Colorado § 15-14-412.8 - Disability trusts - limitations.

§ 15-14-412.8. Disability trusts - limitations.

(1) A disability trust within the meaning of this section is a trust that is established for an individual under sixty-five years of age who is disabled, as such term is defined in Title XIX of the federal "Social Security Act", 42 U.S.C. sec. 1382c (a)(3), as amended, consists of assets of the individual, and is established for the purpose or with the effect of establishing or maintaining the individual's resource eligibility for medical assistance.

(2) A disability trust is not valid for the purpose of establishing or maintaining a person's resource eligibility for medical assistance unless the trust meets all of the following criteria:

(a) The trust is funded by assets of an individual under age sixty-five who is disabled as defined in 42 U.S.C. sec. 1382c (a)(3), as amended, and which is established for the benefit of such individual by the individual, the individual's parent, the individual's grandparent, the individual's guardian, or by the court.

(b) The trust provides that, upon the death of the beneficiary or termination of the trust during the beneficiary's lifetime, whichever occurs sooner, the department of health care policy and financing receives any amount remaining in the trust up to the total medical assistance paid on behalf of the individual.

(c) The sole lifetime beneficiaries of the trust are the individual for whom the trust is established and the state medical assistance program. After the death of the person for whom the trust is created or after the trust is terminated during the beneficiary's lifetime, whichever occurs sooner, no person is entitled to payment from the remainder of the trust until the state medical assistance agency has been fully reimbursed for the assistance rendered to the person for whom the trust was created.

(3) A disability trust is not valid for the purpose of establishing or maintaining eligibility for any category of public assistance other than medical assistance.

(4) No disability trust shall be valid unless the department of health care policy and financing, or its designee, has reviewed the trust and determined that the trust conforms to the requirements of this section and any rules adopted by the medical services board pursuant to section 25.5-6-103, C.R.S.

Source: L. 2000: Entire part R&RE, p. 1813, § 1, effective January 1, 2001 (see § 15-17-103). L. 2006: (4) amended, p. 2003, § 53, effective July 1. L. 2017: (2)(a) amended, (HB 17-1280), ch. 230, p. 894, § 1, effective May 23.

Editor's note: This section is similar to former § 15-14-409.8 as it existed prior to 2001.

ANNOTATION

Law reviews. For article, "Preserving the Disabled Plaintiff's Access to Public Benefits with the Special Needs Trust," see 25 Colo. Law. 49 (May 1996).

This section does not violate the equal protection clause of the U.S. or Colorado Constitutions. Allowing specified funds to be used to fund a disability trust while other funds cannot be so used does not result in dissimilar treatment of similarly situated people. Because there is no dissimilar classification of individuals, no equal protection issue is presented. Colo. Dept. of Health Care Policy & Fin. v. Estate of Roberts, 18 P.3d 813 (Colo. App. 2000).

Federal law permits a state, for the purposes of determining medicaid eligibility, to permit applicants to exclude their income from eligibility by establishing a trust. However, federal law does not prohibit the state from adopting additional trust requirements, as in this section, for these purposes. Colo. Dept. of Health Care Policy & Fin. v. Estate of Roberts, 18 P.3d 813 (Colo. App. 2000); Matter of Mendy Brockman Disability Trust, 2022 COA 75, 519 P.3d 373.

State regulation mandating when disability trusts terminate was not inconsistent with federal law. Regulation adopted pursuant to subsection (4) and stating that a disability trust "terminates upon the death of the individual or if the trust is no longer required for Medical Assistance eligibility" was not inconsistent with federal law, which neither requires nor prohibits a disability trust from terminating when a beneficiary dies or becomes ineligible for Medicaid benefits. Matter of Mendy Brockman Disability Trust, 2022 COA 75, 519 P.3d 373.

Upon termination, a trustee may pay federal and state taxes due from the corpus of the trust before reimbursing the state for medical assistance it rendered to the beneficiary. Stell v. Boulder County Dept. of Soc. Servs., 92 P.3d 910 (Colo. 2004).

The qualification of the trust for exemption from the Medicaid calculation, as opposed to its eventual distribution, is determined by the criteria set forth in this section, not § 15-12-805. Stell v. Colo. Dept. of Health Care Policy & Fin., 78 P.3d 1142 (Colo. App. 2003), rev'd on other grounds, 92 P.3d 910 (Colo. 2004).