Monies held in trust for an individual
applying for or receiving SoonerCare must have the availability of the funds
determined. Funds held in trust are considered available when they are under
the direct control of the individual or his/her spouse, and disbursement is at
their sole discretion. Funds may also be held in trust and under the control of
someone other than the individual or his/her spouse, such as the courts,
agencies, other individuals, or the Bureau of Indian Affairs (BIA).
(1) Availability determinations.
The worker should be able to determine the availability of a trust using the
definitions and explanations listed in (2) of this subsection. However, in some
cases, the worker may wish to submit a trust to the Oklahoma Department of
Human Services (OKDHS) State Office for determination of availability. In these
instances, all pertinent data is submitted to Family Support Services Division,
Attention: Health Related and Medical Services Section, for a decision.
(2) Definition of terms. The
following words and terms, when used in this paragraph, have the following
meaning, unless the context clearly indicates otherwise:
(A) Beneficiary. Beneficiary
means the person(s) who is to receive distributions of either income or
principal, or on behalf of whom the trustee is to make payments.
Corpus/principal means the body of the trust or the original asset used to
establish the trust, such as a sum of money or real property.
(C) Discretionary powers. Discretionary
powers means the grantor gives the trustee the power to make an independent
determination whether to distribute income and/or principal to the
beneficiary(ies) or to retain the income and add it to the principal of the
(D) Distributions. Distributions
means payments or allocations made from the trust from the principal or from
the income produced by the principal (e.g., interest on a bank account).
(E) Grantor (trustor/settlor).
Grantor (trustor/settlor) means the individual who establishes the trust by
transferring certain assets.
(F) Irrevocable trust.
Irrevocable trust means a trust in which the grantor has expressly not retained
the right to terminate or revoke the trust and reclaim the trust principal and
(G) Pour over or open trust.
Pour over or open trust means a trust which may be expanded from time to time
by the addition to the trust principal (e.g., a trust established to receive
the monthly payment of an annuity, a workers' compensation settlement, a
disability benefit or other periodic receivable). The principal may accumulate
or grow depending upon whether the trustee distributes the receivable or
permits it to accumulate. Generally, the terms of the trust will determine the
availability of the income in the month of receipt and the availability of the
principal in subsequent months.
(H) Primary beneficiary.
Primary beneficiary means the first person or class of persons to receive the
benefits of the trust.
(I) Revocable trust. Revocable
trust means a trust in which the grantor has retained the right to terminate or
revoke the trust and reclaim the trust principal and income. Unless a trust is
specifically made irrevocable, it is revocable. Even an irrevocable trust is
revocable upon the written consent of all living persons with an interest in
(J) Secondary beneficiary.
Secondary beneficiary means the person or class of persons who will receive the
benefits of the trust after the primary beneficiary has died or is otherwise no
longer entitled to benefits.
(K) Testamentary trust.
Testamentary trust means a trust created by a will and effective upon the death
of the individual making the will.
(L) Trustee. Trustee means an
individual, individuals, a corporation, court, bank or combination thereof with
responsibility for carrying out the terms of the trust.
(3) Documents needed. To
determine the availability of a trust for an individual applying for or
receiving SoonerCare, copies of the following documents are obtained:
(A) Trust document;
(B) When applicable, all relevant
court documents including the Order establishing the trust, Settlement
Agreement, Journal Entry, etc.; and
(C) Documentation reflecting prior
disbursements (date, amount, purpose).
(4) Trust accounts established on
or before August 10, 1993. The rules
found in (A) - (C) of this paragraph apply to trust accounts established on or
before August 10, 1993.
