The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Laurie Hanson, Esq., a shareholder in the Minneapolis, Minnesota elder law firm of Long, Reher & Hanson, P.A. The firm's focus is to provide positive strategies to individuals who are aging or living with disabilities to enable them to live as independently as possible for as long as possible. Laurie concentrates her practice exclusively in the areas of government benefit eligibility, special needs trusts, trust and public benefit litigation, estate planning and planning for incapacity. She is the past president of the Elder Law Section of the Minnesota State Bar Association and is repeatedly named a Super Lawyer in the field of elder law by her peers.
August 2012 - Vol. 6, Issue 11
The Supplemental Nutrition Assistance Program – or SNAP – is the new name for the retooled and improved federal food assistance program following changes enacted in the 2008 Farm Bill. The familiar name, Food Stamps, along with the actual stamps themselves, have gone the way of paper social security checks. Participants are now given an Electronic Benefit Transfer (EBT) card that looks much like a credit card. Purchasing food with the SNAP EBT card does not have the stigma associated with the old food coupons. With the EBT cards, participants may purchase “eligible food” – food intended for human consumption but not alcoholic beverages, tobacco, and hot foods or hot food products prepared for immediate consumption. Eligible food can also include seeds and plants to grow food, meals on wheels, and meals in certain group living arrangements for elderly or disabled individuals.
SNAP is for the most part uniform across the country and is reaching an estimated 43 million low-income Americans to provide them a nutritionally adequate diet. More than 75 percent of all food stamp participants are in families with children; nearly 25 percent of participants are elderly people or people with disabilities. The federal government pays the full cost of the food stamp benefits, but it splits the cost of administration with the states. SNAP is administered through Food and Nutrition Services, a division of United States Department of Agriculture.
SNAP benefits are available to almost all low-income households. A SNAP household can be a household of one: a person who lives alone or a person who lives with others but usually buys food and cooks alone. If the SNAP recipient purchases food and cooks meals with the people with whom he or she lives, then everyone is included in the SNAP household, meaning everyone’s income and assets are included in determining eligibility. Spouses and individuals under the age of 22 living with their parent(s) or step-parent(s) are considered to be one SNAP household even if household members do not eat together.
People receiving Supplemental Security Income (SSI) are automatically eligible for SNAP benefits. Under SNAP rules, households without automatic eligibility must meet the following three criteria:
- Total monthly income must be below 130% of the Federal Poverty Level (FPL) which in 2012 is $1,180 for a household of one and $2,008 for a household of three (in some states, this amount may be as high as 200% of the poverty level); and
- Net monthly income must be less than or equal to the FPL which in 2012 is $908 for a household of one and $1,545 for a household of three. Net income is computed by subtracting from total income deductions such as a 20% earned income deduction, a standard deduction, a dependent care deduction, medical costs, and an excess shelter deduction from gross income. Note: A person who is disabled or elderly only needs to meet the net income test; and
- Household assets must not exceed the asset limits set by the state. In all but five states, there is no asset test. The five states that do have an asset test are Idaho ($5,000 limit), Michigan ($5,000 limit, excluding one vehicle), Nebraska ($25,000 limit for liquid assets), Pennsylvania ($9,000 limit for elderly and disabled; $5,000 limit for all other households), and Texas ($5,000 limit, excluding one vehicle).
The Amount of Assistance for Food
The amount of SNAP benefits a household receives is called the “allotment.” The Allotment is determined by multiplying the net monthly income of the family by .3 (30% of one’s net monthly income is generally spent on food) and subtracting that amount from the Maximum Monthly Allotment for the household size. For instance, a household of four with a net income of $1,151 would be entitled to a SNAP allotment of $345 each month. There is a maximum monthly allotment for each household size which is adjusted in October of each year. For the year October 2011 – September 2012, the maximum monthly allotments are as follows:
|People in Household||Maximum Monthly Allotment|
See http://www.fns.usda.gov/snap/applicant_recipients/Eligibility.htm for more information on how to calculate benefits.
In most states, you apply for benefits at the same county office where you apply for Medicaid benefits. Specific information about eligibility in your state can be found at http://www.cbpp.org/cms/index.cfm?fa=view&id=618. This site provides the name of the SNAP program in each state, the services available on each state’s website (including on-line applications and benefit calculators), and a list of each state government’s resources that are online.
