When you work on future planning for your family, including a child with special needs, you may want to consider that you may have special needs or a medical crisis at some point. Fortunately, there is a way to incorporate your potential future needs into your plan and assist your child at the same time. You can set up a special needs trust, contribute money to it, and still be eligible for Medicaid long-term care.

What Kind of Special Needs Trust Should You Use?

To contribute money toward your child’s needs while maintaining your child’s eligibility for government benefits, you can set up a third-party special needs trust. This kind of trust will directly benefit only your child with special needs. You can fund the trust right away with money from savings or other assets such as real estate. Also, you can make the trust the beneficiary of your pension, 401(k), or other retirement savings plan, as well as life insurance.

Any money or property held by a third-party special needs trust does not count against your child’s income or assets for purposes of SSI and Medicaid eligibility. Your child will not have access to the money directly but rather the trustee disburses funds as needed pay for specific expenses such as specialized medical care, educational needs, vacations, clothes, entertainment, or recreation.

How Will a Third-Party SNT Affect Your Own Benefits Eligibility?

If skilled nursing care is needed in the future for you or even for a grandparent of the child with disabilities, there is an opportunity to protect assets from needing to be spent down to qualify for Medicaid to pay for the extremely high cost of such care. Normally there is a five year look-back period for Medicaid to pay for skilled nursing care. In other words, you must give your money away five years before you need skilled nursing care for Medicaid to pay for your care. However, under Illinois law and Medicaid regulations, assets transferred directly to a third-party special needs trust with certain very special specific provisions in it, are exempt immediately. There is no five year look-back period for these transfers.

If you are considering using this federal exception to the five-year look-back period for qualification for Medicaid to pay for you or any other relative’s skilled nursing care, it is important you consult with a highly specialized special needs planning attorney.

Rubin Law is the only law firm in Illinois exclusively limited to providing compassionate special needs legal and future planning to guide our fellow Illinois families of children and adults with intellectual disabilities, developmental disabilities, or mental illness down the road to peace of mind. For more information, email us at email@rubinlaw.com or call 866-TO-RUBIN.