(A) Support trust. The purpose
of a support trust is the provision of support or care of a beneficiary. A
support trust will generally contain language such as "to provide for the
care, support and maintenance of ...", "to provide as necessary for
the support of ...", or "as my trustee may deem necessary for the
support, maintenance, medical expenses, care, comfort and general
welfare." Except as provided in (i)-(iii) of this subparagraph, the amount
from a support trust deemed available to the beneficiary is the maximum amount
of payments that may be permitted under the terms of the trust to be
distributed to the beneficiary, assuming the full exercise of discretion by the
trustee(s) for distribution of the maximum amount to the beneficiary. The
beneficiary of a support trust, under which the distribution of payments to the
beneficiary is determined by one or more trustees who are permitted to exercise
discretion with respect to distributions, may show that the amounts deemed
available are not actually available by:
(i) Commencing proceedings against the
trustee(s) in a court of competent jurisdiction;
(ii) Diligently and in good faith
asserting in the proceedings that the trustee(s) is required to provide support
out of the trust; and
(iii) Showing that the court has made
a determination, not reasonably subject to appeal, that the trustee must pay
some amount less than the amount deemed available. If the beneficiary makes the
showing, the amount deemed available from the trust is the amount determined by
the court. Any action by a beneficiary
or the beneficiary's representative, or by the trustee or the trustee's representative,
in attempting a showing to make the Agency or the State of Oklahoma a party to
the proceeding, or to show to the court that SoonerCare benefits may be
available if the court limits the amounts deemed available under the trust,
precludes the showing of good faith required.
(B) Medicaid Qualifying Trust
(MQT). A MQT is a trust, or similar legal device, established (other than
by will) by an individual or an individual's spouse, under which the individual
may be the beneficiary of all or part of the distributions from the trust and
such distributions are determined by one or more trustees who are permitted to
exercise any discretion with respect to distributions to the individual. A
trust established by an individual or an individual's spouse includes trusts
created or approved by a representative of the individual (parent, guardian or
person holding power of attorney) or the court where the property placed in
trust is intended to satisfy or settle a claim made by or on behalf of the
individual or the individual's spouse. This includes trust accounts or similar
devices established for a minor child pursuant to 12 Oklahoma Statutes 83. In
addition, a trust established jointly by at least one of the individuals who
can establish an MQT and another party or parties (who do not qualify as one of
these individuals) is an MQT as long as it meets the other MQT criteria. The
amount from an irrevocable MQT deemed available to the individual is the
maximum amount of payments that may be permitted under the terms of the trust
to be distributed to the individual assuming the full exercise of discretion by
the trustee(s). The provisions regarding MQT apply even though an MQT is
irrevocable or is established for purposes other than enabling an individual to
qualify for SoonerCare, and, whether or not discretion is actually exercised.
(i) Similar legal device. MQT
rules listed in this subsection also apply to "similar legal devices"
or arrangements having all the characteristics of an MQT except that there is
no actual trust document. An example is the member petitioning the court to
irrevocably assign all or part of his/her income to another party (usually the
spouse). The determination whether a given document or arrangement constitutes
a "similar legal device" should be made by the OKDHS Office of General
Counsel, Legal Unit.
(ii) MQT resource treatment.
For revocable MQTs, the entire principal is an available resource to the
member. Resources comprising the principal are subject to the individual
resource exclusions (e.g., the home property exclusion) since the member can
access those resource items without the intervention of the trustee. For
irrevocable MQTs, the countable amount of the principal is the maximum amount
the trustee can disburse to (or for the benefit of) the member, using his/her
full discretionary powers under the terms of the trust. If the trustee has
unrestricted access to the principal and has discretionary power to disburse
the entire principal to the member (or to use it for the member's benefit), the
entire principal is an available resource to the member. Resources transferred
to such a trust lose individual resource consideration (e.g., home property
transferred to such a trust is no longer home property and the home property
exclusions do not apply). The value of the property is included in the value of
the principal. If the MQT permits a specified amount of trust income to be
distributed periodically to the member (or to be used for his/her benefit), but
those distributions are not made, the member's countable resources increase cumulatively
by the undistributed amount.
(iii) Income treatment. Amounts
of MQT income distributed to the member are countable income when distributed.
Amounts of income distributed to third parties for the member's benefit are
countable income when distributed.
(iv) Transfer of resources. If
the MQT is irrevocable, a transfer of resources has occurred to the extent that
the trustee's access to the principal (for purposes of distributing it to the
member or using it for the member's benefit) is restricted (e.g., if the trust
stipulates that the trustee cannot access the principal but must distribute the
income produced by that principal to the member, the principal is not an
available resource and has, therefore, been transferred).
(C) Special needs trusts. Some
trusts may provide that trust benefits are intended only for a beneficiary's
"special needs" and require the trustee to take into consideration
the availability of public benefits and resources, including SoonerCare
benefits. Some trusts may provide that the trust is not to be used to supplant
or replace public benefits, including SoonerCare benefits. If a trust contains
such terms and is not an MQT, the trust is not an available resource.
