Author: Mercy Kurian

Parents of children with special needs often say they plan to distribute their entire estate to their children without special needs so they can take care of their sibling with special needs. Some parents believe the opposite – that they need to leave more to their child with special needs since they believe their other children will take care of themselves. But how do you know which approach is right for you?

 

Working with a specialized estate planner can alleviate concerns about unequal distributions to children and prevent innocent but costly mistakes in planning your estate. An estate planner with experience in special needs planning is practiced in navigating the complex interpersonal relationships between parents and children as well as among siblings. Most importantly, a specialized estate planner understands the importance of creating a plan that is tailored to your specific needs and circumstances.

 

Parents: if you are concerned about one or more of your children with unique needs, here are some simple yet effective ways to dispose your assets while keeping things fair for all of your children.

 

Third-party special needs trusts: Families with children with special needs can set up a third-party special needs trust (“SNT”) to allow their children to benefit from an inheritance or gift from a friend or family member without jeopardizing their child’s eligibility to receive government benefits. Drafted properly, these trusts are invaluable for the child’s benefit. They allow more than just a parent or grandparent to pass down wealth into these trusts.  Any person— an aunt, uncle, family friend etc.— who might want to bequeath assets to this child can do so by naming the third-party SNT as a beneficiary of their estate. As long as this trust is managed and administered properly, none of the assets remaining after the death of the child-beneficiary is available for Medicaid recovery.

 

Retirement plans: Since the passing of the Secure 2.0 Act, individuals with special needs now have some additional benefits compared to adult children without these special needs. A chronically ill or disabled individual, also referred to as an eligible designated beneficiary (“EDB”) under the Secure Act, can inherit retirement plans through a SNT without jeopardizing their eligibility for government benefits. Additionally, they can take advantage of the life expectancy stretch that is otherwise not afforded to a non-spouse or non-EDB.

 

Life insurance is a great equalizer: Life insurance often gets a bad reputation. People are asked to purchase insurance when their children are young, when there is a perceived greater need for insurance at that time. However, once the children are older, friends and well-wishers offer unsolicited advice that money is wasted on life insurance and claim there are other “better” investment opportunities than wasted life insurance premiums. However, we see insurance as a great equalizer that can help balance an otherwise unequal distribution of assets. For example, if Mr. and Mrs. Drew have a net worth of $2 million and a $1 million joint-to-die life insurance policy, they could name their daughter’s SNT as a beneficiary while the rest of the estate could be divvied up between their other two children. Conversely, for those parents who have a home of significant value which they would like their child with special needs to continue to live in after they are gone, one or more life insurance policies naming the other two children as beneficiaries could balance out the estate.

 

Consulting with a specialized estate planner allows families to dispel mistaken notions about the disposition of their estates while giving them peace of mind knowing that their affairs are organized during their lifetime and ensure their children’s well care long after

they are gone.

 

Contact Rao Legal Group, proud sponsored member of the Special needs Alliance (SNA), for more information!

Our hypothetical discusses a 60 year old New Jersey resident who was forced into early retirement due to a workplace injury and her employer settles out of court by giving her a $100k as a settlement for her pain and suffering.  She is now having to face some tough decisions – especially about health coverage. Our facts did not say this but let’s say this individual has to move into a nursing home because they are now unable to live by themselves without 24/7 supervision.  Normally, Medicaid may be an option but receiving that $100,000 settlement adds a layer of complexity.

Let’s break down how Medicaid works in New Jersey, and how that settlement may affect your eligibility.

Understanding Medicaid in New Jersey

Medicaid is a joint federal and state program that provides health coverage to low-income individuals, including seniors, people with disabilities, and others with limited income and resources.

In New Jersey, Medicaid is administered through the NJ FamilyCare program. There are several pathways to qualify, but for a 60-year-old individual who’s not yet eligible for Medicare and may end up need nursing home level of care, will likely need to take advantage of Aged, Blind, and Disabled (ABD) Medicaid under which falls the MLTSS program or Managed Long Term Services and Supports (MLTSS) program.

