Special Needs Trusts
A SPECIAL NEEDS TRUST is an arrangement by which a trustee holds property for the benefit of another person (the beneficiary). Iowa law refers to these trusts as Medical Assistance Special Needs Trusts. They are also known as d4A trusts as they were statutorily created by federal law at 42 USC 1396p(d)(4)(A).
When to Use
Special Needs Trusts are established for Medicaid members who are under 65 years-of-age and disabled to care for the special needs of a beneficiary. Often, Special Needs Trusts are set up after a legal settlement of a personal injury case or medical malpractice action where a person meets Medicaid guidelines, not including the proceeds of the settlement, and there are ongoing medical expenses. Special Needs Trusts may also be used for inheritance, gifts, or other resources.
Requirements for a Special Needs Trust
- The trust must be irrevocable
- established for the beneficiary by the beneficiary, a parent, grandparent, legal guardian, or a court
- created with the assets of a disabled person who is under 65
- the State of Iowa must be the residual beneficiary of the trust
Reimbursement to the State
Reimbursement must include all Medical Assistance provided and not just the Medical Assistance provided during the term of the trust.
Submitting a Special Needs Trust for Approval
The trust document should be sent to the Department of Human Services caseworker for the Medicaid member who will send the trust document to the Medicaid Trust Program for review, approval, or denial.
Yearly reports showing the monthly and total yearly income placed in the trust and the monthly and total yearly expenditures should be sent to the Medicaid Trust Program at the address below for review.
Report Upon Death
Upon death of the beneficiary or other termination of the trust, the trustee is responsible for winding up the affairs of the trust and should send notice of the termination, and reason for termination, to the Medicaid Trust Program at the address below.
At the termination of the trust by death or otherwise, payment of the money left in the trust up to the amount of all Medical Assistance provided to the beneficiary must be paid to "Iowa Department of Human Services." Payments should be mailed to:
Medicaid Trust Program
PO Box 36565
Des Moines IA 50315