Clearly, health insurance is going to be very important for people with special needs. In many cases, medical bills can total millions of dollars over the course of a lifetime when you have a disability. Most people get health insurance through their jobs, but many people with disabilities cannot work.
Medi-Cal is the solution for a significant percentage of people with special needs. This is California’s version of the Medicaid program that is offered nationally. Medi-Cal is a need-based health insurance program. You do not necessarily have to be disabled to qualify, but many people with disabilities are enrolled in the program.
This program is not available to people with financial resources. If you were to become disabled due to an accident, and you got a personal injury settlement, your resources would restrict you from eligibility.
Plus, if someone was to leave you an inheritance or give you a gift, your financial status would improve, and you could lose your eligibility for ongoing Medi-Cal coverage.
Another government program that many people with disabilities depend upon is the Supplemental Security Income program. The name of the program explains its purpose: SSI provides income for people with disabilities who cannot work much on their own.
This is another need-based program, so an improvement in financial status could render a benefit recipient ineligible.
Supplemental Needs Trusts
Now that we have set the stage with regard to government benefit eligibility, we can take a look at supplemental needs trusts. The benefits do not necessarily cover everything that the recipient may need. These unmet needs are referred to as supplemental needs.
A supplemental needs trust can be established to satisfy these unmet needs. The trustee could use assets in the trust for certain approved purposes without jeopardizing the beneficiary’s benefit eligibility.
If the funding is coming from the beneficiary’s own assets, the trust would be a first party supplemental needs trust. After the death of the beneficiary, Medi-Cal would seek reimbursement for money spent from his or her estate.
When the funding is coming from someone other than the beneficiary, it is a third party supplemental needs trust. When this type of trust is in place, there would be no Medi-Cal recovery attempts after the death of the beneficiary.
Special Needs Planning Report
To learn more about special needs planning and supplemental needs trusts, download our in-depth report. This report is free, and you can access your copy through this page: Los Angeles CA Special Needs Planning.
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