An individual under the age of 65 may qualify for the ABD Medicaid if he or she is unable to engage in Substantial Gainful Activity (SGA) which means they are unable to earn more than $1620 per month (disability criteria).

Additionally, in order to qualify, there is an asset limit as well which is a mere $2k which means that at any month if there is account that goes over the $2k limit, their Medicaid benefits could be compromised.  Therefore, the $100,000 lump sum would likely disqualify our individual unless the money is legally protected or “spent down” appropriately.

Spend-down options: include spending the money on qualifying expenses (medical bills, home improvements, etc.) to reduce countable assets under the $2k limit.

Here are some other options you might consider:

• Establish a First Party Special Needs Trust (if you meet the disability criteria)[1]
• Spend down on non-countable assets (home modifications, car repairs, etc.)
• Purchase an irrevocable funeral trust
• Use a structured settlement to spread payments over time (this must be set up before you receive the money)

Important Considerations

• Timing matters: Medicaid eligibility is based on your assets at the time of application. If you can legally reduce your countable assets before applying, you may still qualify.
• Reporting is required: Failing to report a settlement could lead to penalties or Medicaid recovery later.
• You may qualify for Medicare at 65, but you still need health coverage in the meantime—so exploring Medicaid is key especially if you have significant medical bills each month.

Next Steps

1. Consult with a Medicaid planner or elder law attorney familiar with NJ Medicaid.
2. Avoid spending the settlement impulsively—some uses may make you ineligible.
3. Consider a spend-down strategy or trust if that is your best long-term option.

Bottom Line

A $100,000 settlement doesn’t automatically disqualify you from Medicaid in New Jersey—but how you handle it can make all the difference. If you’re under 65, retired early due to injury, and need healthcare, you may still qualify through the ACA-expanded Medicaid program. Careful planning, proper documentation, and trusted advice are key to keeping your health and financial future on track.

[1] First Party trusts hold the assets of the disabled individual but there are 3^rd party trusts out there that have funds from other individuals. Care must be taken never to mix assets between the two as that could impact what the government can take back after death.

This article brings to light a growing number of companies offering online Trust or Will services and its nice to see people still want a live professional helping them with their estate planning needs. That said, there are a sobering number of people who just don’t take the necessary steps to move forward. While we are confident that once we get a chance to sit in front of clients, they will see the value in using a specialized estate planning firm for their documents. But our challenge is getting them to the initial consultation table. Time and again, we hear from our existing clients how surprised they are that their close friends and family just don’t want to even talk about this important subject. We at Rao Legal Group, strive each and every day to spread the word as far as we can to let people know that we are here to listen and to implement their wishes. Ultimately, we want clients to have peace of mind knowing that their estate affairs have been properly set up and organized.

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• Congress Considers Future of Autism Act as Deadline Approaches

Federal lawmakers are working to renew the Autism Collaboration, Accountability, Research, Education and Support (CARES) Act, which allocates nearly $2 billion for autism-related programs, before its expiration on September 30. The Act, first established in 2006 and last renewed in 2019, funds research, screening, professional training, and other government activities related to autism. The 2024 renewal has bipartisan support and has passed committees in both the Senate and the House. During a Senate Committee on Health, Education, Labor, and Pensions (HELP) markup on July 31, Senators Ben Ray Luján (D-NM) and Susan Collins (R-ME) spearheaded the committee passage of bipartisan legislation to advance the reauthorization of the Act. While there are differences between the House and Senate bills, both aim to increase funding to renew many existing autism-related programs for five years and broaden the focus to include issues related to aging in those on the spectrum and support for individuals with limited speech or language.

