Current through Bulletin 2024-06, March 15, 2024
(1) The eligibility
agency shall apply the criteria in
42 U.S.C.
1396a(k), to determine the
availability of trusts established before August 11, 1993.
(a) A Medicaid qualifying trust is a trust,
or similar legal device, established (other than by will) by an individual (or
an individual's spouse) under which the individual may be the beneficiary of
all or part of the payments from the trust. The distribution of payments is
determined by one or more trustees who are permitted to exercise some amount of
discretion with respect to the distribution to the individual.
(b) The amount of the trust property that is
counted as an available resource to the individual who established the trust
(or whose spouse established the trust) is the maximum amount that the trustee
is permitted to distribute under the terms of the trust for the individual's
benefit. This amount of property is counted as available whether or not it is
actually disbursed by the trustee or received by the beneficiary. It does not
matter whether the trust is irrevocable or whether it is established for a
purpose other than to qualify for Medicaid.
(c) Payments made from the available portion
of the trust do not count as income because the available portion of the trust
is counted as a resource. If payments are made from any portion of the trust
that is not counted as a resource, the payments are counted as income in the
month received.
(2) The
Department adopts the provisions of
42
U.S.C. 1396p(d)(4)(A)
concerning trusts for a Disabled Person under Age 65. These trusts are commonly
known as a special needs trust for a disabled person. Assets held in a trust
that complies with the provisions in Subsection R414-305-7(2) and (4) do not
count as available resources.
(a) The trust
must be established solely for the benefit of the disabled individual by the
individual, a parent, grandparent, legal guardian of the individual, or a
court. A trust established by the disabled individual must be established on or
after December 13, 2016.
(b) The
eligibility agency shall treat any additions to the trust corpus with assets
not belonging to the disabled trust beneficiary as a gift to the trust
beneficiary. The additions irrevocably become part of the trust corpus and are
subject to all provisions of Medicaid restrictions that govern special needs
trusts.
(c) The trust must be
irrevocable. No one may have any right or power to alter, amend, revoke, or
terminate the trust or any of its terms, except that the trust may include
language that provides that the trust may be amended but only if necessary to
conform with subsequent changes to the requirements of
42
U.S.C. 1396p(d)(4)(A) or
synonymous state law.
(d) The trust
cannot be altered or converted from an individual trust to a "pooled trust"
under
42
U.S.C.
1396p(d)(4)(C).
(e) The trust must terminate upon the death
of the disabled individual or exhaustion of trust corpus and must include
language that specifically provides that upon the death of the beneficiary or
early termination of the trust, whichever occurs first, the trustees will
notify Medicaid and will pay all amounts remaining in the trust to the State up
to the total amount of medical assistance the State has paid on behalf of the
individual. The trust shall comply fully with this obligation to first repay
the State without requiring the State to take any action except to establish
the amount to be repaid.
(f) The
sole lifetime beneficiary of the trust must be the disabled individual, and the
Medicaid agency must be the preferred remainder beneficiary. Distributions from
the trust during the beneficiary's lifetime may be made only to or for the
benefit of the disabled individual.
(g) The eligibility agency shall continue to
exclude assets held in the trust from countable resources after the disabled
individual reaches age 65. Subsequent additions to the trust other than
interest on the corpus after the person turns 65 are not assets of an
individual under age 65 and the agency shall treat the transfer as a transfer
of resources for less than fair market value, which may create a period of
ineligibility for certain Medicaid services.
(h) A trust that provides benefits to other
persons is not an individual special needs trust and does not the meet the
criteria to be excluded from resources.
(i) A corporate trustee may charge a
reasonable fee for services.
(j)
The trust may compensate a guardian only as provided by law. The trust may not
compensate the parent of a minor child from the trust as the child's
guardian.
(k) Additional trusts
cannot be created within the special needs trust.
(3) The Department adopts the provisions of
42
U.S.C. 1396p(d)(4)(C)
concerning pooled trusts for disabled individuals. A pooled trust is a specific
trust for disabled individuals that meets all of the following conditions:
(a) The trust contains the assets of disabled
individuals;
(b) The trust must be
established and managed by an entity that has been granted non-profit status by
the Internal Revenue Service. The non-profit entity must submit to the State a
letter documenting the non-profit status with the trust documents;
(c) The trustees must maintain a separate
account for each disabled beneficiary whose assets are placed in the pooled
trust; however, for the purposes of investment and management of the funds, the
trust may pool the funds from the individual accounts. If someone other than
the beneficiary transfers assets to the pooled trust administrator to be used
on behalf of that beneficiary of the pooled trust, the eligibility agency shall
treat the assets as a gift to that beneficiary, which the administrator must
add to and manage as part of the balance of the beneficiary's account and which
are subject to all provisions of Medicaid restrictions that govern pooled
trusts.
(d) Accounts in the trust
must be established solely for the benefit of individuals who are disabled as
defined in
42
U.S.C.
1382c(a)(3).
(e) The trust must be irrevocable; accounts
set up in the trust must be irrevocable.
(f) Individual accounts may be established
only by the parent, grandparent or legal guardian of the individual, by the
individual, or by a court.
