other medical expenses), Supplemental Security
Income (SSI), the Supplemental Nutritional Assistance
Program (SNAP), Section 8 housing and similar
welfare benets, can provide critical funding for basic
medical, dental, vision and skilled care, food, income
and shelter for qualied elderly or disabled individuals,
but such programs generally provide only the basics
and have strict nancial limits.
Qualifying for Medicaid requires low income and
assets. In New Jersey, a single individual must have less
than $2,000 in all of his nancial accounts combined
(including all bank, brokerage, certicate of deposit,
401(k), individual retirement accounts, United States
savings bonds, and the cash surrender value of any
whole life insurance policy he may own).
But how can impoverished, disabled individuals aord
to live in the community? The low income and asset
requirements leave little funds available for comfort
and enrichment activities, Uber or Lyfts to the doctor’s
oce, expensive medications outside the Medicaid
formulary, additional hours of care beyond that
approved by the Medicaid Managed Care Organization
(MCO), non-routine dental or vision care, and so forth.
Using a special needs trust can solve these problems.
A special needs trust can be a very eective strategy
to enhance the lifestyle of a disabled individual, while
preserving the individual’s eligibility for means-tested
public benets. Additional health services and medical
equipment, specialized therapies, and private health
insurance premiums, education and vocational
training and job coaching, household goods, furniture
and appliances can be paid from a special needs trust,
as can cable television, home appliances, and
computers and software. Payment for the cost of a
specially equipped automobile can be an allowable
expense, provided there is only one vehicle in the
household of the disabled individual. The costs of
personal services, including care management
services and language translation services provided
to beneciaries whose primary language is not
English, can also be allowable expenses. See e.g.
Wong v. Dainies, 582 F.Supp. 23 475 (S.D.N.Y. 2008)
(use of a special needs trust to pay for a Cantonese-
speaking aide). Special needs trusts can also be used
to pay for the costs of recreational activities, including
domestic travel expenses for the beneciary and
certain companions.
The use of special needs trusts is encouraged as a
matter of federal and state public policy. Special
needs trusts receive special treatment under federal
law and under New Jersey law. The funds held in a
special needs trust can be used to assist the
disabled trust beneciary without disqualifying
that beneciary for means-tested public benets,
even though the funds in the trust are in excess of
the countable resource limits for the various public
benets programs. As stated above, a disabled, single
individual residing in New Jersey could not qualify for
Medicaid if he owns more than $2,000 in countable
assets in his name. However, if the same disabled
individual was the beneciary of a properly
established and funded rst party self-settled special
needs trust, potentially hundreds of thousands of
dollars could be held in the special needs trust and
used for the benet of that disabled individual,
without disqualication from Medicaid.
Similarly, under newly adopted regulations which
took eect on October 18, 2018, if a United States
military veteran seeking to qualify for the Veteran’s
Administration Improved Pension (a nancial benet
which qualied veteran’s may use help pay for the
cost of their care in the home or in a long-term care
setting), the individual may transfer their assets to a
special needs trust for another disabled individual
without incurring a penalty period disqualifying the
veteran from the Improved Pension.
Jane M. Fearn-Zimmer, Esq., LL.M.
Shareholder, Flaster Greenberg PC
Elder and Disability Law
Special Needs Trusts Update
Means-tested public benet
programs such as Medicaid
(which provides health insurance
and payment for skilled care and
