Public Benefits Eligibility Law for Special Needs and Disabled Persons

To Better Understand Public Benefits Law, You Need to Understand “Means Tested” Programs

The government benefit program(s) your loved one may qualify under often introduces a significant amount of complexity.  This is because there are multiple public benefit programs, and each program has its own set of rules that determine eligibility.  While an extensive examination of these programs is beyond the scope of this page, it is important to understand that it is this complexity that is found in the rules and guidelines under which public benefit laws operate.

Eligibility for Means Tested Programs

Level of Care / Medical Eligibility

As a practical matter, the first test to pass is the physical and/or cognitive requirement established for program eligibility.  Simply put, a person must medically “need” the public benefits for which they apply. This is known as the medical eligibility test.  In the following discussion, I am assuming that medical “eligibility” for benefits is not an issue and therefore, I will only examine financial eligibility.  But I caution you, proof of medical eligibility is and always will be the threshold proof required to successfully obtain services and benefits.  If you have questions about medical eligibility, then we can meet to evaluate this issue as well.

You Can Create Legal Documents to Protect a Disabled Individual and Allow Them to Be Financially Secure and More Independent

There are many reasons to create a plan for the benefit of a special needs and/or disabled person.  It will be my pleasure to explain them to you face to face.  Here are some of the benefits I explain to clients when they come to see me.  I have bullet pointed them for you here and then I go onto explaining each point in much greater detail on the pages that follow.

Below I Have Highlighted the Benefits of a Customized Plan to Improve the Quality of Life of a Disabled Person

• The person with the disability will keep his/her income (SSI or SSD) and health care benefits, including Medicaid and Medicare.
• Money can be used to pay for personal items and services not covered by public benefits.
• Money can be used to pay for a doctor, dentist, therapist and other professionals who do not accept Medicaid, or for the services, co-pays and deductibles not covered by Medicare A & B & Medicaid.
• Parents and grandparents can control how, when and where money goes to their loved one with the disability while he or she is alive and even after their passing. Otherwise, the only alternatives left are (1) give nothing to the child; or (2) leaving money to a pooled trust; or (3) leaving money that is not in a public benefits qualifying trust causing the loss of public benefits.
• Numerous programs exist that are dedicated to enhancing the day-to-day quality of life for a disabled person.  A plan can help achieve this enhanced quality of life.

Understanding Financial Eligibility for Benefits and Services

Be Sure to Achieve Financial Eligibility

In addition to meeting a “Medical” Eligibility test, all New Jersey “means tested” government assisted programs have resource limits which place caps on the individual’s assets and/or income. While the income cap varies from program to program, the resource cap is generally $2,000.00. Certain assets, such as the individual’s home and automobile, are generally not counted as available resources when determining eligibility. Most other assets and “things” of value are counted including funds and resources that are capable of being spent down and used to pay for medical care and services. This includes property held in restricted accounts that cannot be accessed without a court order. Without careful planning, the individual with too much income or resources will need to spend down everything and then apply, or reapply, for government benefit programs. We can avoid this forced spend down by creating the right plan for you and drafting the appropriate legal documents.

Traditional Trusts Are Treated as an Available Resource for Determining Benefit Eligibility in New Jersey

As a general rule, assets held in most traditional savings and investment accounts and revocable trusts will be counted as an available resource by the government.  If the government considers a resource to be available, things become very difficult for individuals and their families who want to plan for future needs.  It doesn’t have to be this way!

Beware: Use of a Revocable Trust in New Jersey Equals Disqualification for Many Public Benefits

Since the individual or trustee retains the legal authority to alter the terms of the trust and/or can revoke a trust instrument, a revocable trust is treated no differently than any other available asset such as cash in the bank.  For example, an individual’s revocable trust will be treated no differently than his or her savings or checking account.  This is why Fredrick P. Niemann, Esq. typically does not recommend funding revocable living trusts for the benefit of a person with a disability who could otherwise qualify for a public benefit program while the settlors or beneficiary are/is alive.

Beware: The Incorrect Use of an Irrevocable Trust in New Jersey Also Equals Disqualification

Since the disabled/special needs individual does not retain legal authority to revoke the trust, irrevocable trusts are treated differently than a revocable trust.  The specific language in the trust must be carefully reviewed and evaluated.  Tight restrictions on how trust funds can be spent must be included in these trusts to avoid the loss of benefit eligibility. However, with the right approach we can preserve eligibility for government benefit programs and improve the life of the person with the disability with a well-written irrevocable trust.

Here’s a Question: Can any portion of a Revocable or Irrevocable Trust be used for the individual’s benefit?

The Potential for Payments to the Disabled Person is a Real Problem

If any payment can be made, or must be made, either to the individual or for the benefit of the individual, the portion of the payment that could be paid or must be paid will be considered an available resource by the government.  That means loss of eligibility. If your document(s) contain such language, you need this corrected immediately.

Avoid at All Costs Actual Payments to the Disabled Person

Direct cash payments made to the individual will be considered income to the individual, and the income restriction rules will apply. This also means… ineligibility or a meaningful reduction of financial payments and benefits.

SOUNDS SCARY!! DOESN’T IT? IF SO, CALL OUR OFFICE TODAY. 

I know I covered a lot of information with you.  It’s confusing and probably overwhelming.  We understand.  We’re here to help but you need to contact me personally to discuss your personal situation.  Call me toll-free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.  Our offices are conveniently located off of Route 9 North in Freehold, NJ.