One of the most important notification requirements is for beneficiaries to tell the SSA if they move. The SSA needs to know where beneficiaries live in order to send important notifications that could affect benefits. If a beneficiary misses a notification that calls for action, it could result in a loss of benefits. In addition, out-of-state moves can radically change the amount of a beneficiary’s SSI award because states have different methods of calculating benefits. If a beneficiary moves from a state with a lower cost of living into a state with a higher cost of living and doesn’t tell the SSA, the beneficiary could be leaving money on the table.

The death of a beneficiary also triggers an automatic reporting requirement. But on top of this, beneficiaries must also report the deaths of people living with them because the size of an SSI beneficiary’s family and the earning power of the people in that family can affect SSI benefits. In certain cases, a beneficiary can receive an increased SSDI benefit when a parent or spouse passes away.

There are some other, less obvious changes that require a beneficiary to file an immediate report. Beneficiaries must report changes in income and assets, including reporting if any assistance the beneficiary was receiving to help pay for bills or housing changes. Marriage and divorce also need to be reported because the SSA factors in spousal income and resources when calculating benefits.

Beneficiaries must also tell the SSA if they become the beneficiary of a special needs trust. This could happen suddenly (when a relative dies and leaves money to the beneficiary in a trust that was previously unfunded) or it could be expected (at the conclusion of a lengthy negotiation over a personal injury settlement). Either way, the SSA should hear about the trust and receive a copy of the document.

According to the SSA’s internal rules, a beneficiary is responsible for notifying the SSA in writing of these important changes within 10 days from the end of the month in which the change occurred. So, if a beneficiary moves in January, the beneficiary has until February 10th to let the SSA know. It’s important to keep track of correspondence with the Social Security Administration, so the notification should always be sent with some kind of tracking system that requires a signature, like certified mail or express service with a signature.

The actual monetary penalty for failing to file the report itself is very small and is not always assessed, but a much larger problem looms in the background. If the SSA learns of a change in circumstances that would have reduced the benefit received by a person with special needs, then the SSA can recoup the improperly paid benefits from the recipient, and there is no limit to the amount that can be recovered. So, if a beneficiary fails to report a change in circumstances that would have resulted in a $100 reduction in his monthly benefit and the SSA finds out about the change five years later, that beneficiary owes the government $6,000, which can be almost impossible to repay. The end result is a further loss of benefits because the government will garnish the beneficiary’s award in order to recover the improperly paid funds. On top of this, the bureaucratic nightmare that ensues when the SSA attempts to calculate the amount owed can take months, or even years, to sort out while the beneficiary is left twisting in the wind, unsure of what the monthly benefit will be moving forward.

Your special needs planner can help make sure that you comply with all of the SSA’s reporting requirements. Contact your planner immediately if you have experienced, or expect to experience, any changes like the ones discussed above.

Reprinted by permission: Special Needs Answers

The seminar will be held on February 25, 2012 from 10 am to 5:30 p.m.

It will be located at:

One City Boulevard West (Kondaur Capital Building) Suite 135,Orange California
Contact Abbie Villaneuva at (415) 896-1500 to RSVP, seating is limited.

What Is the Effect of Paying for a Beneficiary’s Food, Shelter, and Utilities If Receiving SSI or Medi-Cal?

It depends. If the beneficiary is an SSI recipient, his or her monthly SSI benefit will this be reduced (or possibly eliminated) by the application of SSI in-kind support and maintenance (ISM) income and the presumed maximum value (PMV) calculation. See chapter 4 for a more thorough description of ISM and PMV.

The appeal addressed the issue of whether the creation of a special needs trust can justify the elimination of the obligation to pay child support to the primary residential parent of a special needs child. The appellate court concluded that while a party may utilize a special needs trust to take advantage of government programs to lessen the burden on the parent to provide support and medical assistance, the facts of the case did not support a concurrent application to eliminate child support. The court denied the ex-husband’s request to eliminate child support payable to the defendant and to establish a special needs trust for the educational and living expenses of the parties’ autistic son. The parties had entered into a property settlement agreement (PSA) relevant to their divorce which had child support provisions and acknowledged the future needs of their son.

The court held that, despite the purpose of the special needs trust (entitlement to governmental benefits for the son), plaintiff had entered into the PSA with a full understanding of his son’s needs and with the further understanding that his day-to-day needs would be provided by defendant through child support. The amount struck by the parties of $50,000 per year in child support reflected that understanding. Moreover, plaintiff, who was very financially sound, understood that he would remain responsible for the cost of the son’s special education as well as the retention of a large life insurance policy. The parties could have established a special needs trust in the PSA but chose not to. The facts and circumstances had not been altered such that there were changed circumstances sufficient to warrant a finding that the PSA was unfair and unjust.

Bond v. Bond*, Unpub. Opinion, N.J. Super., A.D., 2011 WL 6412137 (December 22, 2011)

*A copy of the full case can be obtained with the permission of the Superior Court of New Jersey, Appellate Division.

