ESTABLISHING A DISABILITY ANNUITY TRUST FOR A BENEFICIARY RECEIVING SSDI OR SSI
by: Begley Law Group
by Thomas D. Begley, Jr., CELA
A Disability Annuity Trust (“DAT”) can be established for a disabled child or any disabled individual. However, in considering the use of a DAT for a disabled person, care must be taken to examine the other government benefits currently being received, or which may be received in the future by the person with disabilities.
If the person with disabilities is receiving Supplemental Security Disability Income (“SSDI”), this is usually accompanied by Medicare. SSDI and Medicare are insurance-based programs, rather than means-based programs. Receipt of income from the DAT would not cause a loss of SSDI or Medicare. However, consideration should be given to other benefits that the person with disabilities may receive in the future. For example, will the person with disabilities be a candidate for group housing in the future? If so, the existence of the DAT may cause them to lose that benefit.
If the person is receiving Supplemental Security Income (“SSI”), that person also receives Medicaid. SSI is a means-based program. Both resources and income are considered in determining eligibility. If the person with disabilities receives distributions from the DAT, this may well disqualify that person from receiving SSI and cause a loss of Medicaid. The assets in the DAT would be “available” which would also disqualify the SSI recipient from both SSI and Medicaid, because the assets in the trust would be considered resources. If a DAT is designed as a Special Needs Trust, public benefits may be preserved.
 HCFA Transmittal 64 § 3257(B)(6).