Life Care Planning
- What is early intervention?
In 1986, as part of the Individuals with Disabilities Education Act (IDEA), Congress established Early Intervention (EI). EI provides a broad array of services for children under three years of age, intended to facilitate their physical, cognitive, emotional and social development. IDEA requires that children suspected of having delays receive a “timely, comprehensive, multidisciplinary evaluation” to determine their eligibility for speech and occupational therapy, psychological, vision and audiology services, and more. In most cases, there is little or no charge to the family.
- What are the considerations when developing a life care plan?
A life care plan is a blueprint for providing the economic security and services that someone with special needs will require in order to live a fulfilling life, as independently as possible. It’s necessarily an evolving document that:
- assesses the supports that will be required, and their cost, given the individual’s disabilities and desired lifestyle;
- identifies government benefits for which the person may be eligible;
- includes a financial plan for supplementing publicly-provided services, including a special needs trust (SNT) if means-tested government benefits will be required;
- establishes guardianship or powers of attorney, if the individual will be unable to make important decisions independently;
- includes a letter of intent containing medical, education and personal details to guide caregivers when parents have passed away.
- What government benefit programs are available to assist individuals with special needs?
There are many government benefits available to individuals with special needs, and they vary significantly from state to state. Some of the major programs are:
- Medicaid, which provides basic medical care to low-income individuals. Most states also have “waiver” Medicaid programs covering residential, day care, career and other services.
- Supplemental Security Income (SSI), which provides funds for food and shelter to individuals with disabilities. To qualify, a person must have less than $2,000 in “countable assets.”
- Supplemental Nutrition Assistance Program (SNAP/Food Stamps), which has eligibility guidelines similar to SSI.
- Social Security Disability Insurance (SSDI), which requires that participants have been unable to work for at least a year due to their disability. Benefits are based on the individual’s income history and the number of quarters they have worked and contributed to the program.
- Section 8 Housing, which subsidizes residential rents for families with special needs. Eligibility is based on a sliding scale that considers income and family size.
- What’s the process for obtaining special education services through my local school district?
The Individuals with Disabilities Education Act (IDEA) mandates that all children in the U.S. receive a “free and appropriate public education” in the least restrictive environment possible, provided by their local school district. While the process differs in its details from state to state-and sometimes from school district to school district– the basic framework consists of an initial evaluation, followed by development and ongoing evaluation of an Individualized Education Plan (IEP).
- Evaluation – When a parent or teacher suspects that a child’s difficulties in the classroom are disability-related, they should contact the school district’s Committee on Special Education (CSE). Upon receiving parental consent, the CSE will then evaluate the child’s physical, social, psychological and behavioral development. If parents have arranged for any independent evaluations, they should provide those findings to the committee. The parents and committee then jointly determine whether or not the child should receive special education services. If so, an IEP team is assembled to create an instructional plan.
- IEP – This document establishes goals and an implementation plan for each school year. Education policy generally holds that youngsters learn best in the least restrictive environment, but parents and school districts work together to determine the best mix of mainstream classroom and specialized education settings.
- Your Child’s Rights – Schools must notify parents of any plans to evaluate a child or to modify an IEP. Parents have the right to attend all IEP meetings and to request sessions to discuss potential IEP changes. They are entitled to an impartial hearing if they disagree with a course of action proposed by the school district. This is typically the point at which they seek the services of a special needs attorney.
- What’s meant by the term “transition planning“?
Transition planning is the process of preparing a young person with special needs for adulthood. By the age of 15, a student’s Individualized Education Plan (IEP) should begin addressing the academic, social and life skills that will be needed to become as independent as possible. Will they live in a group residence or supported apartment? Do they aspire to a career? And what sort of social life do they envision? To the extent possible, the individual with special needs should participate in this planning process.In addition, once your child reaches the age of 18 (19 or 21 in some states), they will be legally considered a competent adult. If they will continue to need assistance making decisions relating to finances, health care or education, parents should apply for guardianship or establish appropriate powers of attorney and/or a healthcare proxy.
- Is it necessary for parents to apply for guardianship when an individual with special needs turns 18?
When considering guardianship, it’s important to maintain a balance between an individual’s privacy and independence and the desire to protect a loved one. Most states automatically consider an individual to be a competent adult when they reach the age of 18 (19 or 21 in some states). At that point, parents will not be able to access an adult child’s health records or take an active role in their IEP meetings unless they take legal action. Applying for full guardianship, however, which affects a wide range of personal decision-making, may not be necessary, and individual circumstances should be carefully considered. A health care proxy enables the agent to act on behalf of the individual with special needs who, nonetheless, does not relinquish their ability to make decisions. A financial or education power of attorney similarly allows access to records, participation in discussions and signing authority, while not interfering with the individual’s own decision-making rights. A special needs attorney can help assess alternatives.
- What support services are available to a young adult after high school graduation?
The supports available to an individual with special needs change markedly once they leave the public school system. Services are more fragmented and differ from state to state. Medicaid “waiver” programs addressing career development, residential options and day habilitation are among the most common programs available. Career services may include skills assessments, training, resume assistance, counseling, job placements and supported employment. Check with your state office for disability services for details.
- What’s the purpose of a letter of intent?
A letter of intent (LOI) summarizes, in a single document, important details that will enable guardians and trustees to care for an individual with special needs when parents are no longer able to do so. It should include medical and education history, the individual’s likes, dislikes and habits, and aspirations concerning the loved one’s future, including living arrangements, career and lifestyle. The LOI is meant to be a roadmap for caregivers and to minimize disruption during an emotional time of transition.
