Two Happy Notes

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On the topic of self-settled special needs trusts (aka Medicaid Pay-Back Trusts; aka D4A Trusts), the “Special Needs Trust Fairness Act” has passed both houses of Congress and is headed to the desk of President Obama for his signature. These trusts have long been used to protect the assets of persons who are disabled and under age 65, and who apply for Medicaid and/or Supplemental Security Income.  However, the law has been that these trusts must be created by a court, a guardian/conservator, or the parent or grandparent of the disabled trust beneficiary.  After this new Act becomes law, in addition to these existing methods, persons who are disabled and competent will be able to create their own trusts.  A very important and long sought development in the special needs world.

On the topic of long term care Medicaid benefits, Michigan’s Department of Health and Human Services has amended the rules relating to the treatment of annuities in the context of qualified retirement accounts owned by a Medicaid applicant.   Specifically, as of January 1, 2017, new BEM policy (click here) will provide that where the Medicaid applicant has money in retirement accounts (IRA’s, 401k’s, 403B’s, etc.), different rules will apply to the conversion of those accounts to income through the use of a commercial annuity.  Specifically, the requirement that such annuities are irrevocable, actuarially sound, and that they make payments in equal monthly amounts; will not apply to annuities created with these types of accounts.  Welcome back balloon annuities – I guess. [This positive development was brought about by Chalgian and Tripp’s own David Shaltz, who continues to work under the radar for important reforms that benefit the broader elder law community.]