Special Needs Trusts: Protection for You and Your Family, Funding for Your Future

This article is a collaboration between Ken Paradis, CEO (Chronovo) and Cameron Lindahl, Trust Officer (CPT Institute).


Without realizing it, an injured individual (or others in the household) who accept a settlement award over $2,000 may lose eligibility for needs-based government benefits such as Medicaid, Supplemental Security Income (SSI) and In-Home Support Services (IHSS). The value of these government benefits is significant. Disqualification from Medicaid may eliminate access to affordable healthcare coverage in the United States (Agency for Healthcare Research and Quality, 2018) Medicaid also pays for residence in skilled nursing facility. (In contrast, Medicare does not pay for long-term care.) IHSS is another service provided by Medicaid that provides up to 283 hours of in-home caregiving services every month. Maintaining Medicaid eligibility can provide an individual or a family with thousands of dollars a month in critically important skilled care. A Special Needs Trust (SNT) preserves this eligibility while maximizing the benefits of legal settlements and awards.

In 1993, the Omnibus Budget Reconciliation Act of 1993 (“OBRA ’93”) was signed into law. This legislation provides unlimited funding into a SNT while maintaining eligibility for Medicaid, SSI and IHSS. (Please note, the names of Medicaid and IHSS can vary in certain states; in California, Medicaid is referred to as Medi-Cal.) SNTs can also protect eligibility for Section 8 housing (DeCambre v. Brookline Housing Authority (2016)). Medicare Set-asides (MSA) are considered a countable asset that may disqualify need-based government benefits unless they are placed in an SNT (Center for Medicare and Medicaid Services, 2005). Because funds in SNTs are not counted for need-based eligibility (Medicaid & SSI) calculations, they are critical to receiving the full value of the settlement or judgment.

There are some rules associated with SNTs, but there is also more flexibility in accessing accounts than there was in the past (How the 2018 POMS Update Affects Trust Beneficiaries, 2018). The three core rules for all SNTs are explained below:

  1. All disbursements from an SNT must be for the primary benefit of the individual utilizing the trust.
    This does not mean that another individual is prohibited from using a product or service purchased from an individual’s SNT, but it does mean that it must benefit the intended individual the most.
  2. All disbursements from an SNT must be made payable to a third party, not to the individual who is directly benefiting from a trust.
    Providing money to an individual on Medicaid, SSI, or IHSS could reduce or eliminate his/her benefits entirely. There are 5 permissible ways to purchase items while avoiding disqualification: 1) using a True Link Secured Debit Card with direct access to the trust, 2) using a credit card or secured credit card, 3) reimbursing a family member or friend, 4) sending payment to a company or service provider directly and 5) submitting online order requests to a Trustee.
  3. All disbursement requests from a SNT require receipts and/or invoices.
    If SSA or a state Medicaid office challenges a Trustee’s approval on a product or service, receipts provide documentation to support the decision. On the other hand, not maintaining accurate records can cause the Trustee to be removed or prosecuted.

When an SNT is combined with a structured settlement, the power to protect the financial future of an injured individual and family is unparalleled. In addition to using the SNT to protect ongoing income and benefits—or future eligibility—from various forms of public assistance, a structured settlement can provide a unique, tax-free, highly-secure, income for individuals with physical injuries (See Internal Revenue Code Sections 104(a)(2) and 130(c).)

Importantly, the income from a structure is immune from many creditors in most jurisdictions. Imagine the possibilities of maximizing government benefits while ensuring additional monthly income payouts. In fact, structures can be tailored to specific want and needs. Depending on the specific product and type of trust, structures can not only provide a lifetime of income but also a policy of payments that flow directly to the family even following death. Simply stated, SNTs and structures are critical to financing the future following an injury.


With the right partners, the process of securing an SNT and a structured settlement is incredible simple. So too is the ongoing use of each product.

From the standpoint of the structured settlement, Chronovo provides brokers with a flexible plan that clarifies every aspect of the process and its benefits. Its Chronograph© quote provides graphical explanations and transparency, enabling full personalization of the structured settlement plan. In the next step, the SNT account is funded automatically. Checks are received every month or are wired directly into trust accounts.

CPT clients can easily access their SNT accounts with the True Link Secured Debit Card or with a Credit Card*. Once the general rules of the account are understood, a True Link secured debit card provides day-to-day access to trust funds without seeking Trustee approval beforehand. A True Link secured debit card gives a client the ability to log into the account online to download statements and view the account balance. The only requirement is that the client must submit a monthly itemization of receipts before the card will be replenished. Similarly with credit cards and secured credit cards, the client will simply submit his/her itemized receipts with monthly statement for reimbursement. Most clients use smart phones or keep envelopes in their cars or purses to hold receipts throughout the month. These two methods are the most popular for daily purchases because they are the easiest to use and require minimal Trustee oversight. CPT recommends other methods of reimbursement for large purchases, such as vacations, homes, cars, and home or vehicle modifications.

CPT Institute makes submitting disbursement requests from your SNT incredibly easy via:

  1. Smart Phone Applications for Apple IOS or Android products: Our proprietary applications are intuitive and continually being enhanced. Our next update features real-time status updates. This is the most popular method for submitting disbursement requests.
  2. Email: This method is equally efficient as using our mobile application. Status updates are provided on all requests.
  3. Fax: This is the preferred method of submitting disbursement requests for individuals who prefer non-Internet-based interaction.
  4. Mail: This is the least efficient method for submitting disbursement requests, but it is available.

Special Needs Trusts and Structured Settlements should be customized, as they are often used with a variety of other strategies. It is important to consult with a qualified CPT Trust Officer and a Chronovo broker to learn about all the available options, since this can significantly impact the each individual’s financial future. The good news is that our organizations can coordinate all of these activities on your behalf. Even better news is that all initial consultations are provided free of charge to the injured individual.

If you have any questions about the critical financial planning for an injured individual, please give us a call:

  • For mitigating government benefits, please call 855.278.7681 or email setup@cpttrust.org to speak with a Qualified CPT Trust Officer.
  • For Chronovo, please call Annie Hernandez at 781.336.4680 ex. 119 or email: ahernandez@chronovo.com.

*It will take up to thirty days to set up your True Link card. This process requires customizing your Visa card to needs based government benefits you utilize.

CPT Institute is dedicated to all the disabled people we serve. We have developed a series of safeguards to protect them, including a secure, encrypted interface that links directly with all our financial institutions. In addition, all accounts are bondable and carry SIPC insurance for up to $500,000. Each SNT is drafted to reflect states’ unique Medicaid policies for full compliance. Keeping our client’s safe is CPT Institute’s number one priority. As a 501(c)(3) charitable organization, CPT Institute has a duty to provide unbiased “education and resources to the professional community serving the most vulnerable individuals in our society” (Our Mission, 2018).

For a walkthrough of the Chronovo interface or to discuss Chronovo’s value for your company, please contact us: 1 844 600 NOVO (6686) or info@chronovo.com