1. Where is the SSA Going with POMS Changes? Armchair Chat June 25, 2013 Mary E. O’ByrneNeal Winston Frank, Frank & Scherr, LLCWinston Law Group LLC 1400 Front Avenue, Suite 200440 Broadway Lutherville, MD 21093Somerville, MA 02145 410-337-8900617-841-4000 mobyrne@frankelderlaw.comnw@winstonlg.com

2. Overview History of SSA focus on sole benefit Recent activities and creating new advocacy relationship with SSA POMS changes in 2013 What’s ahead with SSA Questions

3. Background of “sole benefit” OBRA ’93, August 1993 The word “sole” only occurs once in the statute: ◦ 42 U.S.C.A. Sec. 1396p(d)(4)(C)  “…(iii) Accounts in the trust are established solely for the benefit of individuals who are disabled (as defined in section 1382c(a)(3) of this title) by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court…” ◦ arguably refers to the preservation of an individual’s pooled account for that beneficiary and not other pooled trust beneficiaries.

4. Background of “sole benefit” HCFA 64 – State program transmittal letter issued in November 1994 by federal Medicaid policy office. Broadly defined “sole benefit” as limiting trust distributions in all (d)(4) trusts only for the singular use of the recipient beneficiary.

5. Background of “sole benefit” SSI self settled trusts added to OBRA ‘93 requirements under Foster Care Independence Act, January 2000 First POMS reference to “sole benefit” in 2001

6. Current POMS Sole Benefit Limitation “Under the special needs trust exception, the trust must be established for and used for the benefit of the disabled individual. SSA has interpreted this provision to require that the trust be for the sole benefit of the individual, as described in SI 01120.201F.2. Any provisions that provide benefits to other individuals or entities during the disabled individual’s lifetime, or allow for termination of the trust prior to the individual’s death and payment of the corpus to another individual or entity (other than the State(s) or another creditor for payment of goods and services provided to the individual), will result in disqualification fro the special needs trust exception.” (Emphasis added.) POMS SI 011120.203B.1e

7. New POMS Travel Expense Limitation May 12, 2012  “An SSI recipient is awarded a court-ordered settlement that is placed in an irrevocable trust of which he is the beneficiary. The trust document includes a provision permitting the trustee to use trust funds in order to pay for the SSI recipient’s family to fly from Idaho to Nebraska. The trust is not established for the sole benefit of the trust beneficiary, since it permits the trustee to use trust funds in a manner that will financially benefit the SSI recipient’s family.” SI 01120.201 F.2, Ex. 1. (Emphasis added.)

8. Excuse me?  Described by SSA as a “clarification” of existing policy, and not a policy change  Assets of trusts with more liberal travel example language were considered as “countable” to the recipient  Some Regional Offices gave pooled trusts 90 days to amend existing terms, and individual trusts when reviewed inconsistently treated  If trust assets have been used for such travel in the past, the consequences were not clear and not found anywhere in POMS

9. Advocates Reach Out Advocate protests heard by Commissioner Astrue POMS travel example removed in mid- December 2012 SSA Commissioner’s office requests a meeting with advocates to discuss this provision and other concerns. Meeting with SSA Acting Commissioner, relevant Associate Commissioners, and advocates held January 2013 Agenda included review of specific SSI POMS for pooled and individual trusts, internal agency consistency and training, continuing dialogue with advocates at Associate Commissioner level

10. Specific POMS Review Issues Discussed General review of SSA interpretation of “sole benefit” Prohibition on friends and family travel – change to POMS SI 01120.201. F. Ex. 1. Reimbursement to third parties for purchases made on behalf of beneficiary treated as income to the beneficiary. Restrictions on payment of family caregivers. Reliance on prior SSA approval of trust; reasonable time for amendment when rules change. Legal obligations paid from trust Creation of trust by Court

11. Immediate Fix and Longer Range Changes On February 8, 2013, SSA changed POMS SI 01120.201I.1 adding the following: ◦ f. Reimbursements to a third party.  Reimbursements made from the trust to a third party for funds expended on behalf of the trust beneficiary are not income. In addition, reimbursements from the trust to pay a credit card belonging to a third party for purchases made for the trust beneficiary are not income. Existing income and resource rules apply to items a trust beneficiary receives from a third party. (Emphasis added.)

12. SSA Internal Decision SSA staff had sought input from CMS in developing new rules regarding payment of legal obligations and third party travel expenses, and opinion from the SSA Office of General Counsel. Late March 2013, SSA advised SNT Advocates that it was moving ahead with limited third party travel provisions for medical treatment/oversight only and that it would take regulatory route for other changes discussed.

