During the recent annual meeting hosted by the Society of Settlement Planners, attorney members of the Special Needs Alliance (SNA) took to the podium to examine ways for brokers to effectively partner with benefit specialists; instruments for managing settlement proceeds; and implications of the Affordable Care Act.

Peter Wayne (Louisville, KY) described the advantages to settlement planners of working with special needs attorneys in “Using ‘Benefits Experts’ to Help Maximize the Return to Your Client and Resolve the Case Prior Trial.” If not properly handled, personal injury settlements can disqualify recipients for needs-based government programs such as Social Security Income (SSI) and Medicaid. But special needs attorneys can work with brokers to develop settlement plans that both protect eligibility and optimize financial returns to the plaintiff. In addition, special needs attorneys can analyze life care plans to evaluate how much of a settlement should be received as a lump sum in order to address near-term needs and how much should be allocated to structured payments. Explaining that settlements channeled into special needs trusts (SNTs) will protect a beneficiary’s public benefits, he noted that special needs attorneys can also advise families and settlement planners on Medicaid paybacks and Medicare set-asides. He also described a “mediator-like” role that they can play, working with both the plaintiff and defendant teams to objectively outline options that would most benefit the plaintiff at a more reasonable cost to the defendant. By helping to resolve cases more quickly, they can reduce litigation costs.

SNA President Pi-Yi Mayo (Baytown, TX) gave an update on Qualified Settlement Funds (QSFs), which are vehicles for holding funds while negotiating with multiple claimants and are a means of isolating the settlement from the rest of the defendant’s assets. He noted that the cost of QSFs—trustee fees, filing expenses and tax preparation—should be carefully considered beforehand, and that such instruments aren’t practical unless large sums are involved. They are also no replacement for SNTs. Under the right circumstances, though, they offer advantages. Defendants can quickly disengage from litigation, relying upon the fund’s fiduciary to settle with claimants. Attorneys gain time to evaluate the best means of distributing the settlement and plaintiffs are less rushed as they manage the mechanics of dividing it between lienholders, Medicare and, possibly, an SNT. Pi-Yi subsequently took part in a panel discussion that examined additional issues regarding this instrument’s potential for simplifying the settlement process.

Tom Begley (Moorestown, NJ) explored implications of the Affordable Care Act (ACA) for settlements and structures, noting that implementation is incomplete, evolving and complex. There is the potential for future settlements to be smaller, given medical coverage that will be now be available through private insurance or expanded Medicaid eligibility. But calculations will be complex, involving analysis of policies’ restrictions on types of treatment, number of visits and length of hospital stays. Given that insurers are prohibited from establishing lifetime coverage caps, there will be fewer variables to consider in relation to life expectancy. SNTs will still be needed by beneficiaries who will rely upon SSI or Medicaid to provide home care, residential support, transportation or other services. He and Pi-Yi participated in a follow-on panel discussion which further explored the ins and outs of this massive program and its far-reaching effects.

Kristen Behrens (Moorestown,NJ), also delivered a presentation that examined situations in which asset spend down is the right option for reaching eligibility levels required by means-tested government programs. Depending on the client’s age, individual needs and size of the settlement, spend downs may be a viable alternative to creating an SNT. While there’s a five-year look back period for gifting or transfers, there are no such constraints on spend downs, which can involve purchases of a home, car, goods or services, vacations or even a prepaid funeral.

The Special Needs Alliance is a national, non-profit organization comprised of attorneys who serve individuals with disabilities and their families. Members have an average of 18 years of relevant experience in disability and benefits law.