(5) Trust accounts established
after August 10, 1993. The rules found in (A) - (C) of this paragraph apply
to trust accounts established after August 10, 1993.
(A) For purposes of this subparagraph,
the term "trust" includes any legal document or device that is
similar to a trust. An individual is considered to have established a trust if
assets of the individual were used to form all or part of the principal of the
trust and if the trust was established other than by will and by any of the
(i) the individual;
(ii) the individual's spouse;
(iii) a person, including a court or
administrative body, with legal authority to act in place of or on behalf of
the individual or the individual's spouse; or
(iv) a person, including a court or
administrative body, acting at the direction or upon the request of the
individual or the individual's spouse.
(B) Where trust principal includes
assets of an individual described in this subparagraph and assets of any other
person(s), the provisions of this subparagraph apply to the portion of the
trust attributable to the assets of the individual. This subparagraph applies
without regard to the purposes for which the trust is established, whether the
trustees have or exercise any discretion under the trust, and restrictions on
when or whether distributions may be made from the trust, or any restrictions
on the use of the distribution from the trust.
(C) There are two types of trusts,
revocable trusts and irrevocable trusts.
(i) In the case of a revocable trust,
the principal is considered an available resource to the individual. Payments
from the trust to or for the benefit of the individual are considered income of
the individual. • 1
Other payments from the trust are considered assets disposed of by the
individual for purposes of the transfer of assets rule and are subject to the
60 months look back period.
(ii) In the case of an irrevocable
trust, if there are any circumstances under which payments from the trust could
be made to or for the benefit of the individual, the portion of the principal
of the trust, or the income on the principal, from which payment to the
individual could be made is considered available resources. Payments from the
principal or income of the trust is considered income of the individual.
Payments for any other purpose are considered a transfer of assets by the
individual and are subject to the 60 months look back period. Any portion of
the trust from which, or any income on the principal from which no payment
could under any circumstances be made to the individual is considered as of the
date of establishment of the trust (or if later, the date on which payment to
the individual was foreclosed) to be assets disposed by the individual for
purposes of the asset transfer rules and are subject to the 60 months look back
(6) Exempt trusts. Paragraph
(5) of this subsection does not apply to the following trusts: • 2
(A) A trust containing the assets of a
disabled individual under the age of 65 which was established for the benefit
of such individual by the individual, parent, grandparent, legal guardian of
the individual or a court if the State receives all amounts remaining in the
trust on the death of the individual up to an amount equal to the total medical
assistance paid on behalf of the individual. This type of trust requires:
(i) The trust may only contain the
assets of the disabled individual.
(ii) The trust must be irrevocable and
cannot be amended or dissolved without the written agreement of the OKDHS or
the Oklahoma Health Care Authority (OHCA).
(iii) Trust records must be open at all
reasonable times to inspection by an authorized representative of the OHCA or
(iv) The exception for the trust
continues after the disabled individual reaches age 65. However, any addition
or augmentation after age 65 involves assets that were not the assets of an
individual under age 65; therefore, those assets are not subject to the
(v) Establishment of this type of
trust does not constitute a transfer of assets for less than fair market value
if the transfer is made into a trust established solely for the benefit of a
disabled individual under the age of 65.
(vi) Payments from the trust are
counted according to SSI rules. According to these rules, countable income is
anything the individual receives in cash or in kind that can be used to meet
the individual's needs for food, clothing and shelter. Accordingly, any
payments made directly to the individual are counted as income to the
individual because the payments could be used for food, clothing, or shelter
for the individual. This rule applies whether or not the payments are actually
used for these purposes, as long as there is no legal impediment which would
prevent the individual from using the payments in this way. In addition, any
payments made by the trustee to a third party to purchase food, clothing, or
shelter for the individual can also count as income to the individual. For
example, if the trustee makes a mortgage payment for the individual, that
payment is a shelter expense and counts as income.
(vii) A corporate trustee may charge a
reasonable fee for services in accordance with its published fee schedule.