(g) An
initial transfer of funds or any additions or augmentations to a pooled trust
account by an individual 65 years of age or older is a transfer of assets for
less than fair market value and may create a period of ineligibility for
certain Medicaid services.
(h) The
disabled individual cannot control any spending by the trust.
(i) Individual trust accounts may not be
liquidated before the death of the beneficiary without first making payment to
the State for medical assistance paid on behalf of the individual.
(j) The trust must include language that
specifically provides that upon the death of the trust account beneficiary, the
trustees will notify the Medicaid agency and will pay all amounts remaining in
the beneficiary's account to the State up to the total medical assistance paid
on behalf of the beneficiary. The trust may retain a maximum of 50% of the
amount remaining in the beneficiary's account at death to be used for other
disabled individuals if the trust has established provisions by which it will
assure that the retained funds are used only for individuals meeting the
disability criteria found in
42
U.S.C.
1382c(a)(3).
(k) A pooled trust that retains some portion
of a deceased beneficiary's trust funds must describe how retained funds are
used for other disabled persons. Any funds that are placed in an individual
beneficiary's account or that are used to set up an account for an individual
beneficiary who does not otherwise have funds to place in the pooled trust are
subject to all of the provisions of Medicaid restrictions that govern pooled
trusts. The pooled trust may include a plan for using retained funds only for
incidental, onetime services to qualified disabled individuals who do not have
accounts in the pooled trust.
(4) The following provisions apply to both
individual trusts and pooled trusts described in Subsection R414-305-7(2) and
(3):
(a) No expenditures may be made after the
death of the beneficiary before repayment to the State, except for federal and
state taxes and necessary and reasonable administrative costs of the trust
incurred in closing the trust;
(b)
The trust must provide that if the beneficiary has received Medicaid benefits
in more than one state, each state that provided Medicaid benefits shall be
repaid. If the remaining balance is insufficient to repay all benefits paid,
then each state will be paid its proportionate share;
(c) The trust or an attached schedule must
identify the amount and source of the initial trust property. The disabled
individual must report subsequent additions to the trust corpus to the
eligibility agency;
(d) If the
trust is funded, in whole or in part, with an annuity or other periodic payment
arrangement, the State must be named in controlling documents as the preferred
remainder beneficiary in the first position up to the total amount of medical
assistance paid on behalf of the individual;
(i) Any funds remaining after full repayment
of the medical assistance can be paid to a secondary remainder
beneficiary;
(ii) The eligibility
agency shall treat any provision or action that does or will divert payments or
principal from the annuity or payment arrangement to someone other than the
excluded trust or the Medicaid agency as a transfer of assets for less than
fair market value with the exception that any remainder after the Medicaid
agency has been fully repaid may be paid to a secondary beneficiary;
(e) The eligibility agency shall
count cash distributions from the trust as income in the month
received;
(f) The eligibility
agency shall count retained distributed amounts as resources beginning the
month which follows the month that the amounts are distributed. The agency
shall apply the applicable resource rules to assets purchased with trust funds
and given to the beneficiary as his or her personal possessions. The disabled
individual must report the receipt of payments or assets from the trust within
ten days of receipt. The agency shall exclude assets purchased with trust funds
if the trust retains ownership;
(g)
The eligibility agency shall count distributions from the trust covering the
individual's expenses for food or shelter as in-kind income to determine
Medicaid eligibility in the month paid;
(h) If expenditures made from the trust also
incidentally provide an ongoing and continuing benefit to other persons, those
other persons who also benefit must contribute a pro-rata share to the trust
for the expenses associated with their use of the acquisition;
(i) Contracts to provide personal services to
the disabled individual must be in writing, describe the services to be
provided, pay fair market rate consistent with rates charged in the community
for the type and quality of services to be provided, and be executed in advance
of any services being provided and paid. The eligibility agency may require a
statement of medical need for the services from the individual's medical
practitioner. If the person who is to provide the services is a family member
or friend, the eligibility agency may require verification of the person's
ability to carry out the needed services;
(j) Distributions from the trust made to or
for the benefit of a third party that are not for the benefit of the disabled
individual are treated as a transfer of assets for less than fair market value
and may create a period of ineligibility for certain Medicaid services. This
includes such things as payments of the expenses or travel costs of persons
other than a medically necessary attendant;
(k) The beneficiary must submit an annual
accounting of trust income and expenditures and a statement of trust assets to
the eligibility agency upon request or upon any change of trustee.
(5) The eligibility agency may not
count assets held in a pooled trust that comply with the provisions in
Subsection R414-305-7(3) and (4) as available resources.
(6)
42
U.S.C. 1396p(d)(4)(B),
provides for an exemption from the trust provisions for qualified income trusts
(also known as Miller Trusts). Special provisions for this form of trust apply,
under federal law, only in those states that do not provide medically needy
coverage for nursing facility services. Because Utah covers services in nursing
facilities under the medically needy coverage group of the Medicaid program,
the establishment of a qualified income trust shall be treated as an asset
transfer for the purposes of qualifying for Medicaid. This presumption shall
apply whether the individual is seeking nursing facility services or home and
community-based services under one of the waiver programs.