“Beyond the Basics of Special Needs Planning – Part I”

Author: Keith A. Stevens

Social Security rules complicate special needs planning considerably, but several types of trusts can be useful for maintaining assets without losing government benefits.

There may be a long way to go, but we have come a long way in the last 50 years with respect to special needs and disabled individuals. Since coverage opportunities were expanded in 1972, we have seen a remarkable explosion in public services available to assist this vulnerable population. Institutionalization rates have dropped as more and more emphasis is placed on care in the community.

These advances have come piecemeal, and with growing pains. Most prominently we can see a patchwork of implementation at the state level, and restrictions on eligibility for disability income or medical services imposed in the name of fiscal responsibility. The resulting tradeoffs have resulted in many beneficial services becoming available for disabled individuals, but also require that they live in poverty to receive them.

The two primary governmental sources for benefits for disabled and special needs individuals are Supplemental Security Income (SSI) and Medicaid. SSI provides income and is administered at the federal level, while Medicaid provides medical care and is administered by local state entities. Both are means tested and impose extremely restrictive asset requirements.

In order to care for their loved ones, it is therefore not unusual for families to need to continue to provide fiscal support. Doing so, however, risks making the beneficiary ineligible. In this article, we will review the programs that provide benefits for disabled individuals, as well as some of the planning vehicles to help provide financial security.

Medicaid

Medicaid is a combination federal and state program. While state agencies administer Medicaid benefits directly, the larger share of funding comes from the federal government. Federal law sets the basic groundwork, while the implementing states may each make some of their own rules. Given the shocking paucity of federal Medicaid regulations, states have had to step in.

Actually, calling it a program may be a misnomer, as Medicaid services are delivered through dozens of different programs targeted at different populations with different needs. The headline-grabbing fights in Washington over Medicaid are normally about health insurance for individuals with low income and assets, but when an estate planning attorney talks Medicaid, she usually means one of the long-term care programs that provides custodial care.

In the special needs context, Medicaid commonly refers to health insurance, waivers or long-term care services. These three services all overlap to some degree. A uniting theme for all Medicaid programs is that they are needs based, with health and financial criteria. Families with too much money will not qualify for Medicaid health insurance, nor will a healthy individual qualify for a waiver or long-term care.

There are generally two primary ways for a state to enroll in the federal Medicaid program that affects the rules that the state may impose for financial eligibility. § 209(b) states may choose to enact their own eligibility requirements, so long as those requirements are no more restrictive than the eligibility limits in place on January 1, 1972. § 1634 states must align their criteria with that of SSI, which in practice makes it far easier for applicants to be dually eligible for both programs. There are also a handful of hybrid states that find ways to act more like one or the other. An explanation of these programs and a list of states and how they are categorized may be found in POMS SI 01715.010.

In compliance with SSI requirements, 1634 states have a non-exempt asset limit of $2000 for the applicant, and convoluted rules if there is a spouse. States operating under 209(b) requirements may set their own asset limits, but may not institute restrictions requiring less than $1500 in resources.

Medicaid Insurance

Medicaid health insurance is the backbone of all other Medicaid programs. Eligibility for waivers or long-term care services entitles the recipient to a Medicaid card. This allows the beneficiary to receive medical care at no expense, though if the beneficiary has any other insurance, that provider should be billed first. There are a few services that Medicaid will not cover or require an advance physician order and specific criteria, such as dental work or mental health care. Additionally, not all providers will accept Medicaid, since the program usually pays substantially less than a private individual.¹

Medicaid Waivers

The concept of waivers originates in the late 1970s, as special needs individuals and their families continued the fight for alternatives to institutionalization. The name indicates a waiver from the normal requirement that the applicant be institutionalized in order to receive benefits. A Medicaid waiver is, therefore, a program for individuals who require a long-term or institutional level of care, but who can receive services in the community thanks to family support.²

Which waivers are available and what they do is an intensely state-specific question. Waivers are obtained and programs are established by the individual states. Waivers generally can provide an aspect of custodial care, such as a home health aide or respite care, that would not be available under normal Medicaid health insurance. They also require oversight from the administrative state agency, and often feature some sort of care plan to help coordinate services. Because they are Medicaid programs, they still impose asset limitations.