13. SSA Requests and Accepts Some Advocate Recommendations On May 15, 2013, SSA issues revised POMS for allowable third party travel expense from (d)(4) SNT: ◦ “Payment of third party travel expenses which are necessary in order for the trust beneficiary to obtain medical treatment”; ◦ “Payment of third party travel expenses to visit a trust beneficiary who resides in an institution, nursing home, or other long-term care facility (e.g., group homes and assisted living facilities) or other supported living arrangement in which a non-family member or entity is being paid to provide or oversee the individual’s living arrangement. The travel must be for the purpose of ensuring the safety and/or medical well-being of the individual.” POMS SI 01120.201 F.2.b.; ◦ provides for 90 day amendment period for previously approved trusts with old travel terms, with no retroactive termination or overpayment. ◦ See attached publication with specific POMS changes May 15, 2013

14. CMS Position And Influence On SSA Gene Coffey and Jannelle Bratcher, from CMS policy office, attended 2 nd meeting at advocate’s request. No CMS position on sole benefit expressed at meeting except that agency must work “within confines of previously stated policy”. CMS position on “sole benefit” only articulated in HCFA 64, interim decisions, and letters to regional offices.

15. SSA Addresses Operational Issues re: Review of SNTs Creation of “virtual cadre” of trust experts from around the country. Using automation and electronic files for efficiency and to leverage national resources. Will have a group of trust experts for external case specific inquiries. SSA will identify the trust expert for each region. Expect implementation in 2-3 months. Also, considering allowing Advocates to review and comment on training materials.

16. Other Rule Changes Will Require Regulation SSA will publish advance notice of proposed rulemaking for regulations for certain other policy changes such as: ◦ Third party travel expenses for circumstances other than those related to medical treatment or oversight of safety and medical well- being. ◦ Payment of certain legal obligations of the beneficiary from trust considered to be for the benefit/sole benefit of the beneficiary.

17. Payment of Family Caregivers Stated policy of “Not paying mom to be mom”. SSA says this has been their policy. If the services would otherwise be provided by an outside entity, family caregiver may be compensated by trust. No specific credentialing or training required. No rule making anticipated at this time.

18. SSA Position on Individual Establishing (d)(4)(A) Trust SSA Office of General Counsel opinion that beneficiary cannot establish (d)(4)(A) trust and concluded that Congress must have intended that beneficiary could only establish a (d)(4)(C) trust. Marty Ford, ARC Public Policy Office, commented on original intent of Congress to allow individual to establish trust, but not included in statute due to scrivener’s error. Advocates request that Court established trust procedure described in POMS be made more understandable to avoid trust creation errors.

19. Gathering Issues for the Next Meeting with SSA General rule allowing a reasonable amendment period without retroactive termination and overpayment for trusts previously found to meet the SSA special needs trust exclusion, regardless of policy change or different reviewer on redetermination. Court establishment. “General trust rules” regarding what choice of contingent beneficiary makes an irrevocable trust revocable. Allowable trust distributions that do not violate sole benefit interpretation.

20. General Impressions of the Tone of Our Discussions SSA staff have been professional, cordial, fairly candid and willing to engage with the Advocates. Although Commissioner Astrue opened the door, the commitment to meeting with Advocates remains. Evident desire to provide better customer service and willingness to hear us. High level of concern about program integrity and the next ugly front page story about abuses. Proprietary attitude re: protecting “our” beneficiaries from abuse by trustee and having a responsibility to protect these private funds.

21. Implications for New and Existing Trusts Trustees may now reimburse third parties for payments made to purchase goods and services for the beneficiary without this counting as income to the beneficiary. Payment of third party travel expenses is limited to purposes outlined in recent POMS changes. Every other third party travel expense is considered to violate the sole benefit rule. Consequences of having used trust assets for disallowed purpose when found on review? Probably a transfer for less than value rather than a countable asset. Advise clients and beneficiaries that many rules are under scrutiny at SSA at this time and changes in existing trust provisions and patterns of distribution may be necessary as SSA rules evolve.

22. If trust includes authority to pay for third party travel for other than medical treatment or oversight of beneficiary’s well-being, amend trust prior to redetermination to avoid review and penalty. General “Travel” without details as a permissible expenditure, e.g. on the list of examples of trust uses, should not be a problem. If paying family caregivers, document the need for services over and above expectations of parental support, such as with physician or care manager orders/recommendations in a plan of care. When establishing trust by court order, carefully follow POMS terminology, have court “order” trust creation, and not have beneficiary petition court. Share the issues you are encountering with us to bring to the next Advocates meeting.