The Social Security Administration (SSA) recently revised four sections of the Program Operations Manual System (POMS).  The POMS is a primary source of information used by Social Security employees to process claims for Social Security and Supplemental Security Income (SSI) benefits. Most of the changes to the POMS sections were administrative in nature. However, the changes to POMS Section 1120.201 were substantive and may upend countless first-party special needs trusts (SNT) that the SSA previously approved.

The revised POMS Section 1120.201 contains an example in sub-paragraph F that rejects any first-party SNT containing provisions allowing payments that enable family members to visit the disabled trust beneficiary. In the example used in the POMS section, the “trust document includes a provision permitting the trustee to use trust funds in order to pay for the SSI recipients family to fly from Idaho and visit him in Nebraska.” The SSA states that “[t]he trust is not established for the sole benefit of the trust beneficiary, since it permits the trustee to use trust funds in a manner that will financially benefit the SSI recipients family.” Since many special needs trusts contain broadly-worded provisions like those quoted above which permit trust funds to be used to pay for friends or family members to accompany the primary beneficiary on vacation or to special events, or to visit the trust beneficiary, the revised POMS section may affect the validity of many existing SNTs.

In addition to rejecting any first-party SNTs containing provisions allowing payments that enable family members to visit the trust beneficiary, SSA is apparently also going to require that any SNT authorizing payment to caregivers contain language limiting such payments to caregivers who are medically certified, medically trained or approved to provide care. SSA is reportedly reviewing old SNTs to ensure compliance with the new regulations when the beneficiary comes up for re-certification.

In my opinion, this revision to the POMS regulations is going to have a profound impact on many beneficiaries of SNTs. Many of the care services paid for by SNTs are for non-professional services, such as shopping, cleaning, and related “non-medical” care services, which can be obtained at low cost. If a medical professional now must be hired to perform these non-professional services, the increase in cost may bankrupt many SNTS, resulting in the possible institutionalization of the SNT beneficiaries at a much higher cost to the State.

(My thanks to the Academy of Special Needs Planners website and listserv for information used in this blog post.)