Public Disability Payments

Even for a special needs individual, there is much more to life than just healthcare, and much of life takes an income. Even if money can’t buy happiness, it is usually still necessary for the acquisition of comfort. Disabled individuals may seek a monthly, fixed income from one of three sources, depending on the nature of their work history.

Individuals who are able to work enough to vest in the Social Security trust fund, but who then become disabled prior to eligibility, may apply for Social Security Disability Insurance (SSDI). If approved, the applicant will receive his full retirement age Social Security income early, which will vary from one beneficiary to the next, and after two years will be enrolled in Medicare.³ Because the applicant has already vested in Social Security, there are no asset requirements for SSDI. However, there is still an income limit; SSDI is only available to those unable to work enough to support themselves, so non-passive income in excess of $1220 per month will disqualify an applicant.⁴

Those who have either never been able to work or who became disabled prior to vesting in Social Security may apply for Supplemental Security Income (SSI).⁵ An SSI beneficiary is eligible for a standard, sub-poverty benefit, the federal maximum of which in 2019 is $771, though some states supplement these benefits.⁶ Because the SSI beneficiary has not vested in Social Security, she is subjected to strict and confusing asset and income limits.

The most basic SSI asset requirements are that a beneficiary is permitted to own a home, a vehicle, and other assets not to exceed $2000.⁷ There are additional rules that apply to spousal assets and income, and gifts (both made to and from the beneficiary) can significantly alter benefits. These asset restrictions necessitate the planning tools discussed below.

The medical criteria is consistent for both SSI and SSDI, with different standards for adults and children. For an adult to qualify as disabled, he must be unable to engage in any substantial gainful activity by reason of any 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 no less than 12 months.⁸ A child must have a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of no less than 12 months.⁹

There is a third way that an individual may become eligible for disability benefits. Workers in the public sector – state, county, city, and federal employees – are generally eligible for disability benefits through their retirement plans. Public employees do not pay into Social Security, and so they would otherwise not be eligible for SSDI, even after decades of employment. These plans vary from employer to employer, but they will generally not impose asset limits. They may have a different standard for disability, and they may require recertification at certain times.¹⁰ It will generally not be necessary to plan for a disabled former public employee the same way one would plan for a potential SSI beneficiary, but every state is different.

POMS

In discussing any Social Security benefit, it would be imprudent to not remark upon one of the main sources of confusion and frustration in the world of special needs planning. The Program Operations Manual System (POMS) is the Social Security Administration caseworker’s handbook of operating instructions for all Social Security programs, including SSDI, SSI, and traditional retirement benefits. It covers some 2700 sections, and if printed out would be about 27,000 pages long.¹¹ Note that the rules in POMS are not formal regulations, but rather a set of policies that the SSA uses in evaluating claims. In the vein of the old maxim ‘a rule for thee but not for me,’ “POM guidelines do not have legal force, and do not bind the Commissioner[.]”¹²

Be that as it may, POMS de fact binds applicants.

As a collection of guidelines, POMS may be modified by the SSA nearly at will. There may be periods of long stability, but amendments may also issue very quickly. As of this writing, the POMS regulations concerning special needs trusts have not been modified in about a year, since April 2018. However, this is not always the case; in one Ninth Circuit case, the court observed that the litigation turned on a section of the POMS that had only been effective for less than two months before being modified yet again.¹³ Despite the uneven nature of the regulations, courts have generally been willing to grant deference to POMS under the framework enumerated by Skidmore v. Swift & Co., 323 US 134, 65 S. Ct. 161 (1944), at least in some situations.¹⁴

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As previously mentioned, the trade-off for benefits is that both Medicaid and SSI require that a recipient be reduced below poverty levels in order to be eligible. Fortunately, several options are available to safeguard eligibility when assets change hands.

