How do I plan for a disability?
Most government benefit programs that assist with medical expenses depend on the amount of income and number of assets. If a person has too many assets or too much income, they may not qualify for government assistance. In order to reduce their number of assets to qualify for government health care benefits (such as Medicaid), a person may spend down assets, gift or transfer assets, reduce income sources, implement a special needs trust (SNT), or swap assets.
Assets held in special needs trusts are not counted toward the asset caps the government uses to determine benefit eligibility. Assets directed to a SNT by someone other than the disabled person (e.g. a parent or grandparent) are not subject to a “pay-back” to the government for benefits received. On the flip side, a SNT funded with assets of the disabled person (e.g. settlement proceeds from an injury claim) are subject to pay-back following the death of the disabled beneficiary for what Medicaid has paid on their behalf.