 

• Harvard Medical Students with Disabilities Advocate for Enhanced Care and Support in Medical Education

Harvard Medical School students Lilly Montesano Scheibe and Kelsey Biddle, who both have narcolepsy, are leading efforts to improve disability care and support within medical education. After experiencing challenges in managing their condition and finding support, Montesano Scheibe and Biddle have become advocates for better training and resources for students with disabilities. These efforts have led to a comprehensive disability-focused curriculum and expanded support services at Harvard, addressing significant gaps in medical training. With only about half of medical schools offering limited disability education, these initiatives aim to reduce healthcare disparities and better prepare future doctors to care for patients with disabilities. Advocates are also promoting universal design to ensure accessibility for all students, with the goal of increasing the number of clinicians with disabilities and improving health outcomes for marginalized communities.

 

• Bipartisan Group in Congress Pushes for Approval of MDMA to Treat PTSD

A bipartisan group in Congress, led by Rep. Jack Bergman (R-MI), is advocating for the FDA to reconsider its expert advisors’ opposition to Lykos Therapeutics’ combination regimen of talk therapy and MDMA for treating PTSD. Win a letter to President Biden and administration officials, Rep. Bergman and 60 other congressional members highlighted the need for new PTSD treatments and the potential of MDMA-Assisted Therapy (MDMA-AT) to prevent suicide among veterans. The FDA advisors had concluded that the combination of talk therapy and MDMA is not an effective PTSD treatment and that the therapy’s risks outweigh its benefits. The agency is expected to make a decision on Lykos Therapeutics’ MDMA and talk therapy application this week. Additionally, Lykos Therapeutics recently announced the formation of an independent advisory board comprising experts in corporate and medical ethics, innovation, psychiatry, and military and veteran health to oversee the potential commercial launch.

 

• CMS Announces Final Procedural Notice of Transitional Coverage for Emerging Technologies

The Centers for Medicare & Medicaid Services (CMS) has announced the final procedural notice for the Transitional Coverage for Emerging Technologies (TCET) Pathway, a new initiative aimed at enhancing Medicare beneficiaries’ access to medical advancements. This pathway facilitates the integration of FDA-designated Breakthrough Devices into Medicare by expediting the national coverage determination (NCD) process, with a goal of reaching a final decision within six months post-FDA authorization. TCET promotes early access, evidence development, and patient-centered care while ensuring robust safeguards. Manufacturers can nominate devices for TCET, which supports the integration of breakthrough technologies by providing a clear and efficient coverage review process. Extensive feedback from stakeholders has refined the pathway, which now includes an Evidence Preview and Development Plan to address evidence gaps and ensure comprehensive evaluations. TCET anticipates supporting up to five devices annually, with transitional coverage linked to ongoing evidence generation.

• Peterson-KFF Health System Tracker Analyzes Increase of ACA Marketplace Premiums in 2025

The Peterson-Kaiser Health System Tracker recently released an analysis examining the factors contributing to the projected increase in premiums for Affordable Care Act (ACA)-regulated health plans. The study reports a median proposed premium increase of 7% for 2025 across 324 insurers participating in all 50 states and D.C. A deeper analysis of insurers in ten states and D.C. identified key drivers of premium growth, including inflation, hospital market consolidation, workforce shortages, and increased utilization of weight loss and other specialty drugs. Researchers found minimal impact on 2025 premiums from pandemic-related costs and the unwinding of Medicaid continuous coverage.

• National Academies of Sciences, Engineering, and Medicine Publish Report Recommending Increased Participation of Care Providers for Mental Health and Substance Use Disorders in Health Insurance Plans

The National Academies of Sciences, Engineering, and Medicine released a new report urging the Centers for Medicare and Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS) to take action to increase the participation of care providers for mental health and substance use disorders in Medicare, Medicaid, and Marketplace health insurance plans. The report provides recommendations for expanding the behavioral health workforce’s involvement in Medicare, Medicaid, and Marketplace insurance through reforms that are designed to make provider participation more attractive, promote and simplify entry into public insurance, and optimize performance and accountability.