Special Needs Trusts and Personal Injury Settlements
- What is a special needs trust?
A special needs trust (SNT), sometimes referred to as a supplemental needs trust, is a legal vehicle enabling assets to be held on behalf of someone with disabilities without affecting their eligibility for means-tested public benefits such as Medicaid or Supplemental Security Income. While assets held by the trust are not “countable” for the purpose of qualifying for such programs, there are strict regulations regarding disbursements. SNTs are meant to supplement the funds and services available through government programs.
- What responsibilities does a trustee have?
Administering a special needs trust is considerably more complicated than managing most other trusts. The trustee is responsible for investing funds, making disbursements, paying taxes and maintaining detailed accounts. This requires an understanding of government programs, including strict regulations concerning the use of SNT assets, since improper use of funds can disqualify the beneficiary for important means-tested public benefits. In addition to handling these technical requirements, the trustee should have a deep appreciation for the beneficiary’s needs and desires so that the trust will make the best possible contribution to the individual’s quality of life.
- What is a first party special needs trust?
A first party, or self-settled, SNT is created with assets belonging to an individual with disabilities, who becomes the “beneficiary.” Such funds typically consist of a personal injury settlement or inheritance. The person must be under 65 at the time that the trust is established. Funds remaining in the trust at the beneficiary’s death must be used to reimburse Medicaid for services to that individual before they can be distributed to anyone else.
- What is a third party special needs trust?
A third party special needs trust is created with assets provided by parents, other relatives or friends of the beneficiary. Such a trust can be created and funded during the life of the originator (“inter vivos”), or as part of a last will and testament (“testamentary”). Upon the beneficiary’s death, there is no requirement to use residual funds to reimburse Medicaid for services provided to the individual, and “remainder” beneficiaries may be named to receive those assets.
- What is a pooled special needs trust?
A pooled SNT is often a practical alternative for small estates. Sub-accounts belonging to many beneficiaries are managed as a single entity, usually by nonprofit corporations that call upon the experience of social workers, money managers and special needs attorneys. Since many financial institutions do not handle small SNTs, or charge fees that are not cost-effective for modest trusts, pooled trusts can give families access to highly skilled trustees. Funds remaining at the beneficiary’s death are typically divided between Medicaid and the nonprofit.
- When should a special needs trust be considered as a vehicle for holding the proceeds from a personal injury settlement?
If the plaintiff will need means-tested public benefits such as Medicaid (including Medicaid waiver programs), Supplemental Security Income (SSI), SNAP (food stamps) or Section 8 Housing, the settlement should be held by a special needs trust in order to preserve their eligibility. Even a very large settlement can be quickly dissipated, given the high costs of care, and protecting assets in this manner can significantly contribute to the individual’s long-term financial security.
- How can I determine what role structured payments should play in a personal injury settlement?
The first step is to assess the plaintiff’s short- and long-term financial requirements. There may be immediate needs –such as purchase of a wheelchair-accessible van – requiring that a portion of the settlement funds be paid as a lump sum.Then analyze the return available through a structured approach. A broker will contact insurance companies to identify the most favorable payment schedule, which will be based on the plaintiff’s life expectancy and an associated “age rating,” determined through an evaluation of medical records. The internal rate of return should be compared with opportunities offered through other investments. The fact that structured payments are tax-free should also be considered in the analysis.
- What are Medicare set-asides and what role do they play in personal injury settlements? How can they be integrated with a special needs trust?
Medicare set-asides (MSAs) are funds that have been earmarked to pay for future medical care that Medicare would otherwise be expected to cover. Although there are currently no formal guidelines, many attorneys and settlement planners create such set-asides if:
- The plaintiff is currently on Medicare and the settlement is greater than $25,000,or
- The plaintiff is likely to begin Medicare coverage within 30 months and the settlement is greater than $250,000.
- What is a special needs trust?
Because MSAs represent funds that are available to the plaintiff, they are considered “countable assets” by means-tested government programs. In order to protect the plaintiff’s eligibility for public benefits, a first party (self-settled) SNT must be established to include both the set-aside and the remainder of the settlement proceeds. The trust document must contain language sufficient to satisfy CMS (Centers for Medicare & Medicaid Services) that the MSA is being properly administered. This would include language prohibiting the payment of fees and expenses from the MSA amount, a requirement that the proceeds of the MSA be invested and provisions covering distributions to CMS.
- What is an ABLE Account?
In late 2014, Congress passed the Achieving a Better Life Experience (ABLE) Act, which authorized states to create tax-free savings accounts that could be used to pay for disability-related expenses without affecting an individual’s eligibility for means-tested government programs. Only individuals whose disability occurred prior to their turning 26 can hold an ABLE account. Most ABLE programs allow eligible individuals to participate regardless of their state of residence.
Only one ABLE Act account can be established per individual but there is no limitation on the number of individuals who can contribute to that one account. Total contributions for the benefit of a given ABLE Act beneficiary cannot exceed $14,000 in a single year, the maximum federal gift tax exclusion ($14,000 in 2017).
If the ABLE Act account exceeds $100,000, the participant will lose eligibility for Supplemental Security Income (SSI). Medicaid eligibility continues until the account exceeds the limit for the College Savings 529 Plan in the state sponsoring the ABLE program ($250,000 to $450,000 in 2017).
Upon the death of an ABLE account holder, states may require reimbursement from remaining funds for Medicaid services provided to the individual after establishment of the account. Check to see whether or not your state chooses to do so.