Nursing Home Litigation purposes of determining Medical Assistance eligibility.29 Penn-


Mar Human Services, Shared Horizons, Inc., ARC of Northern Virginia, and First Maryland Disability Trust, Inc (“FMDT”) are pooled asset trusts available in Maryland.30 and national trusts also offer services in Maryland.


Other regional


II. Ambiguities in Special Needs Trust Regulations Although federal statute permits individuals with disabilities


to create special needs trusts to hold assets, states vary in their interpretation and application of the federal regulations which govern special needs trusts.


In particular, federal Medicaid


policy is unclear in regards to whether assets may be transferred into a pooled asset trust established by an individual age 65 and older without penalty. Federal policy currently states that funds transferred to a pooled asset trust for an individual 65-years-or- older is a transfer subject to penalty for SSI eligibility purposes.31 Terefore, federal policy only suggests, and does not provide clear guidance, on how state Medicaid programs should treat a transfer of funds into a (d)(4)(C) pooled asset trust.32


States vary


in their interpretation and application of this federal law.33 Prior to the enactment of SB 888, Maryland also provided ambiguous guidance on this issue. Maryland regulations did not impose requirements for pooled asset special needs beyond those specified under federal law.34


On May 11, 2010, the Assistant


Attorney General responded to a query from the FMDT president and stated that, pursuant to federal and state law, there is no age limitation on who may transfer assets into a pooled asset trust subaccount without penalty.35


Terefore, a beneficiary


with a disability, aged 65 years or older could transfer assets into a pooled asset trust without a Medical Assistance penalty. However, in January 2011, the Department of Health and Mental Hygiene proposed new regulations concerning special needs trusts.36


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proposed regulations included other provisions that also severely limited the use of special needs trusts. For example, the proposed regulations stated:


• In contrast to the Assistant Attorney General’s


letter, the regulations stated that a transfer into a pooled asset trust after age 65 would be subject to a transfer penalty.37


29 Id. 30 For more information on each trust, visit the following websites, www.penn-mar.org; www.shared- horizons.org; www.thearcofnova.org; and www.firstmdtrust.org (last visited July 14, 2011).


31 Social Security Administration, POMS Manual, SI 01120.203B.2.a (stating that funds transferred to a pooled asset trust for an individual 65-years-or-older may be required to be treated as income for eligibility purposes, and that this addition income may cause the beneficiary to lose eligibility(emphasis added)); see also 42 U.S.C. § 1396p(d)(4)(C) (not establishing an age limit).


32 On May 12, 2008, CMS failed to clarify Medicaid policy with respect to the transfer of assets penalty provision on pooled (d)(4)(C) trusts established by individual’s ages 65 or older. CMS reiterated that while a (d)(4)(C) trust may be established for a person of any age, any funds in a trust established for an individual 65 years or older may be subject to a penalty as a transfer of an asset for less than fair market value. Cms, State Agency Regional Bulletin, No. 2008-05, Re: Medicaid Eligibility (May 12, 2008).


33 Compare Beach v. State of Tennessee Department of Human Services, No.09-21220-III (Tenn. Chan. Ct. Sept. 8, 2010) (holding that a 92-year-old Medicaid applicant may transfer funds into a pooled special needs trust without a penalty) with Center for Special Needs Trust Administration, Inc. v. Olson, No. 1:09-cv-072 (D.N.D. April 25, 2011) (holding that North Dakota may assess a transfer- of-assets penalty against a 78-year-old Medicaid applicant for funding a pooled trust account).


34 Fiscal and Policy Note, S. 888, 2011 Leg., 428th Sess. (Md. 2011); see also MD. CODE REGS 10.09.24.08-2 (2011).


35 Response letter from Meredith Borden, Assistant Attorney General, to Jason Frank, Esq. regarding pooled asset special needs trusts (May 11, 2010).


Appendix 4O (Matthew Bender, 2009) for a copy of the letter.


36 38 Md. Reg. 185 ( January 28, 2011) (to be codified at MD. CODE REGS. 10.09.24.08-2 through .08-5 (2011)).


37 38 Md. Reg. 185 (January 28, 2011) (to be codified at MD. CODE REGS. 10.09.24.08-4G (2011)).


See Jason Frank, Elder Law In Maryland,


Assets in a special needs trust may not be used to compensate family members of the trust beneficiary in any way, such as accompanying the beneficiary on travel or caring for the beneficiary.38


• A pooled asset trust may only accept individual accounts valued at less than $100,000.39


• Te trustee of a pooled asset trust must pay the Department of Health and Mental Hygiene all amounts remaining in a beneficiary’s individual account upon the death of the beneficiary up to an amount equal to the total Medical Assistance benefits paid on behalf of the beneficiary.40


III. Impact of Senate Bill 888 Governor O'Malley signed the estates and trusts Senate


Bill 888 into law on May 19, 2011 in order to clarify some of the issues regarding special needs trusts.41


the “status quo” in Maryland regarding the use of special needs


38 Id. (to be codified at MD. CODE REGS. 10.09.24.08-5A(3)(h) (2011)). 39 Id. (to be codified at MD. CODE REGS. 10.09.24.08-4B (2011)). 40 Id. (to be codified at MD. CODE REGS. 10.09.24.08-4A(11) (2011)). 41 H.D. 1277, S. 888, 2011 Leg., 428th Sess. (Md. 2011), codified at MD. CODE ANN. 14-114(A)- (D).


Trial Reporter / Fall 2011 19 Te bill maintains


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