Special Needs Trust Fairness Act
The Special Needs Trust Fairness Act (S. 349) was introduced by Sen. Chuck Grassley (R-Iowa) with Sen. Bill Nelson (D-Fla.) as original co-sponsor. The full Senate passed the bill on September 9, 2015. A similar bill, the Special Needs Trust Fairness and Medicaid Improvement Act (H.R. 670), was introduced by Rep. Glenn Thompson (R-Penn.) with Rep. Frank Pallone (D-N.J.) as original co-sponsor and passed the House of Representatives on September 20, 2016. Ultimately, the Senate version was enacted as part of the 21st Century Cures Act, signed by President Obama.
The Special Needs Trust Fairness Act amends Title XIX of the Social Security Act to allow individuals with disabilities to establish their own special needs trusts. Formerly such trusts could only be established by parents, grandparents, legal guardians, or a court.
Special needs trusts allow non-elderly individuals with disabilities to receive and accumulate assets without jeopardizing eligibility for government programs, such as Supplemental Security Income (SSI), Medicaid, and vocational rehabilitation. The trust is specifically designated for “supplemental and extra care” beyond that which the government provides. When the beneficiary dies, the state may file a “Medicaid Pay-Back” claim against the trust to recoup health care costs paid on his or her behalf.