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Consumer Issues in Genetics Vol. 18: Fall, 2000 |
Providing for Extended
Care
Self-Sufficiency Trust of Montana: What Is It? What Does It Do?
Editor’s Note: As the practice of medicine becomes more sophisticated, some patients once diagnosed with severe, chronic genetic disorders with shortened life expectations are now able to live extended, even normal, life spans. The economic issues of long-term care for individuals with disabilities become critical when the individual, his or her family, the medical community and public and private funding sources are faced with the costs of long-term care. The following article discusses options, as they exist in Montana and many other states, for developing economic support strategies for children with chronic disabilities who may survive their family caregivers.
Parents who wish to leave a legacy to their child with a disability are faced with a dilemma: if the child has assets in his or her name, these assets may make the individual ineligible for government benefits like Supplemental Security Income (SSI) and Medicaid. Very few families have enough money to set up a trust to cover all of their child’s needs, so they are reluctant to create even a small trust, which will not be enough to sustain the individual but will have the effect of disallowing the person from more substantial and long-term government benefits.
Montana’s Self-Sufficiency Trust (MSST) is a mechanism to help families deal with the dilemma of providing for a disabled loved one’s future. MSST was established by state statute to allow families to create trusts for their children and use the interest income from the trusts to purchase supplemental services for the beneficiaries without jeopardizing their eligibility for government benefits.
"Government benefits" means eligibility for means-tested programs like (SSI) and Medicaid, which pay for basic needs such as shelter, food, clothing and medical care for individuals with disabilities. MSST funds are designated for "extras," above and beyond the costs of basic sustenance, so MSST funds are considered "supplemental" to the basics paid for by SSI. MSST has a letter of agreement from the federal government saying that individuals with MSST accounts can remain eligible for SSI benefits. The reason that MSST beneficiaries remain eligible for benefits is because the interest income from MSST passes from the private to the public sector; in this process the funds become, in effect, government monies. Since services are purchased for the beneficiaries without any monies being attributed to them individually, they are considered to be receiving supplemental services and remain eligible for government benefits.
To participate in the Self-Sufficiency Trust, donors (parents or other interested individuals) set up individual trust accounts for their children with disabilities. These individual trust accounts are pooled in a statewide Private Trust. In addition to the Private Trust to which donors contribute, there is also a Charitable Trust which receives charitable donations from individuals and organizations. The combined Private and Charitable Trusts make up the total Self-Sufficiency Trust. The principal in the pooled trusts of MSST is invested and the income earned is transferred to the State Trust Fund. The state then uses the income from the SST to purchase supplemental services for the trust beneficiaries from non-profit providers in the community.
The State Trust Fund is a special account in the Montana state treasury. The state auditor has the power to direct payments from the trust account to the Developmental Disabilities Program (DDP) and through DDP to non-profit providers which deliver services in the communities.
To direct how income from the Trust is to be spent for each beneficiary, a Lifecare Plan is developed. This plan embodies the wishes of the donors and defines the scope and nature of supplemental services to be provided to the individual with disabilities. Trained Self-Sufficiency Trust counselors help donors to develop a realistic and need-specific plan. SST funds can be used to 1) maintain lifestyle by providing extras like leisure time activities, training, clinical services or transportation; 2) enhance opportunities for housing, supported employment or other government funded programs; or 3) provide life-long advocacy services.
In order to participate in the Montana’s Self-Sufficiency Trust, donors must do the following:
The expense to the donor who is creating a Trust includes whatever costs are involved in executing their transfer document, the registration fee, and an annual management fee. The current manger of the Trust is P.A. Davidson in Great Falls.
Income from the MSST continues to be disbursed according to the dictates of the Lifecare Plan throughout the lifetime of the beneficiary. When the beneficiary of an MSST trust account dies, at least ten percent (10%) of the current market value of the individual’s trust account goes into MSST’s Charitable Trust, and the remainder is disbursed as designated by the donor.
The Montana Legislature amended the SST statute to make explicit that ten percent of the remaining principal must be designated to the Charitable Trust and the rest may be subject to garnishment.
Frequently Asked Questions About MSST
1. What is a Medicaid-eligible trust?
A Medicaid-eligible trust is one that has been approved by Medicaid as a trust to be used to supplement (not supplant) benefits provided by the state or federal government. The Montana Self-Sufficiency Trust is a Medicaid-eligible trust. Medicaid-eligible trusts may also be created on a private basis using the expertise of an attorney or estate planner.