First Party Trusts

Here’s the good news – a disabled individual coming into money does have options to preserve public benefits without spending down everything. Since 1993, disabled beneficiaries have been able to secure their financial independence without giving up public benefits through two vehicles, Special Needs Trusts and Pooled Trusts.¹⁵

Before discussing the anatomy of these two types of trusts, it would benefit us to first review the characteristic limitations in first-party trusts. There is no such thing as a free lunch, and a disabled individual can no more have her cake and eat it too. There are two primary tradeoffs with self-settled trusts that fundamentally define their nature, namely a supplemental standard of distribution and a mandatory payback provision.¹⁶

Supplemental Standard

The purpose of asset and income limits on public benefits is to prevent the government from supporting a person capable of supporting himself or herself. This rationale carries over and applies mandatory limits to special needs trust planning as well.

The fundamental axiom is that a trust cannot support the disabled individual by replacing the need for public benefits. If a trust is able to pay for the needs normally covered by SSI or Medicaid, why would you need SSI or Medicaid? Therefore, a trust that may pay for these benefits will likely be treated as a countable resource, absent provisions affecting the trustee’s discretion, which must be assessed on a jurisdiction-by-jurisdiction basis.

In practice, a compliant trust should limit the trustee’s ability to make distributions for three purposes: food, shelter, and medical expenses.¹⁷ Food and shelter are collectively known as in-kind support and maintenance (ISM) in SSI circles. The ability to pay for the former two will affect SSI benefits – this is what your $771 per month is supposed to cover, after all – while the latter avoids duplicating Medicaid services. Food is fairly straightforward; while the SSA will likely not make a huge issue of the trust occasionally paying for a meal at a restaurant, the trust absolutely should not make a habit of it or purchase groceries. The other two restrictions bear a little more analysis.

Shelter expenses that qualify as ISM, per POMS, include:

• Mortgage
• Real property taxes
• Rent
• Heating fuel or gas
• Electricity
• Water
• Sewer
• Garbage removal¹⁸

Distributions for the above purposes will be treated as ISM, which will reduce the beneficiary’s benefits. So too will direct distributions of cash, or those that result in a beneficiary receiving non-cash, non-exempt assets (such as a second vehicle).

When a distribution is counted as ISM, the beneficiary’s share will be reduced by one-third of the maximum benefit. This is known as the PMV or Presumed Maximum Value.¹⁹ If a beneficiary lives in the household of another who provides food and shelter, the reduction will be an additional 20 dollars. It may be worth weighing whether it makes more financial sense to have the trust pay for ISM – such as the mortgage on property owned by the trust – if the value of doing so exceeds the PMV reduction.

Not all medical expenses must be forbidden. A trust may still pay for medical care that is not covered by Medicaid, including massage, acupuncture, other alternative treatments, or dental work (which is often not covered).

In an attempt to minimize state expenditures, some states have passed legislation enumerating specific items for which trust funds may be used, instead of listing forbidden uses. Ariz. Rev. State. § 36-2934.01(B), for instance, lists seven categories of permitted expenditures. This shifts the burden on to trustees to ensure that they are distributing for the proper reasons, rather than the agencies to show that they are distributing for an improper reason. The constitutionality of these additional limitations is suspect and subject to legal challenge. Nonetheless, if a beneficiary’s state of residence has adopted such a statutory scheme, the drafter should follow it as closely as possible.

It should be noted that, prior to March 9, 2005, clothing was also a forbidden ISM item. Since that time, however, gifts of clothing do not count against SSI eligibility.²⁰

Payback Provision

This requirement attempts to tip the balance sheets back for the benefit of the government. Aside from certain administrative expenses for winding up its operations, a first-person asset sheltering trust must pay its remaining corpus to the states that have provided Medicaid benefits, up to an amount equal to those benefits. For instance, if a disabled individual has incurred $300,000 in benefits over her lifetime, and the trust corpus is worth $500,000, the trust will only be able to pass on $200,000 to the remainder beneficiaries. On the other hand, much more common end of the spectrum, if the Medicaid expenditures exceed the trust res, the trust will be fully depleted in reimbursing the state. The exchange is intuitive; after providing benefits that can value hundreds of thousands of dollars, the state seeks reimbursement for its expenditures from those beneficiaries with means.

