The question of whether a special needs trust can subsidize broadband for telehealth usage is increasingly relevant in today’s digital age, especially as access to healthcare expands through virtual means. For beneficiaries relying on public benefits like Supplemental Security Income (SSI) and Medicaid, maintaining eligibility while accessing essential services is paramount. A properly structured special needs trust – specifically a third-party special needs trust – can indeed be used to pay for internet service without disqualifying the beneficiary from these needs-based programs, but it requires careful consideration and adherence to specific rules. The key lies in ensuring the payment doesn’t constitute “income” or “resources” that would jeopardize their benefits, and that the service is demonstrably for their benefit and supports their health and well-being. According to a 2023 report by the Pew Research Center, roughly 40% of adults with lower incomes lack broadband access at home, creating a significant barrier to telehealth services.
What are the rules regarding trust distributions for healthcare?
Generally, distributions from a special needs trust for the benefit of the beneficiary – including those for healthcare-related expenses – are permissible as long as they don’t violate the terms of the trust or impact public benefits. The critical element is ensuring the distribution is for “supplemental” needs, meaning it covers expenses *not* already paid for by government programs. Paying for broadband to facilitate telehealth falls squarely into this category, as it expands access to care beyond what’s traditionally covered. However, it’s not simply a matter of writing a check; documentation is crucial. The trust document should clearly authorize such expenditures, and a record should be kept demonstrating how the internet service directly benefits the beneficiary’s health. For example, a doctor’s note confirming the patient’s need for regular telehealth appointments can be invaluable. A 2022 study by the Kaiser Family Foundation found that telehealth use increased 38% during the pandemic, highlighting the growing importance of internet access for healthcare.
How does using trust funds affect Medicaid and SSI eligibility?
One of the biggest concerns when using trust funds is preserving the beneficiary’s eligibility for Medicaid and SSI. Both programs have strict income and asset limits. Distributions from a trust are generally considered supplemental and do not count as income for SSI or Medicaid eligibility purposes – *provided* the trust is properly structured. A third-party special needs trust – established with funds belonging to someone *other* than the beneficiary – is the preferred vehicle, as it avoids the complexities of “countable assets” associated with first-party or self-settled trusts. It’s vital to avoid direct payments to the internet provider in the beneficiary’s name. Instead, the trust should pay the provider directly or reimburse the trustee for expenses incurred on the beneficiary’s behalf. Failure to adhere to these rules could result in a reduction or termination of benefits, leaving the beneficiary without essential healthcare access.
What happened when a family didn’t plan for telehealth access?
I remember working with the Millers, a wonderful family with a son named Ethan, who has autism and relies heavily on consistent therapy. They had established a special needs trust years ago, but hadn’t considered the implications of telehealth access. When Ethan’s therapist transitioned to virtual appointments, the Millers were caught off guard. They attempted to pay for the internet service using funds directly from Ethan’s checking account, mistakenly believing it wouldn’t affect his SSI. Within weeks, they received a notice from the Social Security Administration stating that Ethan’s benefits were being reduced due to the reported income. It was a stressful situation, and required immediate legal intervention to explain the situation and seek a waiver, thankfully we were able to get it sorted, but it highlighted the importance of proactive planning. It underscored the point that even seemingly small expenditures need to be carefully considered in the context of public benefit eligibility.
How did proactive planning ensure successful telehealth access?
Later that year, I worked with the Davidsons, whose daughter, Olivia, has cerebral palsy and requires frequent physical therapy sessions. Recognizing the potential of telehealth and learning from the Millers’ experience, they proactively amended their special needs trust to specifically authorize payments for internet service and related technology. The trust document outlined the process for reimbursement, ensuring that the payments were made directly to the internet provider by the trustee. Olivia seamlessly transitioned to virtual therapy, and her benefits remained intact. The Davidsons’ foresight not only ensured continued access to essential care but also provided them with peace of mind. They had created a sustainable solution that allowed Olivia to thrive, demonstrating the power of comprehensive estate planning. It proved that thoughtful preparation and proactive planning can make a world of difference in the lives of individuals with special needs.
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About Steve Bliss at Wildomar Probate Law:
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Feel free to ask Attorney Steve Bliss about: “Who should I talk to about guardianship for my children?” Or “What assets go through probate when someone dies?” or “What professionals should I consult when creating a trust? and even: “What’s the process for filing Chapter 13 bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.