Blue Cross Blue Shield Employees: Special Needs Trusts

Healthcare Provider Update: Healthcare Provider Information for Blue Cross Blue Shield Blue Cross Blue Shield (BCBS) operates as a federation of independent health insurance companies across the United States. Each individual organization under the BCBS umbrella serves specific geographical regions, offering a range of health insurance products and services, including individual and group health plans, dental and vision coverage, and more. Notable regional affiliates include Blue Cross Blue Shield of Illinois, Blue Cross Blue Shield of Texas, and Blue Cross Blue Shield of Florida, among others, facilitating comprehensive healthcare management and coverage options for millions of members nationwide. Healthcare Cost Increases in 2026 In 2026, significant increases in health insurance premiums are anticipated, particularly for plans available through the Affordable Care Act (ACA) marketplaces. Record hikes, as high as 66% in some states, are expected as a result of rising medical costs, the potential expiration of enhanced federal premium subsidies, and aggressive rate adjustments by major insurers like Blue Cross Blue Shield. The Kaiser Family Foundation warns that a staggering 92% of marketplace enrollees could see their out-of-pocket premiums surge by over 75% due to this confluence of factors, which will likely price many middle-income Americans out of affordable health coverage. Click here to learn more

Blue Cross Blue Shield employees considering a special needs trust for a relative should consider the tradeoff between preserving government benefits and covering supplementary needs, 'says (Advisor Name), of the Retirement Group at Wealth Enhancement Group. Working with professionals who understand these trusts is important so your loved ones are properly protected without compromising their benefits,' she said.

The Retirement Group, a division of Wealth Enhancement Group, reminds Blue Cross Blue Shield employees that setting up a special needs trust is about more than financial security - it's about peace of mind. Engaging skilled advisors may help structure the trust to meet immediate and long-term care needs while preserving eligibility for key government programs.

In this article we will discuss:

1. How to Form a Special Needs Trust: How to start a special needs trust for people with disabilities so they can continue to receive government benefits such as Medicaid and SSI.

2. Types of Special Needs Trusts (SN Trusts): Exploring different types of special needs trusts including third party and self-settled trusts and how they can be adapted to meet the needs of disabled people.

3. Funding & Managing a Special Needs Trust: A Practical Guide. Guidelines for funding and managing a special needs trust so it can meet its intended goals without compromising eligibility for government programs.

How Much Does A Special Needs Trust Cost?

For Blue Cross Blue Shield customers with a child or other relative with special needs, a special needs trust may be appropriate. An estate plan that accommodates the needs of disabled people without compromising eligibility for government benefits is called a special needs trust or supplemental needs trust. An attorney can help you form and manage such a trust.

Tip: Our Blue Cross Blue Shield clients should know that the term special needs is used herein to describe any trust established to fund the supplemental needs of a person with a disability while maintaining eligibility for government benefits. It includes trusts funded by the individual (as defined by the Omnibus Budget Reconciliation Act of 1993 (OBRA' 93), as well as trusts funded by assets received from a third party (a parent or grandparent).

But Why Set Up A Special Needs Trust?

Some Blue Cross Blue Shield employees wonder why a special needs trust should exist. Unlike other types of trust used in estate planning, the purpose of a special needs trust is to meet the life expectancy of a disabled individual. In general, children and people with special needs are eligible for federal and state benefits. And if your child is eligible for government benefits, one of your goals may be to keep him or her eligible indefinitely. A special needs trust may help you with that goal. And this type of trust can offer more services for your loved one.

Tip: We also want these Blue Cross Blue Shield employees to know that although this discussion is about using a special needs trust to benefit a child with disabilities, some special needs trusts may be established for a parent or other older adult who wishes to keep eligibility for nursing home benefits under Medicaid.

Preserve Eligibility for Medicaid.

Medicaid eligibility is a pro for Blue Cross Blue Shield clients contemplating a special needs trust. The joint federal-state Medicaid program helps disabled people who have financial need. For children and adults, Medicaid eligibility is determined only if their monthly income and other assets are below state-specific limits. (Most states set a USD 2,000 asset limit.) A state may look only at legally available income and assets to determine Medicaid eligibility. The beneficiary is denied direct access to the assets of the trust to the point where they are not legally accessible through a special needs trust. So a special needs trust can protect Medicaid eligibility because its assets are not countable.

Preserve Eligibility for Supplemental Security Income (SSI)

Many children and adults with limited Income and resources receive monthly Supplemental Security income (SSI) benefits. These monetary benefits may be used for housing or food. Since SSI benefits are determined by need, a child with special needs who inherits money could lose eligibility. Rather than their child, these Blue Cross Blue Shield customers can put their assets toward taking care of a special needs trust. Since SSI recipients typically automatically qualify for Medicaid, preserving your child's SSI eligibility may also preserve his or her Medicaid eligibility.

Provide Other Care and Services.

A special needs trust may be especially useful to Blue Cross Blue Shield clients who want to protect their child without cutting into Medicaid benefits. Medicaid covers hospital bills, physician services and long-term care but not non-essential items and services. Those may include health-related costs like eyeglasses, dental care, rehabilitation and home health help services, and personal costs like transport, computer equipment and vacations.

Caution: To prevent trust assets from reaching the beneficiary, the trustee must have sole discretion over trust income and principal distribution. No beneficiary may control the trust or demand distributions from the trust. The trustee should buy goods and services for the beneficiary directly rather than give the beneficiary money from the trust to buy items needed.

