The Disabled Military Child Protection Act - Allowing Funds to Be Directed to a Trust for Special Needs Children

 See below for details on this new bill........

Sponsor

• Congressman Jim Moran (D-VA) (H.R. 4329 of the 112^th Congress)
• Senator Kay Hagan (D-NC) (S. 1076)

Quick Summary of the Bill:

• Enables veterans who invest in a Survivor Benefit Plan (SBP) to transfer their benefits to a Supplemental Needs Trust for their special needs children (instead of leaving the benefit directly to the disabled child).

• Ensures that a dependent, disabled child continues to qualify for certain government benefits.

What’s the Current Problem?

• Health care for a disabled child can exceed $100,000 a year.
• Current law does not allow military families to plan adequately for their special needs children’s future.
• SBP
• A benefit that military members can choose at the time of retirement.  
• Under a SBP, a military retiree can have a portion of his or her monthly retirement pay withheld in order to provide, after his or her death, a monthly survivor benefit to a surviving spouse, child, or other eligible recipient.
• Service members often want to leave these benefits to their disabled child.

• Current law only permits that these SBP benefits go directly to the recipient, not into a trust. 
• If a military member selected his or her disabled child to be the recipient of the benefit then the benefit will go directly to the disabled child.
• However, this payment directly to a disabled child after the military retiree’s death is counted as income for Medicaid and Supplemental Security Income (SSI).
• As a result, the military veteran’s disabled child likely becomes ineligible for federal benefits.  

What are Supplemental Needs Trusts?

·       Congress officially recognized the use of SNTs in the Omnibus Budget Reconciliation Act of 1993.

·       SNTs allow assets to be held in a trust for an individual with disabilities without having these assets considered countable assets for purposes of Medicaid or SSI

·       The benefit of the SNT is that it allows this individual with disabilities to have supplemental funds to pay for basic living needs and extra care above that provided by the government without disqualifying the individual for government benefits.

o   Protects against the risk of complete impoverishment and allows the individual to meet basic living needs.

About the Bill:

• This bill would allow the SBP payment to be placed in a SNT for the disabled child of a deceased military veteran (disabled child remains eligible for federal assistance).
• The bill requires use of a first party SNT, meaning there is a Medicaid pay-back provision for when the beneficiary of the SNT dies.
• Equity and fairness issue.
• Non-military (civilian) parents can create SNTs for their disabled children and can often assign their retirement benefits to a SNT for the disabled child rather than have the survivor benefit go directly to the disabled child.
• The bill would allow more than 1,000 severely disabled military dependents to receive survivor benefits without losing access to Medicaid and SSI.
• Helps disabled military children receive long-term care.
• This bill will NOT lead to abuse of the system.
• SNTs have significant oversight.
• SNTs are administered under both state and federal law.
• Appointed fiduciaries are subject to auditing.

Source: NAELA (National Academy of Elder Law Attorneys)