State and federal programs cover the cost of services for children with disabilities. These programs, like the Children’s Long-Term Support Program (CLTS) and adult long-term care programs like Family Care and IRIS require that the person be Medicaid-eligible. However, public programs including Medicaid and Supplemental Security Income (SSI)  are “means-tested,” which require the person to have very limited income and assets.  

If a Medicaid or SSI recipient has income over the allowable level, or assets over $2,000, or is expected to at some point receive money through an inheritance, Special Needs Trusts (SNTs) and ABLE accounts are tools that can be used to maintain a person’s eligibility for public programs. They can be part of a family’s overall financial planning process and can be especially important for families who have adult children with disabilities.    

Financial Tools to Keep a Person Eligible 

ABLE (Achieving a Better Life Experience) Accounts allow people with disabilities to establish special savings accounts that will largely not affect their eligibility for SSI, Medicaid or other means-tested programs. Contributions to the ABLE account can be made by any person including the beneficiary, family or friends, and income earned in the account will not be taxed.

Distributions from an ABLE account must be made for a qualified disability expense. The definition of this is broad and can include expenses for the person’s living, working, transportation, direct support or healthcare needs.   

While Wisconsin does not currently have its own state-sponsored ABLE program,* most other state ABLE programs allow people from out-of- state to open an account. ABLE plans differ by state, but most have an initial fee to open, offer debit cards to withdraw funds, and allow you to choose from a range of professionally managed investments. The ABLE National Resource Center (ablenrc.org) offers resources to compare programs and answer commonly asked questions. You can also learn more with the Family Voices ABLE Account fact sheet.

Special Needs Trusts (SNTs) can be created for a child or adult with disabilities and the assets in the trust are not countable under Medicaid rules. These funds will not affect the person’s ability to receive public benefits. There are two types of SNTs, first-party/self-settled trusts and third-party/community trusts. Families can set up individual SNTs by working with attorneys or financial planners who specialize in forming first- or third-party trusts.

• • • First party/self-settled SNTs: funded with the assets of the person with disabilities. For example, funds from a settlement from an injury lawsuit or inherited funds. These trusts have a Medicaid Payback provision, meaning that when the person passes away, the state Medicaid program can be reimbursed for expenses they covered during that person’s life.
    • Third-party/community SNTs: funded with assets owned by people other than the person with disabilities, such as a parent or a grandparent, and does not have a Medicaid Payback provision.

Another option for families is to work with a nonprofit organization that administers trusts on behalf of a number of participants called a pooled trust. These types of trusts, combine or “pool” the assets of many beneficiaries for investment purposes. Management and setup fees are usually less expensive than individually organized trusts. Wisconsin has two options for setting up pooled SNT’s Wispact and Life Navigators.

Wispact (wispact.org) administers pooled and community SNTs for people with disabilities.

Life Navigators (lifenavigators.org/trust-program) administers both first-party and third-party/community SNTs.

Learn More

• • • Special Needs Alliance, When Should You Consider a Pooled Trust?
    • Wispact, What is a Trust?