ALLOWABLE DISTRIBUTIONS - SSI AND AHCCCS

from a 42 U.S.C. § 1396p(d)(4)(A) and (C) SPECIAL NEEDS TRUST for SSI and AHCCCS

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The Social Security Administration (SSA) and the Arizona Health Care Cost Containment System (AHCCCS) treat and limit distributions from a “special needs trust” as follows:

  • Distributions for food, shelter, or cash count as income to the beneficiary
  • “Shelter” is defined as room, rent, mortgage, property taxes, homeowners’ insurance, utilities, sewerage, and garbage collection services
  • Cash to the parents of a minor, spouse, custodian, and/or legal guardian/conservator for any purpose is considered cash to the beneficiary and will count as income
  • Distributions of cash directly to the beneficiary or to someone on the beneficiary’s behalf will reduce the SSI benefit $ for $ after the first $20
  • Distributions directly to vendors or providers for food or shelter expenses will reduce the SSI benefit by 1/3rd or 1/3rd + $20, depending on the beneficiary’s living arrangements
  • The trust may only make distributions for the beneficiary’s sole benefit and, therefore, the trust can only pay the beneficiary’s proportionate share of shared expenses
  • If the trust disburses funds to purchase a vehicle, the vehicle must be titled in the name of the trust, or the trust must take a lien back on the vehicle equivalent to the amount of trust funds disbursed
  • If the trust disburses funds to purchase an interest in real property, title to the real property must reflect that the trust owns an interest equivalent to the amount of trust funds disbursed
  • The trust may disburse funds to pay for personal care services provided by a “financially responsible relative,” i.e., a parent of a minor child or a spouse, at the fee-for-service rate if the beneficiary’s physician prescribes the services as medically necessary and it is pre-approved by AHCCCS. 
  • Distributions for the following do not benefit the beneficiary per AHCCCS and, as a result, would disqualify the trust from special treatment status:
  1. Payments on a life insurance policy unless the trust is both the owner and the beneficiary of the policy;
  2. Child support and alimony payments;
  3. Gifts to other persons, in cash or kind;
  4. Paying all of the shelter costs for a shared households (see above);
  5. Income taxes that are not attributable to trust income/dividends;
  6. Payments on past debts;
  7. Health insurance premiums for other individuals.

updated 2/27/09