Section 178.7. Treatment of trust amounts for all categories of MA for trusts established on or after July 30, 1994

(a) Trusts established on or after July 30, 1994, except for trusts established by will, are subject to this section. Trusts established by will or established prior to July 30, 1994, are treated as set forth at § 178.4(c) (relating to treatment of resources for all categories of MA).

(b) A trust is established if the assets of the individual were used to form all or part of the corpus of the trust and one or more of the following persons establish the trust other than by a will:

(1) The individual.

(2) The spouse of the individual.

(3) A person or a court or administrative body with legal authority to act in place of, or on behalf of, the individual or the spouse of the individual.

(4) A person or a court or administrative body acting at the direction, or upon the request of the individual or the spouse of the individual.

(c) When the corpus of the trust includes the assets of an individual, and the assets of other persons, the requirements of this section apply only to that portion of the trust attributable to the assets of the individual.

(d) Unless the trust meets the requirements described in subsection (f), this section applies to all trusts without regard to the following:

(1) The purpose for which a trust is established.

(2) Whether the trustees have or exercise discretion under the trust.

(3) Restrictions on when or whether distributions are made from the trust.

(4) Restrictions on the use of distributions from the trust.

(e) Whether, and to what extent, a trust is considered in an MA eligibility determination depends upon the specific characteristics of the trust. In determining eligibility for MA, the CAO shall apply the following:

(1) In the case of a revocable trust:

(i) The corpus of the trust shall be considered as a resource available to the individual.

(ii) Payments from the trust to or for the benefit of the individual shall be considered as income of the individual.

(iii) Other payments from the trust shall be considered as assets disposed of by the individual which are subject to a determination by the Department as to whether the disposition was for less than FMV on or after the look-back date specified in § 178.104(c) (relating to disposition of assets and fair consideration provisions for transfers on or after July 30, 1994).

(2) In the case of an irrevocable trust:

(i) If there are circumstances under which payment from the trust could be made to or for the benefit of the individual, the portion of the corpus from which, or the income on the corpus from which, payment to the individual could be made shall be considered resources available to the individual, and payments from that portion of the corpus or income to or for the benefit of the individual shall be considered income of the individual, and for other purposes shall be considered a transfer of assets by the individual which is subject to a determination by the Department as to whether the transfer was for less than FMV on or after the look-back date specified in § 178.104(c).

(ii) Any portion of the trust from which, or any income on the corpus from which, no payment could under any circumstances be made to the individual shall be 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 of by the individual subject to a determination by the Department as to whether the disposition was for less than FMV on or after the look-back date specified in § 178.104(c), and the value of the trust shall be determined by including the amount of payments made from any portion of the trust or income on the corpus after the date the trust was established or payment from the trust was foreclosed.

(f) The trust requirements of this section do not apply to the following:

(1) A trust containing the assets of an individual under 65 years of age who is disabled as defined by the SSI criteria in 42 U.S.C.A. § 1382c(a)(3), if the trust was established for the benefit of the individual by a parent, grandparent, legal guardian of the individual, or a court and the trust contains a provision that the Commonwealth will receive the amounts remaining in the trust upon the death of the individual, up to an amount equal to the total of MA benefits paid on behalf of the individual.

(2) A trust containing the assets of an individual who is disabled as defined by the SSI criteria in 42 U.S.C.A. § 1382c(a)(3) if the trust meets the following conditions:

(i) The trust is established and managed by a nonprofit association.

(ii) A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds the trust pools these accounts.

(iii) Accounts in the trust are established solely for the benefit of individuals who are disabled based on the SSI criteria in 42 U.S.C.A. § 1382c(a)(3) by the parent, grandparent or legal guardian of the individual, by the individual, or by a court.

(iv) To the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the Commonwealth from the amounts remaining in the account an amount equal to the amount of MA benefits paid on behalf of the beneficiary.

(g) The Commonwealth will waive the requirements of this section with respect to an individual if the individual establishes that application of these requirements would cause undue hardship for the individual.

The provisions of this § 178.7 adopted December 23, 1994, effective December 24, 1994, and apply retroactively to July 30, 1994, 24 Pa.B. 6423.

Notation

Authority

The provisions of this § 178.7 issued under sections 201(2) and 403(b) of the Public Welfare Code (62 P. S. § § 201(2) and 403(b)).

Cross References

This section cited in 55 Pa. Code § 178.4 (relating to treatment of resources for all categories of MA); 55 Pa. Code § 178.104 (relating to deposition of assets and fair consideration provisions for transfers on or after July 30, 1994); 55 Pa. Code § 178.174 (relating to disposition of assets and fair consideration provisions for transfers on or after July 30, 1994); and 55 Pa. Code § 258.3 (relating to property liable to repay the Department).