Special needs trusts are designed to allow individuals with special needs to qualify or maintain “needs-based” government benefits such as Medicaid and supplemental security income.
In general, eligibility for these programs requires that a disabled recipient have less than $2000.00 “countable assets” and limited income. When properly designed, assets held in special needs trust will not be considered “countable” for Medicaid and SSI eligibility.
However, those assets held in the trust can still be used to supplement needs-based government benefits and provide many of the good things in life such as electronics, companionship, vacations, hair care, dental, education, etc.
In order to qualify for need-based government programs the individual needs to be over the age of 65, blind, or disabled. To be considered disabled for purposes of Medicaid and SSI, a person must be unable to: “engage in 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” (20 CFR section 416.905).
There are two tests that are used to determine whether someone may qualify for Medicaid or SSI, they are an income test and an asset test. The numbers and qualifications under both of these tests change periodically, so I won’t include those criteria.
Needless to say, it is currently an asset base of less than $2,000.00 with the exception of household goods, tools used for work, a certain amount of home-equity, funds set aside for a funeral, and personal effects.
In the income test, disabled individuals cannot make more than $1,170.00 a month and blind individuals cannot make more than $1950 per month. Eligibility for Medicaid and SSI does vary from state to state.