In-Home Support Services and the Developmental Service budget are not the only budgets greatly impacted by the cuts. Major reductions were also seen in Higher Education. K-12 was impacted, but less than education advocates had feared.

$100 million in cuts in spending to the overall Developmental Services budget was also included. Certain services within 21 non-profit regional centers and 4 state operated developmental centers for eligible children and adults with developmental disabilities would be impacted by those cuts.

These budget cuts were to take effect at some point after January 1, 2012, the exact date depending on the reduction. Currently, a Federal Court Order has halted the 100 million dollar cuts to the In-Home Support Services. Details have not been released about the Developmental Services cuts at this time.

Programs that affect persons with disabilities or mental health needs, as well as seniors and low income families would not be affected by the “trigger cuts”. However, Medi-cal managed care would see a $15 million reduction.

A non-partisan Legislative Analyst released his mid-year report in mid November on the 2011/2012 State Budget and revealed a 13 billion dollar shortfall unless the problem is corrected by the Legislature and Governor. The revised State budget that was presented by Governor Brown and Department of Finace Director Ana matosantos showed revenue below what was anticipated when the State budget was passed last June because of the state of the economy.

Governor Brown warned that his proposed 2012-2013 State Budget that he will release on January 10th will contain more proposed reductions. Governor Brown doesn’t anticipate proposing more cuts mid-year other than what will be impemented by the “trigger cuts”  and is hopeful that the state’s economy will continue to improve and hopeful that voters will approve his proposed temporary tax increases.

“These cuts to the universities, to In-Home Supportive Services…are not good. But we have to live within our means,’ said the Governor.

Yes.

Federal law permits a first party Special Needs Trusts (SNTs) to hold assets (such as structured settlements) of injured parties under age 65 while preserving their needs-based public benefits such as California’s Medi-Cal, Medicare and SSI. However, under federal law, individual Special Needs Trusts cannot be used by individuals over age 64 and over without disqualifying the injured parties from receiving public benefits. A plaintiff who, for example, is eligible for Medi-Cal and receives a litigation recovery will lose Medi-Cal benefits until the litigation recovery is spent below $2,000 for an individual or $3,000 for a couple (the resource limits for Medi-Cal). Fortunately, a first party Pooled SNTs can overcome these disqualifying hurdles.

However within days an injured party of any age or settlement amount can combine a Pooled SNT with structured settlement assets to preserve government benefits while receiving income for nonmedical needs. Pooled SNTs are a state approved master trust that is established and managed by a charity. Because they are created through a nonprofit entity, support a “pool” of individuals, not a single individual, and the settlement money remains in the trust and is not owned by the plaintiff until distributed, the income from these trusts is not counted against needs-based public benefits.

When the trust is terminated and the state lien has been paid, the remainder passes to heirs just as it would with an individual SNT. There is no minimum funding requirement and the trust documents are provided to Plaintiff firm within three business days.

Pooled SNTs can be used for an individual of any age, but this is the only type of special needs trust available to people age 65 or older.

Much like the SNT used to preserve a plaintiff’s eligibility for Medi-Cal, a Medicare Set Aside Arrangement (MSA) is used to preserve a plaintiff’s future eligibility for Medicare. When the plaintiff is receiving (or soon will receive) both Medi-Cal and Medicare, an MSA is placed inside a Pooled SNT but must be professionally administered.

Currently, only one California Pooled SNT has the ability to provide plaintiffs’ protection of their settlement recovery from both Medi-Cal and Medicare: the California Charities Pooled Trust (CPT).

e. Established for the Sole Benefit of the Individual

• provides a benefit to any other individual or entities during the disabled individual’s lifetime, or
• allows for termination of the trust account prior to the individual’s death and payment of the corpus to another individual or entity

SI 01120.201F.2. Trust Established for the Sole Benefit of an Individual

• reimbursement to the State, after the individual’s death, for medical expenses paid on the individual’s behalf (see SI 01120.203B.1.f. and SI 01120.203B.2.g.);
• upon death of the beneficiary, retention of a certain percentage of the funds in a “pooled trust” established through the actions of a nonprofit association in accordance with the trust agreement (see SI 01120.203B.2.); and
• transfer of the remaining trust corpus to a residual trust beneficiary after the individual’s death.

Obama administration approves California Medi-Cal cuts
Gov. Jerry Brown scored a budget win Thursday as the Obama administration approved a major share of Medi-Cal cuts that health care providers and patient advocates said would cut off medical access to the state’s most vulnerable residents.

The federal Centers for Medicare & Medicaid Services (CMS) will allow the state to cut reimbursement rates by 10 percent this fiscal year for a variety of Medi-Cal providers, including physicians, pharmacists and optometrists. The state Department of Health Care Services says it will not cut rates paid to pediatricians or home health providers.

California Medical Association CEO Dustin Corcoran said Thursday his group will file suit asking the court to immediately block this latest round of Medi-Cal cuts.

The state expects to save a significant part of the projected $623 million associated with the rate cut, though it may fall short due to excluding some services.

