Medical Assistance for People Who Are Age 65 or Older or People Who Are Blind or Have a Disability

2.3.3.2.7.9.7 Supplemental Needs Trusts

A supplemental needs trust is a trust established and funded by a third party to provide for the supplemental needs of a person living with a disability while allowing the person to remain eligible for Medical Assistance (MA).

Trust Requirements

A trust must satisfy all of the following requirements in order to be evaluated as a supplemental needs trust. If a trust does not meet all of the requirements, the trust must be evaluated as a third party established and funded trust.

Purpose

The purpose of a supplemental needs trust is to provide for the reasonable living expenses and other basic needs of a person with a disability when benefits from publicly funded benefit programs are not sufficient to provide adequately for those needs. A supplemental needs trust may allow or require distributions only in ways and for purposes that supplement or complement the benefits available under MA.

A supplemental needs trust must contain provisions that prohibit disbursements that would have the effect of replacing, reducing, or substituting for publicly funded benefits otherwise available to the beneficiary or rendering the beneficiary ineligible for publicly funded benefits.

Established By

The trust must be established by someone other than the beneficiary or the beneficiary’s spouse.

Funded By

The trust must be funded with the income or assets of someone other than the beneficiary, the beneficiary’s spouse, or anyone obligated to pay any sum for damages or any other purpose to or for the benefit of the trust beneficiary under the terms of a settlement agreement or judgment.

• An exception to this requirement is when a supplemental needs trust is established with lump sum proceeds of payments made by the Social Security Administration (SSA) pursuant to the United States Supreme Court decision in Sullivan v. Zebley, 493 U.S. 521 (1990).

Disability Standard

For supplemental needs trusts established before July 1, 1993, the beneficiary must meet the disability criteria of the Supplemental Security Income (SSI) program before the trust is established. A person with a disability established by SSA or the State Medical Review Team (SMRT) meets this qualification.

A disability may also be established by the written opinion of a licensed professional who is qualified to diagnose the illness or condition, confirmed by the written opinion of a second licensed professional who is qualified to diagnose the illness or condition. The licensed professional must determine the beneficiary has a mental illness or condition, which to a reasonable degree of medical certainty is expected to:

• Last for a continuous period of 12 months or more; and

• Substantially impair the person’s ability to provide for their care or custody.

Trustee

The beneficiary cannot be the trustee.

Distributions upon the Beneficiary’s Death

A supplemental needs trust may provide for other beneficiaries upon the death of the beneficiary.

A supplemental needs trust is not required to include a provision to reimburse the Minnesota Department of Human Services (DHS) for all MA benefits paid on behalf of the beneficiary at the beneficiary’s death.

Evaluation of Trust Assets

Trust Corpus

Trust assets, including any income generated by the trust assets that is retained by the trust, are unavailable assets.

Distributions

Disbursements from the trust made directly to the beneficiary or to someone acting on the beneficiary’s behalf, such as a guardian or legal representative are counted as unearned income in the month received.

Payments made by the trustee for the benefit of the beneficiary, but not made directly to the beneficiary, are not counted.  

Limitation on Unavailability

The corpus of a supplemental needs trust, established on or after July 1, 1993, is considered an available asset when all of the following conditions are met:

• The beneficiary is age 65 or older

• The beneficiary resides in a state institution or nursing facility for six months or longer; and

• There is no reasonable expectation that the beneficiary will be discharged from the institution or facility.

Housing Support (HS) is not considered a state institution or facility for purposes of this exemption.

Legal Citations

Minnesota Statutes, section 501C.1205, subdivision 2

Published:  June 1, 2016