July 2025

From The Certified Elder Law Attorney's Desk:

Can My Special Needs Trust Buy a Home?

By:

Catherine B. Read Esquire, CELA*

Blog Spotlight:

The New Right to Appeal Medicare Observation Status.

An Update and a Remedy.

By: William W. Erhart, Esquire, CELA*

Calendar of Events

Article of Interest:

Study Reveals Turning Point When Your Body's Aging Accelerates

Science Alert

Michelle Starr

July 28, 2025

Quote

From The Certified Elder Law

Attorney's Desk:

Can My Special Needs Trust Buy a Home?

By: Catherine B. Read Esquire, CELA*

When a person with a disability receives a settlement from a personal injury lawsuit, often it is best for the person not to receive the settlement directly, but in a special needs trust. Reasons for a special needs trust are varied, but chief reasons include: 1) the beneficiary is a minor, 2) retaining eligibility for the beneficiary’s means-based public benefits, 3) protection from dissipation by the beneficiary, 4) protection from dissipation by others in the beneficiary’s life, and/or 4) protection from the beneficiary’s creditors.

Once the special needs trust is decided upon, the next question from most beneficiaries is: “Can my Special Needs Trust buy a home?

The technical answer is yes. There is no legal prohibition on a special needs trust owning a home.

But just because something can happen, does not mean it should. The considerations are complex for whether and on what terms a person with a disability should own a home. Trustees have a fiduciary duty to take all of these considerations into account, consult with experts to obtain financial data and legal advice, then decide on home ownership legal structure.

Chief Considerations for Whether and On What Terms

a Special Needs Trust Should Buy a Home Include:

A. Making the trust money last. A home purchase should not use a disproportionate amount of trust funds. The trust money is intended to last the beneficiary’s lifetime, regardless whether the beneficiary or family would prefer to spend it upfront. The beneficiary by definition has a disability and will have significant needs throughout a lifetime that are not paid for by public benefits which are very limited in scope. The trust is there to supplement the beneficiary’s quality of life over a lifetime, including through education, expenses not covered by public benefits, and simple pleasures of life such as entertainment, furnishings, and vacations. There will come a day when the beneficiary’s family is deceased or incapacitated: that trust fund is there as the safety net for that beneficiary. Home price compared to trust size is a very serious consideration and often a disappointing one for beneficiaries.

B. Required State Payback under 42 U.S.C. §1396p(d)(4)(A). The type of trust for a personal injury settlement is typically a First Party Trust because the beneficiary’s own money is funding the trust. With a First Party Trust, under federal and state law, there is a catch: when the beneficiary dies, the State must first be paid back, from the trust, for up to all Medicaid payments the State made for that beneficiary. Under Delaware law, the Medicaid payments are counted starting the date the trust is created. First Capital Sur. & Trust Co. v. Elliott, Court of Chancery of State of Delaware, September 27, 2012, C.A. No. 4194-VCG. When a trust owns a home, the home is subject to that State payback on death, meaning on the beneficiary’s death the home must be sold to satisfy the required State payback if the trust lacks sufficient liquid funds to pay. This is a serious consideration when other family members live with the trust beneficiary and will be displaced by that sale.

C. Right of Other Family Members to Live There. Federal and state law require a special needs trust be “for the sole benefit of” the trust beneficiary. When other individuals reside in the home with the trust beneficiary, a question arises as to whether that legal requirement is breached. Solutions may exist, such as leases and expense-sharing agreements, but the matter is complex and often families lack the funds and desire to maintain these hyper-technical agreements, which when breached can have disproportionately large consequences.

D. Estate Recovery. What if a beneficiary owns the home outright, rather than in trust? Estate recovery is the concern. Under federal and state law, all States are required to establish a program where, when a Medicaid beneficiary dies, the State files a claim to recover, through the probate process, up to all medical assistance Medicaid paid for that individual.