(viii) The OKDHS Form 08MA018E,
Supplemental Needs Trust, is an example of the trust. Workers may give the
sample form to the member or his/her representative to use or for their
(ix) To terminate or dissolve a
Supplemental Needs Trust, the worker sends a copy of the trust instrument and a
memorandum to OKDHS Family Support Services Division, Attention: Health Related
and Medical Services (HR&MS) explaining the reason for the requested
termination or dissolution of the Supplemental Needs Trust, and giving the name
and address of the trustee. The name and address of the financial institution
and current balance are also required. Health Related and Medical Services
notifies Oklahoma Health Care Authority/Third Party Liability (OHCA/TPL) to
initiate the recovery process.
(B) A trust (known as the Medicaid
Income Pension Trust) established for the benefit of an individual if:
(i) The individual is in need of long-term
care and has countable income above the categorically needy standard for
long-term care (OKDHS Appendix C-1 Schedule VIII.B) but less than the average
cost of nursing home care per month (OKDHS Appendix C-1 Schedule VIII.B).
(ii) The Trust is composed only of
pension, social security, or other income of the individual along with
accumulated income in the trust. Resources cannot be included in the trust.
(iii) All income is paid into the
trust and the applicant is not eligible until the trust is established and the
monthly income has been paid into the trust.
(iv) The trust must retain an amount
equal to the member's gross monthly income less the current categorically needy
standard of OKDHS Appendix C-1. The Trustee distributes the remainder.
(v) The income disbursed from the
trust is considered as the monthly income to determine the cost of their care,
and can be used in the computations for spousal diversion.
(vi) The trust must be irrevocable and
cannot be amended or dissolved without the written agreement of the OHCA. Trust
records must be open at all reasonable times to inspection by an authorized
representative of the OHCA or OKDHS.
(vii) The State will receive all
amounts remaining in the trust up to an amount equal to the total SoonerCare
benefits paid on behalf of the individual subsequent to the date of
establishment of the trust.
(viii) Accumulated funds in the trust
may only be used for medically necessary items not covered by SoonerCare, or
other health programs or health insurance and a reasonable cost of
administrating the trust. Reimbursements cannot be made for any medical items
to be furnished by the nursing facility. Use of the accumulated funds in the
trust for any other reason will be considered as a transfer of assets and would
be subject to a penalty period. • 3
(ix) The trustee may claim a fee of up
to 3% of the funds added to the trust that month as compensation.
(x) An example trust is included on
OKDHS Form 08MA011E. Workers may give this to the member or his/her
representative to use or for their attorney's use as a guide for the Medicaid
Income Pension Trust.
(xi) To terminate or dissolve a
Medicaid Income Pension Trust, the worker sends a memorandum with a copy of the
trust to OKDHS Family Support Services Division, Attention: HR&MS,
explaining the reason and effective date for the requested termination or
dissolution of the Medicaid Income Pension Trust, and giving the name and
address of the trustee. The name and address of the financial institution,
account number, and current balance are also required. Health Related and Medical Services notifies
OHCA/TPL to initiate the recovery process.
(C) A trust containing the assets of a
disabled individual when all of the following are met:
(i) The trust is established and
managed by a non-profit association;
(ii) The trust must be made
(iii) The trust must be approved by
the OKDHS and may not be amended without the permission of the OKDHS;
(iv) The disabled person has no
ability to control the spending in the trust;
(v) A separate account is maintained
for each beneficiary of the trust but for the purposes of investment and
management of funds, the trust pools these accounts;
(vi) The separate account on behalf of
the disabled person may not be liquidated without payment to OHCA for the
medical expenses incurred by the members;
(vii) Accounts in the trust are
established by the parent, grandparent, legal guardian of the individual, the
individual, or by a court;
(viii) To the extent that amounts
remaining in the beneficiary's account on the death of the beneficiary are not
retained by the trust, the trust pays to the State from such remaining amounts
an amount equal to the total medical assistance paid on behalf of the
individual. A maximum of 30% of the amount remaining in the beneficiary's
account at the time of the beneficiary's death may be retained by the trust.
(7) Funds held in trust by Bureau
of Indian Affairs (BIA). Interests of individual Indians in trust or
restricted lands are not considered in determining eligibility for assistance
under the Social Security Act or any other federal or federally assisted
(8) Disbursement of trust. At
any point that disbursement occurs, the amount disbursed is counted as a
non-recurring lump sum payment in the month received. Some trusts generate
income on a regular basis and the income is sent to the beneficiary. In those
instances, the income is treated as unearned income in the month received.