John is 21 years old, is on SSI, and resides at home with his two parents who both have incomes above $40,000 per year. He has cerebral palsy and requires personal care attendants to assist him with his activities of daily living. He generally prepares his own meals and eats with his caregiver. Is he eligible for Food Support? No. Since he is living with his parents, he is not eligible. He lives in a household of three and so John’s parents’ income is counted. Since their income is above 130% of the poverty line, the household is ineligible for SNAP. It does not matter if John is buying his own food and preparing it with his caregiver: he simply is not eligible because his parents make too much money.
What happens when John turns 22? Can he get SNAP? It depends. As long as John buys his own food and prepares his meals separately through the help of his caregiver, he would be eligible for SNAP when he turns 22. A caregiver is not counted in the SNAP household.
How a Trust Affects Eligibility
What happens if John has a special needs trust (SNT)? (See previous editions of The Voice for an explanation of SNTs.) Most states do not have an asset test and so your state may not be counting the trust as an asset. Some states, like Minnesota, do not count the income from the trust, either, reasoning that since the trust is excluded, so is any income or distribution from the trust. Other states may be stricter. In general, whether trust income and trust disbursements are income for purposes of SNAP depends upon the type of trust and whether the household is automatically eligible. For instance, an individual on SSI will be automatically eligible for SNAP. As long as the individual remains eligible for SSI, then the trust and the income from the trust will not affect SNAP eligibility. In other words, as long as the trust continues to be excluded for purposes of SSI, then the SNAP program will not look behind that eligibility.
For households where eligibility is not based on SSI, SNAP rules provide that funds in a trust or transferred to a trust, and income produced by that trust are unavailable only if all the following conditions are met:
- The trust arrangement is not likely to end during the certification period, and no household member has the power to revoke the trust arrangement or change the name of the beneficiary during the certification period;
- The trustee administering the funds is one of the following:
- A court;
- An institution, corporation, or organization which is not under the direction or ownership of any household member, or
- A person appointed by the court who has legal limits placed on the use of the funds;
- Trust investments made on behalf of the trust do not directly involve or assist any business or corporation under the control, direction, or influence of a household member; and
- The irrevocable trust is either
- Set up or funded by a non-household member or
- Funded from a household member’s own assets and the trustee uses the funds solely to pay the educational or medical expenses of any person named by the household creating the trust
If John’s trust is established by a third party – John’s grandmother died and left him $100,000 in a SNT. This is often referred to as a third party SNT because someone other than John created and funded the trust. The grandmother appoints John’s mother as trustee and specifies that at no time will John have access to the trust. Will this affect his SNAP benefits? Under the strict rules above, because John’s mother is the trustee, the trust will be counted as a resource. If John lives in one of the 45 states that do not have an asset test, then the trust is not counted and he is still eligible. Trust distributions may be counted as income to John, depending upon the state.
Let’s say that John’s mother appointed a professional trustee. Then, in all 50 states, the SNT would not be a resource and the distributions from the trust would not be considered income.
If John’s trust is funded with his own assets – John is injured, recovers $100,000 in a personal injury lawsuit, the court establishes the trust and appoints a professional trustee. Because this trust will hold assets that belong to John, this type of trust is often referred to as a first party SNT. Can John get SNAP if he has a first party SNT? Yes. The trust would not be considered a resource, but the distributions would have to be used only for John’s educational or medical expenses.
The challenge in all 50 states will be to determine how trust disbursements are viewed. In the 45 states where there is no asset test, a trust disbursement is simply using an excluded asset to purchase goods or services. This is no different than the individual going into his or her savings account, withdrawing money and purchasing the goods or services. Thus, as in Minnesota, the disbursement would not be income. Income earned by the trust, like income on a savings account, would be considered income, and cash distributions to or for the benefit of a household member will be considered income.
In order to assess how a trust will affect SNAP benefits it is important to determine the following:
- Is eligibility based on SSI or do the SNAP trust rules apply?
- Is the trust a third party trust or a first party trust?
- Is the trustee a professional trustee or limited by court imposed requirements?
- Does any household member have control over the trust or the trustee?
- What are your state’s rules regarding how SNAP treats trust distributions?
Individuals living with disabilities should consider applying for SNAP benefits because it can add a significant amount to the household budget and allow for more independent living. The program rules are complicated, especially when a household member is the beneficiary of a trust, but a knowledgeable special needs attorney can assist applicants and their advocates to be sure maximum benefits are received.