If someone is disabled and under the age of 65 a special trust is available to protect resources and qualify for Medicaid. This trust is established under federal and Oklahoma law and regulations. Sometimes this trust is referred to as a D4(A) Trust, referring to the particular sub-section of the federal statute authorizing the trust. The rules for establishing this trust are:
- The primary beneficiary of the trust must be a person under 65 years old who meets the Social Security Act definition of Â‘disabledÂ’;
- During the life of the primary beneficiary, trust assets can be only used for the benefit of the primary beneficiary;
- The trust must be created by the disabled personÂ’s parent, grandparent, guardian, or a court; If created by a court, the judge must be the grantor or have ordered the trust to be created by someone else. The judge may not approve a trust that has already been created.
- The trust must be funded entirely with the disabled personÂ’s assets;
- The trust cannot be revoked or terminated during the primary beneficiary’s lifetime.
- The trust cannot be amended without the consent of DHS;
- When the trust terminates at the death of the primary beneficiary, the Medicaid Program shall be reimbursed for all funds expended by the Medicaid Program for the primary beneficiary. Except for some administrative expenses, this shall be done before any other expenditure, including expenses of final illness and burial. If the primary beneficiary needs to be eligible for SSI, SSA requires the language contained in Article XI – Termination of Trust.
- As of November 1, 2007, 63 O.S. § 5051.1 says:
- A Medicaid special needs trust for the purposes of establishing or maintaining Medicaid eligibility shall not be approved until such time as the [Oklahoma Health Care] Authority has been made whole and paid in full for all paid medical claims which are associated with the action.
- A Medicaid recipient must notify the [Oklahoma Health Care] Authority prior to a compromise or settlement against a third party in which the Authority has provided or has become obligated to provide medical assistance.
A Supplemental Needs or D4(A) Trust is normally used for an inheritance or insurance settlement received by a disabled individual who does not want to lose their Medicaid benefits. The trust is subject to normal SSI income rules. Distributions cannot be made for food, clothing or shelter. That means the money in the trust can only be used for supplemental needs. Supplemental needs is a diverse group. It could be medical equipment or treatment not provided under Medicaid, entertainment, a vacation, furniture, a vehicle, gasoline, and vehicle insurance to list some. Some expenditures that would normally qualify as supplemental are disallowed by DHS policy. It is recommended that the approval of the DHS Medicaid caseworker be obtained in advance before making supplemental expenditures.