Page 54

54 TITLE 16 HEALTH AND SAFETY DELAWARE ADMINISTRATIVE CODE 15 DE Reg. 202 (08/01/11) 20400.10 Treatment Of Funds Entering And Leaving An Exempted Trust For an Individual with Disabilities While trusts for an individual with disabilities are exempt from treatment under the trust rules, funds entering and leaving them are not exempt from treatment under the rules of the appropriate cash assistance program. The following are rules applicable to funds entering and leaving both kinds of exempt trusts for an individual with disabilities. (see DSSM 20400.1.1, trusts established with income and DSSM 20400.10.2, trusts established with resources). 15 DE Reg. 202 (08/01/11) 20400.10.1 Exempted Trust For an Individual with Disabilities Established With The Individual’s Own Income - For eligibility purposes, do not count income before it is placed in the trust. - If a transfer of assets into a trust for an individual with disabilities is not exempted under the exceptions to the transfer of assets' rules, a penalty must be enacted. - Post-eligibility income rules may be applied to income placed in the trust. - Funds paid out of the trust to or for the benefit of the individual would count as income - Spousal impoverishment provisions are also applicable as they apply to exempted trusts. Note: When the right to income placed in a trust actually belongs to the trust and not the individual, the income does not count under SSI rules as income received by the individual. Most trusts for an individual with disabilities are created using the individual’s resources; some may be created using the individual’s income or a combination of income (Income as defined by the SSI program.) and resources. When income is placed in the trust see Section 20400.11.1- Income Trusts (Miller Trusts) for treatment of income. 15 DE Reg. 202 (08/01/11) 20400.10.2 Exempted Trust for an Individual with Disabilities Established in Part or in Whole With Resources - Resources placed in an exempt irrevocable trust for an individual with disabilities are counted as resources only during the months in which they are in the possession of the individual. Beginning with the month the resources are placed in the trust, they are exempt from being counted as resources to the individual. - Resources placed in an exempted trust for an individual with disabilities are subject to imposition of a penalty under the transfer of assets provisions unless: the transfer is specifically exempt from penalty, or unless the resources placed in the trust are used to benefit the individual, and the trust purchases items and services for the individual at fair market value. NOTE: These rules apply to both income and resources placed in an exempt trust. 15 DE Reg. 202 (08/01/11) 20400.11 Income Trusts (Miller Trusts) This type of trust is composed only of Social Security, pension, and/or other income to the individual, including accumulated interest in the trusts. 20400.11.1 Medicaid Qualification of a Miller Trust or Income Trust To qualify, the individual must receive the income and place it into a Miller trust. If an individual has transferred his/her right to receive the income, and the income is legally received by the trust, then this income is no longer considered to be the individual's income. In this situation the income does not meet the requirements for exemption. A Miller Trust must be irrevocable. The trust must be composed only of income. No resources may be used to establish or add to the trust. The inclusion of resources will void the Medicaid eligibility of the trust. The trust must state that, upon the death of the individual, the State will receive all funds remaining in the trust, up to an amount equal to the total medical assistance paid on behalf of the individual under the State Medicaid plan. 20400.11.2 Treatment of a Miller Trust That Meets All Requirements When a trust meets all requirements for exemption, and is irrevocable, the corpus of the trust is exempt from being counted as available to the individual. A revocable trust is counted under SSI rules as an available resource to the individual. 20400.11.3 Treatment of Income Placed in a Miller Trust Income (Social Security benefits, VA pensions, private pensions, etc.) can be placed directly into a Miller trust by the recipient of those funds, without those funds adversely affecting the individual's eligibility for Medicaid. Income generated by the trust that remains in the trust is not income to the individual. 20400.11.4 Application Of Transfer Of Assets Penalties To Income Placed In A Miller Trust