Keeping Independence and Benefit Eligibility When You're Over the Asset Limit

Scales House MoneySome of the most rewarding work we do is helping clients ensure their quality of life, even when they are dealing with difficult circumstances. We handle so many cases that give us the opportunity to help clients maintain their independence, comfort, and security, even when they thought those things were out of reach. Medicaid eligibility and other factors that greatly influence critical life choices can be quite confusing. It’s easy to assume that you’re out of options, even when you aren’t.

In one such case, a woman in her fifties had finally received the good news that a Section 8 apartment had become available….

Struggling to Manage Housing and Support Service Needs

Lila owned a condo, but had applied for the Section 8 housing because she wasn’t able to afford the ongoing costs of maintaining the condo and paying the fees. After the long wait, she was thrilled at the prospect of being able to move into a home that was better suited to her financial situation, but she had a problem.

Lila has cerebral palsy, so she has some physical limitations that make it impossible to live independently without critical support services. Like many other people, Lila relies on Medicaid and SSDI (Social Security Disability Insurance) income to cover the costs of necessary in-home personal care support and other services like transportation to her job, doctor’s appointments, and other necessities.

Her dilemma, once she received approval for the Section 8 apartment, was how to sell her condo without jeopardizing her eligibility for these important services.

With her type of Medicaid waiver, she was allowed a maximum of $10,000 in assets. The sale of the condo would increase her assets beyond that limit, causing her to lose her SSDI and Medicaid benefits. And without those benefits, she would be unable to afford the out-of-pocket costs for required services over the long term.

The situation looked bleak, until Lila reached out for help.

Establishing a First-Party Supplemental Needs Trust

The solution to Lila’s quandary was a first-party supplemental needs trust. This kind of trust is designed to help individuals retain assets without disqualifying them from public benefits programs.

Once we had determined our course of action, the actual process was fairly simple. Lila sold her condo, and we put the proceeds into the newly established trust. Her brother assisted her with the process and agreed to become the trustee of the trust. (An individual cannot be the trustee of their own first-party supplemental needs trust, but a friend, family member, professional trustee service, or PLAN of Connecticut can all fulfill that role.)

This approach provided Lila with everything she needed:

  • The ability to move into the Section 8 apartment;
  • Continuation of her SSDI and her Medicaid waiver benefits; and
  • A cushion of money that will be extremely important for her future.

While Lila is still currently working, her earning potential will not increase, and she’ll eventually want to retire. The way things are set up for her now, she is much more secure—both in the current situation, and looking ahead to her future.

Balancing Benefits for a More Secure and Relaxed Future

No one should have to choose between affordable housing and support services that are necessary to maintain independence.

And no one should have to sacrifice quality of life because a short-term windfall makes them ineligible for critical benefits. This kind of situation comes up more frequently than you might think, and not just in the context of selling personal property. People who receive an outright inheritance, for instance, or a settlement from a lawsuit often find themselves in a position very similar to Lila’s.

A first-person supplemental needs trust can provide a very effective way of balancing all of an individual’s needs—housing, support services, and a small nest egg to ensure comfort in the years to come.

If you have questions about how this kind of trust might help you or a loved one, we’d be happy to talk with you about the options.

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