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Special Needs Trust

The primary purpose of creating a Special Needs Trust is to maintain the eligibility of the injured party to receive government benefits, specifically Medicaid. Establishing a Special Needs Trust (SNT) allows an injured party to receive a settlement without being disqualified from SSI or Medicaid. Federal and state laws allow proceeds from an injury lawsuit to be placed into an SNT without those proceeds being considered assets or countable resources for the purpose of qualifying for government benefits.

There are several different types of Special Need Trusts:

  • For injured parties under the age of 65 (42 U.S.C. 1396p(d)(4)(A))
  • For injured parties over the age of 65 (42 U.S.C. 1396p(d)(4)(C))
  • A third party Special Needs Trust
  • For injured parties that do not qualify for Medicaid (42 U.S.C. 1396p(d)(4)(B) (also known as a Miller Trust)


Any of the above SNT’s can be funded with a structured settlement which provides the injured party with excellent security, while also helping to increase the value of the overall settlement. If an injured party has a SNT funded with lifetime benefits from a structured settlement annuity, then the injured party will not outlive the trust benefits. In addition, the interest earned in the structured settlement annuity is tax free. However, the interest earned after the funds are paid to the SNT and invested by the trust will be taxable.

Advantages of a Special Needs Trust:

  • The injured party remains eligible for Medicaid, State Medicaid Waiver Program and Supplemental Security Income (SSI).
    • With as little as $2,000 in certain assets, an injured party can be disqualified from some government benefits, including Medicaid and SSI. Federal law does not consider the injured party to have “received” the money if it is placed in a SNT.
  • The injured party remains eligible for private care programs based on Medicaid eligibility.
    • If an injured party takes a cash settlement all Medicaid benefits could be impacted, including private care programs.
  • The injured party can still purchase medical services and equipment at regular rates, whenever necessary.
    • As seen below, these services and many other are available to the injured party who uses a SNT.

Below is a list of the types of items and services that a SNT can pay for:

  • Out of pocket medical and dental expenses
  • Essential dietary needs
  • Personal care attendant
  • Transportation, maintenance and insurance for vehicles
  • Rehabilitation and gym memberships
  • Computers
  • Special education
  • Non-medical goods and services that add pleasure and quality to life (not “food and shelter” items), such as:
    • Televisions
    • Radios/CD players
    • DVD players
    • Movies
    • Travel


For more information on Special Needs Trusts or for assistance in establishing one, please Contact Us Today.

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