiary with special needs trust funds.

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