Five Options for Buying a Home for a Person with Disabilities

What is to be done, then? How can a home be purchased for a person with disabilities who receives a personal injury settlement, if the trustee determines the trust funds are sufficient? Following are five common options, though not the only options:

1. Trust purchases the home. In this option, the trustee has made an informed determination as to how much the beneficiary will need in a lifetime based on a life care planner’s assessment, engaged an investment advisor to make the funds last and achieve tax and spending goals, consulted with the beneficiary as to the beneficiary’s needs, done its due diligence to carry out its fiduciary duties, and then determined the trust has enough liquid assets to purchase the home. However, on the beneficiary’s death, the home will be subject to the State payback under 42 U.S.C. §1396p(d)(4)(A) and have to be sold to repay Medicaid for medical assistance rendered to the beneficiary if the Medicaid benefits exceed the cash remaining in the trust. Also, family members must pay their pro rata share of the operating expenses or some rental because the trust must be “for the sole benefit of” the trust beneficiary.

2. Trust purchases a life estate for the beneficiary; parents or spouse purchase the remainder interest.

This option requires significant family financial contribution. Here, the trust purchases a life estate in the home. The purchase price for the life estate is calculated by multiplying: 1) a statutorily-determined factor for the beneficiary’s remaining life expectancy by 2) the home purchase price. The younger the beneficiary, the longer the life expectancy, the higher price to purchase the beneficiary’s life estate. In Delaware, there is no estate recovery against a life estate under current law. (Note, however, if a beneficiary is receiving Medicaid from another state, that state’s law must be consulted as some states do permit estate recovery against a life estate.) The disadvantage is the parents or spouse must pay for the remainder interest (which is the other portion of the total purchase price) and their share of any home improvements.

3. Trust purchases home with parents/spouse as co-tenants. In this option, parents or a spouse are cotenants with the trust. This gives them a right to use the property, so they need not pay rent. The disadvantage is the Medicaid State payback provisions apply to the percentage of the home owned by the trust.

4. Beneficiary owns home. Here the beneficiary, not the trust, owns the home. Funds to purchase the home can be advanced from the trust, or can come out of the settlement proceeds first before the remaining proceeds are deposited to the trust. An advantage is the home will not be subject to the State payback provisions of the trust, but a disadvantage is, under Delaware law, the home is subject to Medicaid estate recovery when the beneficiary dies. (States vary on this.) Another disadvantage is, if the beneficiary has poor financial habits, he/she might mortgage the home, and/or fail to pay homeowners insurance, real estate taxes, or other expenses. As such, a person not competent for homeownership, including a minor, should not own a home.

5. Parents purchase the home. Here, the parents purchase the home. Advantages include no Medicaid State payback and no estate recovery; however, the parents must pay for the home. Where appropriate, personal injury attorneys negotiating a settlement should take this into consideration and make an attempt to allocate sufficient funds to the parents to pay for the home.

Math, Creativity, and Prudence Required

As you can see, purchasing a home for a special needs trust beneficiary is not a one-size-fits all solution.

Math definitely is required. And that math likely requires the trustee consulting with experts including Life Care Planners and investment professionals.

Creativity is required. Knee-jerk reactions by counsel and trustees for “this is how we always do it” are inappropriate. Life expectancy, beneficiary needs, care specifics, parent/spouse employment, transportation, and other facts matter - much. Knowledge of real property law is essential for understanding and titrating ownership structures. That knowledge must overlap with disability and public benefits law expertise, tax law, the law governing surrogate decision-making, and laws and considerations governing vulnerable persons in general. Real estate settlement attorneys may be required. A special needs attorney who helps personal injury attorneys structure settlement, before settlement terms are finalized, can make all the difference. As you can see, a significant part of creativity is consulting with other experts to create solutions. Experience and access to resources count a ton.

Prudence is a must. Taking a moment and doing the homework – gathering facts, gathering Life Care plan data, listening to the beneficiary and family, working through financial options with investment professionals and mortgage brokers – all of these are predicates to a home buying decision and on what terms that purchase should be made. Further, the trustee and counsel must have the hard discussions with families to transform potentially unrealistic expectations into workable solutions where all individuals understand and accept the risks involved, as no solution is without its disadvantages.

Source: https://www.specialneedsalliance.org/wp-content/uploads/2023/03/SNA-Buying-a-Home-for-a-Person-with-Disabilities.pdf

The New Right to Appeal Medicare Observation Status: An update and a Remedy!

