Reassessing Your Child’s Long-Term Care Plan in Pennsylvania

If you have a special needs child who receives Medicaid, now is a good time to reassess your long-term plans.

CNBC recently reported that about 11.2 million children in the U.S. have special needs — and of those – nearly 5 million rely on coverage from Medicaid and its Children’s Health Insurance Program.

“Now, funding to those programs is imperiled as the House and Senate debate their health-care bills,” the CNBC article reads. “The House proposal, the American Health Care Act, would reduce Medicaid spending by $834 billion from 2017 to 2026, according to the Congressional Budget Office.”

Under a Senate bill called the Better Care Reconciliation Act, federal spending on Medicaid is expected to decrease by $772 billion from 2017 to 2026.

Medicaid doesn’t just cover doctor’s visits and lab work. The benefits also include physical, occupational and speech therapy, nurses for people with chronic conditions, and in-home care.

“More than likely, parents of children with special needs may come to the conclusion that they can’t rely on benefits, and they will have to be proactive,” Russell J. Fishkind, an estate planning attorney and partner at Saul Ewing in Princeton, New Jersey is quoted as saying in the article. “If you have a special needs child, now might be the time to reassess your long-term plan and secure additional funding in the event the Medicaid income you needed is no longer there.”

Many people who have children with special needs are dependent on Medicaid and Supplemental Security Income, but they are required to qualify for the benefits.

“Individuals with more than $2,000 in assets and couples with more than $3,000 won’t qualify for the SSI program,” the article reads. “This year, the monthly maximum for SSI benefits is $735 for an eligible individual and $1,103 for a couple. In most states, a child eligible for SSI can also obtain Medicaid to cover medical services and special health care needs.”

In order to maximize available resources, family members can set up a third-party special needs trust and fund it with assets not owned by the child, such as life insurance policies.

By doing this, the child will still be eligible for SSI and Medicaid benefits and upon his or her death; those assets in the trust can go to other family members or to charity.

“A benefit of the third-party special needs trust — which is also known as a supplemental needs trust — is that assets that remain after the demise of the disabled individual do not have to be paid back to Medicaid,” the article reads. “This is because the assets never belonged to the beneficiary in the first place.”