Doctors, pharmacists and patient advocates lobbied CMS this summer to block the Medi-Cal cuts, suggesting that many providers would abandon the system.

“We are providing California with flexibility to address their difficult budget circumstances while protecting the health care needs of Californians served by the Medicaid program,” said Cindy Mann, Deputy Administrator and Director of the Center for Medicaid and CHIP Services, in a statement. “Many of the state’s rate cut proposals are now off the table, and we and the state will monitor implementation of the remaining reductions on an ongoing basis to ensure that they do not jeopardize Californians’ access to care.”

California, which already ranks among the nation’s worst in Medicaid reimbursements, approved 10 percent rate cuts as part of the 2011-12 budget deal. The state initially faced a $26 billion deficit, which lawmakers and Brown resolved by a mix of cuts and an assumption that tax revenues would grow throughout the fiscal year.

State leaders also approved mandatory co-payments for Medi-Cal patients, as well as a conditional cap on health care visits. Federal officials have yet to weigh in on those cuts. All told, Medi-Cal cuts add up to $1.7 billion, though not all require federal approval.

Providers and patients filed suit against similar rate cuts in previous budgets. Federal courts blocked or reduced those reductions, but the U.S. Supreme Court this month heard arguments on whether outside groups had the legal right to challenge Medicaid cuts.

Corrected to note that nursing homes were not exempted from the cut.

Read more: http://blogs.sacbee.com/capitolalertlatest/2011/10/obama-administration-approves-california-medi-cal-cuts.html#ixzz1c6TNgbui

On Thursday, October 20 United States Senator Amy Klobuchar of Minnesota introduced S1744, the Guardian Accountability and Senior Protection Act. (See attached) Senator Bill Nelson of Florida is a co-sponsor of the bill.

The bill will provide funding for State courts to assess and improve the handling of proceedings relating to adult guardianship and conservatorship, to authorize the Attorney General to carry out a pilot program for the conduct of background checks on individuals to be appointed as guardians or conservators, and to promote the widespread adoption of information technology to better monitor, report, and audit conservatorships of protected persons.

In a letter of support for the proposed legislation, the NGA Board of Directors said, “As practicing guardians and affiliated professionals, this board understands how critically important it is to encourage the active participation of the highest state courts in reforming adult guardianship law, and to have the support and resources at the federal level to accomplish that.”

On behalf of all the dedicated members of NGA, they went on to say: “Those of us who are concerned about best practice in adult guardianship for the people we serve are very interested in the collaborative efforts this bill outlines between the highest state courts and the state aging networks.”

While acknowledging that “these are difficult fiscal times,” they urged that “the needs of persons under guardianship are great, and their right to ethical and appropriate support should be paramount.”

Introduction of the guardianship bill follows a September 22 hearing on “Protecting Seniors and Persons with Disabilities – An Examination of Court – Appointed Guardians” that was held by the Subcommittee on Administrative Oversight and the Courts, which is part of the U.S. Senate Committee on the Judiciary. Senator Klobuchar presided at that hearing and the webcast is available online.

The attached presentation was presented by Will Lindahl,MBA, CLPF at PFAC meeting at Paradise Village in National City on October 19, 2011.  Outline below is covered in attached presentation.  Click here to download Will’s presentation in PDF format:   Special Needs Planning in your Fiduciary practice

Objectives

• Determine who needs Special Planning
• Learn which government benefits can be protected & when to consider a Special Needs Trust
• Learn differences between an Individual & Pooled SNT
• Learn how to evaluate Special Needs providers

Who needs Special Planning

• Minors
• Adults who lack capacity
• Wards receiving public benefits

Defining Disability

• Someone could be substantially disabled in the commonly understood sense (e.g., if the person must use a wheelchair for mobility). However, that individual would not be considered disabled under the SSI or Medi-Cal rules if he or she holds a full-time job and earns a living wage

Defining disability for SSI

• “Disability” for an adult is defined as the inability to engage in any “substantial gainful activity” (SGA) due to any medically determinable physical or mental impairment, or combination of impairments, that has lasted or can be expected to last for a continuous period of at least 12 months, or result in death.

• “Disability” for a minor is defined as a medically determinable physical or mental impairment or combination of impairments that causes marked and severe functional limitations, and that can be expected to cause death or that has lasted or can be expected to last for a continuous period of not less than 12 months

Public Benefit Programs

• Needs Based – Medi-Cal (Medicaid) & Supplemental Security Income (SSI)
• Entitlement – SSDI, SS, Medicare
• Other – Section 8 & VA

SSI Eligibility Requirements

Medi-Cal Eligibility

What Supplemental Security Income providers

What Medi-Cal an provide

Special Needs Trusts

Trust Types that can preserve government benefits eligibility for SSI & Medi-Cal 42 U.S.C ‘ 1396p

Individual vs Pooled Special Needs Trusts

What can’t a SNT pay for?

What can a SNT Pay for?

Just about anything. For example:

Which SNT type do I use?

Interview questions for a Pooled Trust provider

Pooled Trust Programs to avoid

What to look for in Pooled Trust Provider

How does it work

Summary