By: William W. Erhart, Esquire, CELA*

Those Medicare recipients admitted to hospitals, who were injured by Medicare’s improper re-classification post-admission from Inpatient status to Observation status, now have the opportunity to be reimbursed for nursing home and rehabilitation services. The right extends back to 2009. The deadline for action is January 2, 2026.

The Issue

In the past, I have written about Medicare Observation status and the right to appeal it. For Medicare beneficiaries receiving traditional Medicare, a patient must stay three days or more in a hospital to satisfy the “qualifying hospital stay” requirement to trigger Medicare coverage of skilled nursing facility (“SNF”) care. A patient must be hospitalized as an Inpatient covered by Medicare Part A for three days before one can receive Medicare coverage of SNF services. This is called the Two Midnight Rule. If a patient has spent two midnights in the hospital, then the three-day requirement is met.

Failure to qualify as an inpatient means Medicare Part A will not pay for rehabilitation services or nursing home care when a patient is discharged from the hospital. The result is patients often go without necessary services or pay tens of thousands of dollars out of their own pockets.

Remember, Part A Medicare covers hospitalization and residential rehabilitation. Part B Medicare covers outpatient services, such as doctor visits, therapy, and medical equipment. Observation status is considered outpatient services, not hospitalization.

The Problem

Many patients are admitted and spend three days or more in a hospital. They receive that same treatment as any other patient. When discharged to a SNF for rehabilitation or permanent stay they suddenly find out that Medicare did not consider them as Inpatient, but under Observation Status. They were covered by Part B. Therefore, Part A coverage for the SNF was unavailable. Worse, sometimes patients were admitted as Inpatient, but had their status re-classified as Observation status after their admission. Sometimes the reclassification occurs after they are discharged from the hospital.

The Solution

In the class action case of Alexander v. Azar,613 F. Supp. 3rd 559 (D. Conn. 2020), aff’d sub nom. Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022) the Court found that the group of plaintiffs and therefore class members, who had their Inpatient status re-classified by Medicare to Observation status were denied Due Process and could file a retrospective appeal for out-of-pocket expenses for nursing home services. This covers hospitalizations between January 1, 2009 and February 13, 2025. A person appointed a Medicare Representative for a beneficiary may apply on the beneficiary’s behalf. See this form. https://www.cms.gov/medicare/cms-forms/cms-forms/downloads/cms1696.pdf

To file a retrospective appeal the exclusive process ordered by the Court is to file a form with the “Eligibility Contractor.” This is the form. https://medicareadvocacy.org/wp-content/uploads/2024/12/Observation-Status-Retrospective-Appeals-Form-CMS-10885.pdf Representatives of deceased Medicare beneficiaries my appeal on behalf of the deceased person.

A flow chart illustrating the process for a retrospective appeal is attached: https://medicareadvocacy.org/wp-content/uploads/2024/12/Observation-Retroactive-Appeal-Flowchart.pdf

The deadline for filing a retrospective appeal is January 2, 2026. Medical documentation should be filed with the form.

If an appeal is successful then Medicare will pay for eligible nursing facility expenses. The provider (nursing home) should owe you a refund.

Going Forward: Prospective Appeals

Alright! So much for Medicare beneficiaries wronged in the past. What about going forward?

The Court in Alexander v. Azar requires Medicare to provide a process for expedited appeals for patients who do not have the required three-day inpatient stay. This is necessary for patients who may not have the required three day stay, but need SNF care. If the appeal is successful the patient will be considered an Inpatient and qualify for Medicare coverage of SNF services. Otherwise, patients will either go home without receiving essential services or they will spend tens of thousands of dollars just to be admitted to a SNF. In Delaware, the current cost of a SNF is approximately $15,000.00 a month.

Eligible to appeal are Medicare beneficiaries who are admitted as inpatients but later reclassified as “outpatients receiving observation services” and are either not enrolled in Part B or spent at least three days in the hospital.

