FIRST PARTY TRUSTS:

Supplemental Needs Trusts (also known as “Special Needs Trusts” or “SNT’s”) have been in existence for years but were officially recognized by Congress in 1993 under the Omnibus Reconciliation Act (“OBRA 93”) and were approved as a way to protect an individual’s eligibility for Medical Assistance, Waiver Programs and Supplemental Security Income (“SSI”). Congress created the “Payback Trust” also known as a (d)(4)(A) and the “Pooled Trust” known as a (d)(4)(C).   See 42 U.S.C. §1396p(d)(4)(A) and 42 U.S.C. §1396p(d)(4)(C).

PAYBACK TRUST:

  • Payback Trusts are used for persons of all disabilities but the individual must be under the age of sixty-five (65).
  • The Trust may be created by the parent, grandparent, legal guardian of the individual with a disability or by Order of the Court.
  • Trust documents are drafted by an attorney and then submitted to the Social Security Administration and the Office of the Attorney General on behalf of the State of Maryland for their review and approval. Once the Trust has been approved the individual’s funds may be placed in the Trust.
  • The Payback Trust is also known as a “Stand Alone” trust because it is only the Individual with disabilities funds in the account.
  • The Payback Trust is funded with assets belonging to the Individual with disabilities. The individual may add assets/funds to the Trust at any time (up to age 65) to avoid an unnecessary spend down.
  • The assets in the Trust are used for the benefit of the individual with disabilities only.
  • Funds remaining in the Payback Trust when the individual passes away must be paid to the Maryland Department of Mental Health & Hygiene as repayment for the cost of Medical Assistance benefits.
  • If there are funds remaining in the account after payback to the State, the Trust Agreement directs the distribution of those funds.

First Maryland Disability Trust Inc. serves as trustee or co-trustee of Payback Trusts.

POOLED ASSET TRUST (“PSNT”):

  • Pooled Trusts are for persons with all types of disabilities and ALL AGES.
  • The Pooled Trust may be created by the individual with disabilities, parent, grandparent, legal guardian of the individual with a disability or by Order of the Court.
  • Pooled Asset Trust documents are standard documents and have been approved by both the Social Security Administration and the Office of the Attorneys General. In order to open a Pooled Trust Account, a Joinder Agreement is signed by the person creating the account and the Trustee of the Pooled Trust.
  • The Pooled Trust is funded with assets belonging to the Individual with disabilities. The individual may add assets/funds to the Trust at any time to avoid an unnecessary spend down.
  • The assets in the Trust are used for the benefit of the individual with disabilities only.
  • First Maryland’s Pooled Trust has no minimum deposit.
  • Pooled Trusts are a good resource for Agencies who have clients with funds in excess of what is allowed under the rules of “means tested” benefits.
  • Using a Pooled Trust allows the individual with disabilities to “pool” or combine their assets with the assets of others for investment purposes only. Individual accounts are maintained for each person’s interest in the pool.
  • Funds remaining in the Pooled Trust when the individual with disabilities passes away are either retained by First Maryland Disability Trust, Inc. for the charitable fund which benefits other persons with disabilities OR are paid to the Maryland Department of Mental Health & Hygiene as repayment for the cost of Medical Assistance benefits.
  • First Maryland Disability Trust is operated by the non-profit organization, First Maryland Disability Trust, Inc.

First Maryland Disability Trust serves as Trustee of the Pooled Asset Trust.

First Party Pooled Trust Documents:

MEDICARE SET-ASIDE TRUSTS (“MSA’s”):

  • MSA Trusts are for the individual who has received a Worker’s Compensation Award or Personal Injury Award and must have funds “set-aside” in a separate account for future medical expenses relating to that particular case.

Denise W. Fike

Executive Director

1400 Front Avenue, Suite 303

Lutherville, MD 21093