• HHS Issues Department-Wide, Division Specific Language Access Plans

Ahead of the 24^th anniversary of Executive Order 13166, “Improving Access to Services for Persons with Limited English Proficiency,” the Department of Health and Human Services (HHS) issued department-wide division-specific Language Access Plans for people with limited English proficiency (LEP). Secretary Becerra and various Assistant Secretaries expressed their support for Language Access Plans to expand access to HHS services and the Administration’s commitment to equity, This initiative follows HHS’s department-wide Language Access Plan from November 2023.

 

• HRSA Publishes Data Showing Highest Number of HRSA-Funded Health Center Patients in History of Program

The Health Resources and Services Administration (HRSA) released new data showing that HRSA-funded health centers served a total of 31 million patients in 2023, an increase of 2.7 million from 2020. HRSA-funded health centers are required to treat patients regardless of ability to pay. In 2023, over 90% of health center patients had incomes less than double the 2023 Federal Poverty Guidelines. HRSA-funded health centers now serve one in eight children across the country, more than 9.7 million patients in rural areas, and over 1.4 million people experiencing homelessness. Health centers have also expanded their preventive services, screening hundreds of thousands more people for cancer and infectious diseases and caring for patients with substance use disorders. Since 2020, they have administered more than four million HIV tests, treated 585,000 prenatal care patients, and improved clinical quality measures for chronic conditions, including an 8% increase in hypertension control and a 7% increase in depression screening.

 

• HHS Awards Nearly $9 million to HRSA-funded Health Centers for Cancer Screening Treatment for Underserved Communities

The U.S. Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), awarded nearly $9 million to 18 HRSA-funded health centers to bolster access to life-saving cancer screenings in underserved communities. These health centers will partner with National Cancer Institute-Designated Cancer Centers to expedite patient access to cancer care and treatment. The 18 awarded Health Centers serving underserved communities span across California, Colorado, Indiana, New York, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Virginia, and Washington. This funding supports the Biden Administrations’ Cancer Moonshot and builds on the 21^st Century Cares Act to expand the use of cancer prevention and early detection strategies. HHS previously invested $11 million in 2023 and $5 million in 2022 into HRSA-funded health centers as a part of the Cancer Moonshot.

 

What’s on Tap

• Both the Senate and House have left for their summer recess and will return September 9th.

 

• Last week, the Harris campaign announced Minnesota Governor Tim Walz as her running mate for her presidential campaign. The selection of Walz, a former teacher and six-term U.S. representative who served 24 years in the National Guard, seems to have edged the campaign’s health care agenda further to the left. Walz has affirmed that he views health care as a right. With a Democratic state Legislature, he launched a number of progressive campaigns during his Minnesota governorship. He created a prescription drug affordability board that sets limits on what insurers pay, signed a bill to help people afford insulin in emergency situations, and oversaw the state as it reached a settlement with Eli Lilly to cap all insulin prices at $35 for the next five years. Walz also championed the Minnesota Health Care Access Fund, which helps fund health care coverage for low-income state residents, signed a bill making the right to an abortion a state law, signed legislation legalizing adult-use marijuana in his state, and signed an executive order protecting gender affirming healthcare. However, the Harris-Walz campaign has not specifically outlined their health care positions compared to the Biden-Harris administration as of yet.

 

• On Thursday, August 15th, the White House is expected to describe the outcomes of its first 10 Medicare price negotiations with drugmakers under the Inflation Reduction Act. While it is unclear how specific the announcement will be, the Biden administration is predicted to highlight the savings that patients can expect starting in 2026. The administration faces a September 1^st deadline to disclose negotiated rates from discussions between drugmakers and federal health officials that began last October, when selected drug manufacturers agreed to opt into the process. Medicare must then explain how it arrived at the prices by March 1 before they kick in on January 1, 2026. The agency plans to finalize guidance this fall for the next round of negotiations and will publish the new list of up to 15 drugs selected by February 1st.