Hospitals are required to deliver patients a “Medicare Change of Status Notice” to inform them of their right to appeal. It looks like this: https://medicareadvocacy.org/wp-content/uploads/2024/11/10868-MedicareChangeofStatusNotice.pdf To appeal, patients contact the Medicare contractor listed on the notice. The hospital must furnish records for the Medicare contractor to review. Patients should be prepared to explain why they complied with the Two Midnight Rule. Again, that means they have spent at least two midnights in a row in the hospital. Patients should seek the comments/records of the physician who ordered the admission in the first place. The decision is to be made within one calendar day of the Medicare contractor receiving the information.

There is more than one level of expedited review. The beneficiary may proceed through Medicare’s standard administrative appeal process if necessary. Importantly, an appeal can be taken if one has left the hospital. An appeal can be taken at any time. A beneficiary can incur SNF expenses and qualify for Medicare coverage even after leaving the SNF. See attached flow chart: https://medicareadvocacy.org/wp-content/uploads/2025/03/Prospective-Appeals-Flowchart.pdf

If successful, Medicare Part A will cover the hospital stay. SNF services may be covered if the patient otherwise qualifies.

We can help

While the process is designed to permit non-lawyers to appeal, we are available to consult with Medicare recipients who have questions regarding the process.

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Study Reveals Turning Point When Your Body's Aging Accelerates

Science Alert

July 28th, 2025

By Michelle Starr

The passage of time may be linear, but the course of human aging is not. Rather than a gradual transition, your life staggers and lurches through the rapid growth of childhood, the plateau of early adulthood, to an acceleration in aging as the decades progress.

Now, a new study has identified a turning point at which that acceleration typically takes place: at around age 50.

After this time, the trajectory at which your tissues and organs age is steeper than the decades preceding, according to a study of proteins in human bodies across a wide range of adult ages – and your veins are among the fastest to decline.

"Based on aging-associated protein changes, we developed tissue-specific proteomic age clocks and characterized organ-level aging trajectories. Temporal analysis revealed an aging inflection around age 50, with blood vessels being a tissue that ages early and is markedly susceptible to aging," writes a team led by scientists from the Chinese Academy of Sciences.

"Together, our findings lay the groundwork for a systems-level understanding of human aging through the lens of proteins."

Humans have a remarkably long lifespan compared to most other mammals, but it comes at some costs. One is a decline in organ function, leading to a rise in risk of chronic disease as the years mount up.

We don't have a very good understanding of the patterns of aging in individual organs, so the researchers investigated how proteins in different tissues change over time. They collected tissue samples from a total of 76 organ donors between the ages of 14 and 68 who had died of accidental traumatic brain injury.

These samples covered seven of the body's systems: cardiovascular (heart and aorta), digestive (liver, pancreas, and intestine), immune (spleen and lymph node), endocrine (adrenal gland and white adipose), respiratory (lung), integumentary (skin), and musculoskeletal (muscle). They also took blood samples.

The team constructed a catalogue of the proteins found in these systems, taking careful note of how their levels changed as the ages of the donors increased. The researchers compared their findings to a database of diseases and their associated genes and found that expressions of 48 disease-related proteins increased with age.

These included cardiovascular conditions, tissue fibrosis, fatty liver disease, and liver-related tumors.

The most stark changes occurred between the ages of 45 and 55, the researchers found. It's at this point that many tissues undergo substantial proteomic remodeling, with the most marked changes occurring in the aorta – demonstrating a strong susceptibility to aging. The pancreas and spleen also showed sustained change.

Previous work by other researchers showed another two peaks in aging, at around 44, and again at around 60. The new result suggests that human aging is a complicated, step-wise process involving different systems. Working out how aging is going to affect specific parts of the body at specific times could help develop medical interventions to make the process easier.

"Our study is poised to construct a comprehensive multi-tissue proteomic atlas spanning 50 years of the entire human aging process, elucidating the mechanisms behind proteostasis imbalance in aged organs and revealing both universal and tissue-specific aging patterns," the researchers write.

"These insights may facilitate the development of targeted interventions for aging and age-related diseases, paving the way to improve the health of older adults."

Click here to finish reading.

*By the National Elder Law Foundation

Accredited by the American Bar Association

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