2. Can Medicaid require reimbursement from an SST account for Medicaid-funded services after the death of the SST beneficiary?
The federal code governing Medicaid was recently changed so that Medicaid can claim reimbursement for Medicaid-funded services from the estate of a Medicaid beneficiary. Montana incorporated the federal code language into the Departmental Rules for Self-Sufficiency Trusts (Subchapter 5-45.2.502). The language in the Montana Rules says:
"The individual trust must provide that upon the death of the beneficiary the state be reimbursed, to the extent that monies remaining in the trust allow, an amount equal to the total cost to the state of providing Medicaid services to the beneficiary."
Practically speaking, this rule means that anyone who has received Medicaid services during their lifetime may have his or her estate garnished to reimburse the state for Medicaid services. An MSST account would have to be very large (i.e., several hundred thousand dollars) not to be fully utilized in reimbursing the state for services.
When the beneficiary of an SST account dies, whoever is the Advisor is obligated to notify the State of Montana that there is a remainder in the account, which can be used to reimburse the state for Medicaid services.
Montana law does have an additional provision, which says that ten percent of a remaining principal in an MSST must go to the Charitable Trust and may not be garnished to repay for Medicaid services.
3. How should SST accounts be identified in order to comply with IRS rulings?
An MSST account should be set up as a taxable entity with its own IRS tax ID number. In this way, the income from the trust for IRS purposes will be attributed to the trust account and not to the beneficiary individually. If the beneficiary is to remain eligible for Social Security, then he or she should not have any income, which would disallow government benefits.
The Trust Advisor will need to file an SS-4 Form (Report of Fiduciary lncome) and a Form 1041 income tax return in order to comply with IRS regulations and to report the trust income in a legal way.
It is possible, though not particularly advisable, to set up an SST account under the Social Security number of the Donor or Trust Advisor. Then that individual would have to report the trust income on his or her regular tax return.
It is not wise to set up an SST account under the Social Security number of the beneficiary because the trust income will be attributed to that individual and may disallow the individual from receiving Supplementary Security Income and Medicaid.
4. What is the current minimum for a deposit in an SST account?
We recommend a minimum deposit of at least $2,500 because any smaller amount will be quickly "eaten up" by the annual management fee charged by Trust Corp.
5. What management fees does Trust Corp charge?
The Montana Self-Sufficiency Trust has an agreement with Trust Corp to manage the trust accounts. In the original agreement, Trust Corp said it would charge a minimum fee of $100. This minimum fee was really a charitable donation on the part of Trust Corp, since it did not cover their actual costs for managing the accounts.
As of June 1, 1996, Trust Corp has raised its management fee to more realistic numbers so that they can break even on their costs. On trust accounts with a personalized portfolio (individual stocks and bonds chosen by the donor), Trust Corp will charge a minimum of $500 as an annual management fee. For those accounts that deposit cash and agree to follow Trust Corp’s recommended investment in the Federated Managed Series Trust, the minimum annual fee will be $250.
Any questions regarding fees should be addressed to Trust Corp at 1-800-634-5526. Copies of the Montana Rules governing the Self-Sufficiency Trust are available by calling PLUK at 1-800-222-7585.
To learn more about the Self-Sufficiency Trust, call PLUK and ask for the Donor and Attorney handbooks. These booklets will be mailed to you at no charge.
Contributed by Jan Duffy
The Genetic Drift Newsletter is not copyrighted. Readers are free to duplicate all or parts of its contents. The Genetic Drift Newsletter is published semiannually by the Mountain States Regional Genetic Services Network for associates & those interested in Human Genetics. In accordance with accepted publication standards, we request acknowledgement in print of any article reproduced in another publication. The views expressed in the newsletter do not necessarily reflect local, state, or federal policy. For additional information, contact Carol Clericuzio, M.D., Editor, Department of Pediatrics, The University of New Mexico, Albuquerque, NM, 87131
Introduction
Implications of Testing for Professionals
Difficulties in the Diagnosis of Genetic Disorders
Clergy Response to Genetic Issues in Counseling
Providing for Extended Care: The Montana Self-Sufficiency Trust
Patient Realities in Genetic Testing
Patient Perspective on Social Security
Systems Advocacy
Genetics and Managed Care
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