What Requirements Must A Special Needs Trust Meet?

The trust must be drafted correctly if it is meant to supplement rather than replace government benefits. While specific requirements depend on state law and the kind of special needs trust being established, we recommend our Blue Cross Blue Shield clients understand the following general rules about special needs trusts in general:

So the beneficiary of the special needs trust might not have access to the trust's assets. No such beneficiary can end the trust. This individual must meet SSI requirements. Kids and adults have different laws. Provisions of the trust may bar the trustee from making payments or distributions that would affect the beneficiary's eligibility for government benefits (e.g., distributions can not be made directly to the beneficiary). Special needs trusts may exist in a will as a testamentary trust or during the creator's lifetime as a living or inter vivos trust. Special needs trusts can hold unlimited assets and can be augmented at will.

What Types of Special Needs Trusts Are Available?

The many varieties of special needs trusts fall broadly into two broad categories: a third-party special needs trust funded by assets not owned by the beneficiary and a self-settled trust funded by assets owned by the beneficiary.

Third-Party Special Needs Trust

The assets paid into the third-party special needs trust are not assets of the beneficiary. A parent or grandparent, for example, could fund a testamentary trust with cash, life insurance or another asset. If the third-party trust is properly drafted, the state will not be required to pay for long-term care services when the beneficiary dies.

Self-Settled Trust

The disabled person sets up a self-settled special needs trust out of their own funds. For example, a self-settled trust could be created using a personal injury award or inheritance. One type of self-established trust is the qualified self-funded special needs trust. This type of trust is created for the benefit of only one disabled person under age 65 at the time of its establishment. All long-term care after the beneficiary dies must be paid for out of trust assets. Such a trust is also called a (d) (4) (A) trust.

Other common types of self-settled trusts are qualified pooled trusts, also called (d) (4) (C) trusts. A nonprofit organization establishes and manages such a trust. Each trust beneficiary has a separate account but funds are pooled for investment and management. Any remaining trust assets are given to the charitable organization upon the death of the beneficiary and the charitable organization reimburses Medicaid for benefits paid to the beneficiary. Some survivors may even receive a share or all of the remaining funds.

Articles you may find interesting:

Caution: Self-settled trusts are complex and must conform to OBRA' 93.

Caution: One parent may preserve eligibility for nursing home benefits under Medicaid by placing money in a special needs trust for a child with disabilities that has a Medicaid payback provision.

What Does A Special Needs Trust Usually Get Funded For?

Many Blue Cross Blue Shield employees wonder how often such trusts are funded. Many times a special needs trust is created but not funded while the parent or other creator is alive. A parent dies leaving the special child's share of an inheritance to the special needs trust. Also, the trust can be named the beneficiary of assets other than the child - such as employee benefits and life insurance policies.

A special needs trust is funded typically by:

1. Life insurance Cash (including relatives' gifts). Stocks, bonds, investments - etc. Pension benefits / IRA funds / 401 (k) assets - Retirement plan benefits. Real and personal property Personal injury settlement proceeds (for self-settled trusts).

2. Though life insurance is among the most common ways of funding - particularly low-cost survivorship life insurance - each method has advantages and disadvantages. And these Blue Cross Blue Shield employees will need to project how much lifetime income their child will likely need to fund the trust.

Still Other Things to Consider?

A few other things to consider for Blue Cross Blue Shield customers considering a special needs trust.

Selecting a Trustee

Trustees are people or institutions that administer the assets of a trust. The trustee is liable for following the terms of the trust document and meeting its objectives. You may designate yourself, another family member, an attorney, a bank or another professional as trustee of the special needs trust. All have benefits and drawbacks. Such Blue Cross Blue Shield employees may also name a relative and a professional trustee as co-trustees.

Providing a Letter of Intent.

For our Blue Cross Blue Shield clients who establish a special needs trust through a will, you may also want to write a letter of intent setting out your wishes for your child's future care. Although not a legal document, it may be useful to guardians, trustees, family members and anyone else caring for your child. This letter could discuss your child's medical needs, daily routine, interests / likes / dislikes, religion, living situation, social activities / behaviour management and independence. A letter like this might help your child's attendants and may help the child adjust to a new living situation.

Informing Family Members

Tell siblings or other relatives why these Blue Cross Blue Shield employees are starting a special needs trust. Siblings should expect equal inheritances but you will likely have to save more for your child with special needs. Clarifications & explicit instructions may prevent.

Sources:

1. Special Needs Alliance . 'SNA 2022 Handbook.'  Special Needs Alliance , 2022.  www.specialneedsalliance.org .

2. CPT Institute . 'What is a Special Needs Trust? [The Complete Guide].'  CPT Institute: Protecting Government Benefits for the Injured and At Risk ,  www.cptinstitute.org .

3. Medicaid Planning Assistance . 'Special / Supplemental Needs Trusts & Medicaid Eligibility for Seniors.'  Medicaid Planning Assistance ,  www.medicaidplanningassistance.org .

4. The Autism Community in Action (TACA) . 'Special Needs Trusts.'  TACA ,  www.tacanow.org .

5. NeuroNav . 'A Special Needs Trust Deep Dive: What to Know.'  NeuroNav , 15 Oct. 2024,  www.neuronav.org .