 

 

 

 

 

Consumer Guide on

How To Talk To Your Family about Your Fiduciary Choices

Time and again we have seen families hesitate (for years, may we add!) to even start the estate planning process because they are paralyzed by the thought of having to break the news to a family member that he or she is not going to be their first choice of a fiduciary (i.e. a guardian, trustee, agent under a power of attorney etc.). If you fall into this category of individuals, then having this conversation could be as awkward as letting a porcupine loose in a balloon store. However, setting up your estate plan and selecting the right people for various roles are critical not only to get your estate affairs organized but to ensure that your loved ones are taken care of when you are gone. Don’t let ‘paralysis by analysis’ get the better of you– use this guide to approach these important discussions with kindness, concern, and a sprinkle of humor.

      1. Schedule a meeting with the family member (s) asap!

• Make reservations at a nice restaurant of their choice well in advance. Once its pre-scheduled both sides are committed so its harder to push off.
• Start by acknowledging the sensitivity of the topic and any apprehension they might have
• Show empathy and understanding, recognizing that these discussions can be emotional.
• And one of our clients recommends – “don’t forget to bring a nice bottle of wine!
• Prepare the environment that will allow your family member to relax and let their guard down even if its just for a bit.

      2. Simplify and Focus

• Keep the conversation straightforward, focusing on the key points.
• Explain the rationale of why you picked who you picked and avoid over-explaining.
  Stay on topic!
• Be kind in your tone and always keep their sentiments in the back of your mind. Know that they may be upset, only because they care about you and your family.

      3. Explain Your Intentions Clearly:

• Gently explain why you chose certain individuals as Executors, Guardians, and Trustees.  If you are selecting different people to handle your affairs if you become incapacitated, then explain why you chose that particular person. Focus on those people’s strengths rather than your family’s weakness.
• Emphasize that these decisions are made with the family’s best interests in mind.

      Some examples –

• You already have four kids of your own and we thought it would be unfair to impose this additional burden on you to name you as the guardian.
• [Name of Person] would be better as my healthcare power of attorney because they would be less emotional if I gave them authority to make end of life decision making authority.
• As you know, [Name of person] does not have pets and [Name of Child] is allergic to pets.
• We really gave this a lot of thought and kept [Name of Child] interests in mind. We made arrangements with our [Name of Friends] who have offered to serve as guardians of our children, if we in turn, offered to serve as theirs.

      4. Address Their Concerns Thoughtfully:

• Listen carefully to their concerns and respond with calmness and kindness.
• Provide reassurance and factual information. If they get too heated, remind them, “Hey, I’m just trying to avoid a real-life version of ‘Family Feud.’”

      5. Set Boundaries with Compassion:

• If the conversation becomes tense, kindly but firmly steer it back to the topic. “Let’s not go there. Otherwise we might turn this into a reality TV show”
• Remind them of the importance of respectful communication and the shared goal of honoring your wishes.

      6. Seek Common Ground:

• Find areas of agreement and emphasize shared goals. “We all want what’s best, even if we sometimes argue like we’re on a bad sitcom.”

      7. Offer Written Documentation:

• We call this our “Letter of Wishes” which outlines your decisions and the reasons behind them. Normally we ask families to write a Letter of Wishes to their trustees to give them insight into how they want their money distributed to their children after they are gone. This is typically left along with their estate planning binder. However we think that by writing down a similar script in advance, it will not only help avoid ad-libbing during the drama but can be something your family can read later when things are not so emotionally charged
• Ensure your estate planning documents clearly specify the roles and responsibilities of each chosen individual.

      8. Express Gratitude and Trust:

• Thank them for their willingness to engage in this important conversation. “Thanks for  joining this not-so-fun, but oh-so-important family meeting!”
• Reassure them of your trust in your chosen Executors, Guardians, and Trustees to carry out their duties responsibly.

Conclusion:

Discussing your estate plan with difficult family members can feel daunting, but with patience, empathy, and a dash of humor, you can navigate the conversation effectively. By approaching it with kindness and understanding, you can ensure your wishes are clearly communicated and respected, keeping the family harmony intact—even if it means cracking a joke or two along the way.

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