(d)(4)(A) trust payback

Question:

Is there away to determine the amount to be reimbursed back to Medicaid before the death of a disabled beneficiary of a 1st party SNT?

Response:

Probably not, though the answer would depend on the particular state’s Medicaid agency.

To explain your question for the uninitiated, Medicaid provides health care coverage for those who qualify under its restrictive financial criteria. In addition, it can provide benefits that are unavailable through Medicare and private health insurance, such as personal care attendants (PCAs).

While the financial eligibility rules can differ from state to state and depending on both the type of Medicaid coverage sought — nursing home or community based — and the age of the beneficiary — under or over 65, typically there’s a $2,000 limit on countable assets. In addition, assets in a trust funded and created by the the applicant for benefits, a so-called “first party” or “self settled” trust, are typically counted against the asset limit.

However, Congress created an exception for self-settled trusts for the sole benefit of disabled Medicaid beneficiaries as long as the trusts provide that upon the beneficiary’s death they reimburse the state Medicaid agency for benefits paid out during their life. These are often referred to as “pay back” or “(d)(4)(A)” trusts, the latter name referring to the relevant statute, 42 USC § 1396p (d)(4)(A).

Though some advocates have argued otherwise, it’s generally understood that this payback obligation is broader than the usual Medicaid estate recovery claim which only seeks recovery of expenses paid out after age 55.

If there are funds remaining in the trust after the state Medicaid agency has been fully reimbursed, they may be distributed to other beneficiaries of the trust. This is, no doubt, why you are interested to know how much may be owed. However, during the beneficiary’s life, the number is a moving target, since as long as they are receiving coverage, the amount the state spends on their health care keeps growing.

My guess is that most, if not all, state Medicaid agencies will not go to the trouble of providing a snapshot of the obligation that has accrued up to any particular date. They have too much else on their plates. And the issue is totally academic if the trust funds are totally disbursed during the beneficiary’s life since the repayment obligation is only from the trust’s remaining funds, if any. No funds left, no repayment.

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