Practitioners are advised to pay attention when drafting these provisions. In one case that the author recently assisted with, the Special Needs Trust was rejected by the SSA because its payback provision permitted the payment of the beneficiary’s funeral expenses before paying back the state. Only administrative expenses relating to winding up the business of the trust or the estate of the beneficiary supersede the state’s interest.²¹ A similarly important detail is that the trust must require reimbursement for any and all states that provide benefits.²² An attorney should never specify which states may be reimbursed. Even if the beneficiary never has, plans to, or will live anywhere other than Cincinnati, the fact that she may hypothetically take her Medicaid card across the river to Kentucky (or fly to Anchorage, for that matter), means that more than one state may be entitled to reimbursement.

Careful, experienced drafting, then, is an absolute necessity.

1.    Special Needs Trust (aka d4A Trust, Payback Trust)

The first-party Special Needs Trust is one of the most common, but also most perilous, tools in the special needs planner’s toolbox. Commonly known by an abbreviation of its code section, 42 USC § 1396p(d)(4)(A), this trust is a creature of federal law. It is created by or on behalf of a disabled individual in order to hold the individual’s assets. Assets titled to a properly drafted d4A Trust will not be countable for SSI or Medicaid purposes.

The four elements of a Special Needs Trust are that it:

a)    contains the assets of an individual under age 65 who is disabled consistent with 42 USC § 1382c(a)(3);
b)    is established for the benefit of the individual;
c)    is established by the individual (including via power of attorney), the individual’s parent, grandparent, legal guardian, or a court; and
d)    is required by its terms to reimburse any states for Medicaid benefits received upon the death of the individual.²³

Structurally speaking, a Special Needs Trust is settled by the individual or their representative, with the disabled individual as the lifetime beneficiary, and a third party as the trustee. The third-party trustee is most often a family member, including parents or children.

A Special Needs Trust is a preferred tool of choice where a disabled individual receives an influx of financial assets, or if an individual with resources requires Medicaid benefits prior to 65. The most common fact patterns are personal injury settlements or the failure on behalf of a parent or other family member to take adequate precautions in their own estate plan.

Example 1: Tiffany, 19, was a passenger in a vehicle that was struck by a semi. Due to her injuries, she has suffered brain damage that impairs her ability to care for herself. Her parents help to enroll her on SSI and Medicaid while she pursues a personal injury action against the carrier. After receiving benefits for 18 months, Tiffany settles the case and receives a $450,000 benefit. Her parents or the court may establish a Special Needs Trust and fund it with the money in order to avoid disqualifying her.

Example 2: Alan, 64, has developed Parkinson’s Disease, which requires institutionalization, for which he has enrolled in Medicaid vendor pay. His mother passes away, and due to bad information and personal superstition, she had no advanced estate plan. At the conclusion of the administration of her probate estate, Alan is to receive $60,000. Alan, his attorney-in-fact, or the court may establish a Special Needs Trust in order to maintain benefits.

It is necessary to be vigilant when it comes to Special Needs Trusts, both in administration and in creation. We will discuss the supplemental standard as it pertains to administration later in this article. Some of the difficulties with creating Special Needs Trusts have been mediated by the Special Needs Trust Fairness Act, as incorporated in the 21^st Century Cures Act.²⁴ However, it is still worth noting that the ability to create the trust is limited to these enumerated parties, and in the way listed in the statute. POMS is very clear, and at least one federal case has turned on this, that in cases involving a court, the court must create the trust. If the court simply approves a previously created trust, this is insufficient to qualify as a protected vehicle.

2.    Pooled Trusts (d4C Trusts)

42 USC § 1396p(d)(4)(C) allows for the creation of an additional type of self-settled trust, commonly referred to as a Pooled Trust. A Pooled Trust has several similarities at a high level to Special Needs Trusts, but the starting point for distinction is that it is administered by a non-profit organization. The elements are therefore reorganized:

a)    The trust is created by the non-profit association
b)    A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts.
c)    The account is created by the disabled individual (including via power of attorney), parent, guardian, or court.
d)    The account must be used for the sole benefit of the disabled individual.
e)    The trust is required by its terms to reimburse any states for Medicaid benefits received upon the death of the individual, less any amount to be distributed to the non-profit association.²⁵

Put another way, the Pooled Trust agreement is typically created by a non-profit. The disabled individual, or his representative, executes paperwork to join the agreement and transfers the trust funds to the trustee. There is a wide latitude for individual variation within these agreements. Some will only manage money, while others will hold title to real estate.

