Special Needs Trust Can Be Established Only When The Social Security Administration Determines That The Beneficiary Is Disabled

In J.C. v. Division of Medical Assistance and Health Services and the Ocean County Board of Social Services, ____ N.J. Super. ____ (App. Div. 2010), petitioner was determined to be totally disabled due to a work place injury by a workers’ compensation (WC) court in New Jersey, and awarded $308 per week in WC benefits. The petitioner then asked the WC court to establish a special needs trust (SNT) pursuant to 42 U.S.C. §1396p(d)(4)(a) in order to exclude her WC benefits from consideration in determining eligibility for Medicaid and other needs-based public benefits. After the SNT was established and the WC benefits transferred to the trust, petitioner applied for Medicaid benefits. The Medicaid application was denied and petitioner appealed. On appeal, the Superior Court of New Jersey, Appellate Division, affirmed the denial of benefits. The appeals court held that, since under federal law the determination of petitioner’s disability must be made by the Social Security Administration or the state disability review team based on the federal definition of “disability”, which was not done in this case, the WC court judgment that petitioner was disabled was not dispositive and the SNT was ineffective in preventing her assets from being included in the Medicaid eligibility determination.

The case is annexed here – J.C. v. Division of Medical Assistance and Health Services