Unlike the strict age limit of Special Needs Trusts, an individual over 65 may still be able to use a Pooled Trust, at least for Medicaid purposes, though this is subject to both state law and an SSI corollary. All states view assets held in Pooled Trusts to be unavailable to the applicant; however, some states will assign a restricted coverage penalty if the applicant was over 65 when he made the transfer. For instance, Ohio permits transfers at any age, while the Supreme Court of Iowa recently held that the transfer of assets to a Pooled Trust by a 65-year-old Medicaid applicant constituted an improper transfer requiring a restricted penalty period.²⁶

Some pooled trusts have begun to branch out in their distribution of funds. Some of the non-profit associations affiliate with other local charities for the distribution of unused funds at death. The non-profit association may also use the funds paid into it in order to provide grants to disabled individuals, limited to trust beneficiaries or not. There are some really interesting things being done at this level, and worth examining.

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Typically, pooled trusts offer a superior option to Special Needs Trusts where the beneficiary has no close family or friends that are able or willing to competently administer a trust. The truth is that there are a lot of moving pieces and subtleties of regulation when it comes to administering these tools, and a well-meaning family member may soon feel overwhelmed. Still, a beneficiary could use a professional trustee to administer a Special Needs Trust.

However, a Special Needs Trust is more easily accessible for the beneficiary, who likely only has to work with a trustee she already knows. This can be a double-edged sword; as observed, any trustee should be willing and able not only to learn the rules of trusteeship and distributions, but also abide by them.

Both trusts have advantages and disadvantages, and the choice to use one or the other will largely depend upon the situation.

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Third-Party Trusts

Federal law does not directly dictate the form of third-party trusts, but nonetheless allows protection for them. A third-party trust is one that is established by someone other than the beneficiary, holding assets which never belonged to the beneficiary.²⁷ As long as the beneficiary is not able to directly access the funds herself, the trust will generally not be counted as an available resource. These trusts are most often established by parents or grandparents who wish to give or leave funds to a disabled beneficiary.

However, special needs are not the only reason that one may want to leave an inheritance to a trust rather than to a beneficiary directly. A parent may wish to protect the inheritance against creditors, divorce, or a spendthrift beneficiary. A third-party trust that may be established for creditor protection may not be sufficient to eliminate the assets if public benefits are required.

It is vital to note that some state courts created a distinction between “support” and “discretionary” trusts, the former of which are available for public benefits purposes, while the latter are exempt.²⁸ For instance, the Ohio Supreme Court has found that where the trustee has the ability to “make income and principal distributions for a beneficiary’s medical care, care, comfort, maintenance, health, welfare, and general well-being,” then “a trustee may be compelled to make distributions consistent with the trust’s support terms for the benefit of the beneficiary.”²⁹ In other words, if the language of the trust identifies that the trustee may support the beneficiary, or make distributions for the classic ascertainable standards (health, education, maintenance, and support), then the trustee may be compelled to do so.

However, where the “trust lacks a mechanism through which a beneficiary may compel a distribution” and “allows the trustee the uncontrolled discretion to distribute income and principal as the trustee determines, without a support standard,” the third-party trust is purely discretionary.³⁰ The trustee may not be compelled to exercise his sole and absolute discretion, because he is not held to a specific standard. Therefore, the assets of discretionary trusts are not available for Medicaid purposes.³¹

Remember that these state court decisions apply only to Medicaid. They do not apply to SSI cases. If a beneficiary is on, or will likely require, SSI benefits, the drafter should still implement a supplemental standard. Wholly discretionary trusts may work for Medicaid, but because the trustee also has discretion to distribute for ISM purposes, such a trust will likely still be counted for SSI purposes. If SSI is not a possibility, then wholly discretionary language is preferred.

Third-party trusts are often created in advance of necessity. A client may choose to establish the trust to receive his child’s inheritance at his death, rather than fund it now. Some states permit the establishment of empty trusts, but at common law, all trusts were required to begin with some founding res. This explains why practitioners may require a small bill be stapled to the original document.

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Limitations of Form

In addition to statutory limitations on distributions made by first-party trusts, there are a few other incidental restrictions that limits the flexibility of planning with them. These trusts are irrevocable, meaning that the ability of any party to modify them is severely curtailed, while the disabled beneficiary is also restricted from serving as a trustee in either case. These concerns affect Special Needs Trusts more than Pooled Trusts, as each Pooled Trust will be guided by the master trust agreement formulated by the non-profit association managing the trust, while the Special Needs Trust is crafted by the grantor and his or her counsel.

While some medical conditions will never permit the beneficiary to serve as his own trustee, this restriction on trusteeship makes any disabled person, whether mentally and emotionally competent or not, completely dependent on another trustee for access to her funds. This makes the selection of a trustee at the formation of the trust to be an absolutely vital determination, and one which merits careful review and discussion. It may be possible to grant the disabled individual, a legal representative, or a third party, such as a trust protector, the ability to change the trustee. To avoid the agencies from reading trust-breaking powers into such a provision, the drafter should be as specific as possible in who can remove a trustee, for what reason, and how a successor would be named. Under no circumstances should the beneficiary be able to serve as trustee.

The trust’s irrevocability may be circumvented in at least one way by granting the beneficiary a limited power of appointment to change remainder beneficiaries. We would not want to be bound by a beneficial scheme worked out decades before. In that time, relationships may change, people may enter or exit the beneficiary’s life, and circumstances may change. A limited power of appointment tailored to not interfere with the payback requirement should grant a little bit more freedom in this regard.

Beyond these specific issues, the irrevocability of these trusts can make it difficult to save a defective or compromised Special Needs Trust. If a decision comes down from the Social Security Administration terminating benefits due to an improper provision or allowance, the easiest solution is likely to simply create and re-fund a new trust.

Under common law, an irrevocable trust may be modified by an agreement between all trustees and beneficiaries. Under Medicaid and SSI, the beneficiary’s involvement may be seen as an impermissible gift. For states that have adopted the relevant portions of the Uniform Trust Code, an irrevocable trust may be modified by petitioning the probate court with an agreement for all affected parties. While such a reformation may work for Medicaid purposes, it is likely to be challenged before the SSA. We will review the Draper decision in more detail in a follow-up piece, but remember that a Special Needs Trust must be created by the court. The SSA would likely determine that a reformation or court-ordered modification is an instance of the court approving a pre-existing trust, rather than creating it.

If the resident state has adopted the Uniform Trust Code, it may be possible to classify the transfer between trusts through the decanting process. Doing so would be most useful in a situation where the disabled beneficiary is not competent to create the trust himself. When decanting, a trustee uses her power to make distributions to a beneficiary to do so in trust, creating a second trust that is largely the same as the first, with desired additions or subtractions. These modifications are treated, legally, as though they were made by the settlor at the time of the creation of the trust. What changes may be made is dependent on the trustee’s powers and discretion in the first trust, as well as the resident state’s variation on the UTC.

Conclusion

So, the good news is that there are federally sanctioned solutions to allow a disabled individual to retain her benefits and receive assets. The bad news – can there be good without bad? – is that the vehicles to achieve this are often complicated, governed by rules subject to perilous reinterpretation or reissuance. There are incredible opportunities, but serious, often hidden dangers. It is always necessary to consult an expert on these matters.

Next month, we will review changes to the special needs planning field in the last five years, focusing primarily on the creation of ABLE accounts and changes to how the Social Security Administration reviews trusts.

¹ As an anecdote, the author’s daughter received county services that paid for physical and occupational therapy through one provider from birth. At age six, when she was approved for a Medicaid waiver, it was necessary to change providers, as the one who had worked with her for years did not accept Medicaid.

² 42 USC § 1396n(c).

³ Disability Benefits, Social Security Administration Publication No. 05-10029; 42 USC § 1395c.

⁴ Update 2019, Social Security Administration Publication No. 05-1003. This is the 2019 figure. The income limit for applicants who are disabled due to blindness is higher, $2040 per month, while a married couple where both spouses are disabled may receive up to $1157 together.

⁵ 42 U.S.C. § 1381 et seq.

⁶ Id. The maximum SSI payment is indexed for inflation consistent with Social Security Benefits. However, it is eye-opening to compare SSI benefits with the 2019 Federal Poverty Guidelines, which sets the threshold for poverty at $1,041 per month. Annual Update of the HHS Poverty Guidelines 84 Fed. Reg. 22, 1168 (Feb. 1, 2019).

⁷ 42 USC § 1383(a)(1).

⁸ 42 U.S.C. § 1382c(a)(3)(A).

⁹ 42 U.S.C. § 1382c(a)(3)(C).

¹⁰ In Ohio, for instance, a public employee is determined to be disabled if he is if he is “mentally or physically incapable of performing the duties of the most recent public position held by the [employee].” O.R.C. § 145.35(E). This is called the “own occupation standard. After five years, the employee is reevaluated, at which point he is disabled if meets the “any occupation” standard, namely, that the employee cannot engage in an occupation that pays 75% of the prior position, that is found within the employee’s reasonable surroundings, and that the employee has the education or experience for. O.R.C. 145.362(B).

¹¹ Thomas R. Hager, CPA, CGMA, NSSA, “Social Security Planning Strategies: An Education Workshop.” The online version, which is much more usable, can be found at http://secure.ssa.gov/apps10/.

¹² Shontos v. Barnhart, 328 F.3d 418, 424 (8^th Cir. 2003).

¹³ Lockwood v. Commissioner Social Sec. Admin., 616 F.3d 1068, 1073 (9^th Cir. 2010). The court determined that “[t]he Social Security Administration’s lack of a consistent direction weighs against giving POMS any substantial weight.”

¹⁴ The Supreme Court itself has been divided on this question. Compare Schweiker v. Hansen, 450 US 785, 787, 101 S.Ct. 1468, 67 L.E.2d 685 (1981) (“It agreed with petitioner as an initial matter that the regulation requiring a written application is valid and that the Claims Manual has no legally binding effect.”) and Washington State Dept. of Social & Health Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371, 385, 123 S.Ct. 1017 (2003) (“While these administrative interpretations are not products of formal rulemaking, they nevertheless warrant respect[.]”).

¹⁵ This article will refer to first-party, Medicaid payback trusts as Special Needs Trusts. The author is aware that the term Special Needs Trust has been applied to several different varieties of trusts

¹⁶ See 42 U.S.C. 1396p(d)(4)(A) and (C); POMS SI 01120.203.

¹⁷ POMS SI 01120.203(E).

¹⁸ POMS SI 00835.400.

¹⁹ POMS SI 00835.300, SI 00835.340, SI 00835.350.

²⁰ POMS SI 00835.400(A).

²¹ POMS SI 01120.203(E)(1).

²² POMS SI 01120.203(B)(10).

²³ 42 USC 1396p(d)(4)(A).

²⁴ Pub. L. No. 113-244, § 5007.

²⁵ 42 U.S.C. 1396p(d)(4)(C).

²⁶ Cox v. Iowa Dept. of Human Servs., No.18-2018 (Iowa 2018).

²⁷ 42 USC 1396p(d)(2)(A).

²⁸ See, e.g., Kryzsko v. Ramsey Cnty. Soc. Servs., 607 N.W.2d 237 (N.D. 2000); In re Barkema Trust, 690 N.W.2d 50 (Iowa, 2004); and Pack v. Osborn, 117 Ohio St.3d 14, 2008-Ohio-90.

²⁹ Pack, 117 Ohio St.3d at 19, ¶ 17.

³⁰ Id. at 19-20, ¶¶ 18-19.

³¹ Cf. Uniform Trust Code § 504.