Revision 09-4; Effective December 1, 2009

A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.

The Omnibus Budget Reconciliation Act of 1993 identifies several types of trusts which are exceptions to the trust provisions stated in F-6300, Trusts (Aug. 11, 1993, and After). These exceptions apply only to trusts established on or after Aug. 11, 1993.

F-6710 Special Needs Trust

Revision 25-1; Effective March 1, 2025

A special needs trust is a revocable or irrevocable trust established with the assets, including income or resources, of a person under 65 who meets the Supplemental Security Income (SSI) program's disability criteria. The trust must be established for the person’s benefit by a parent, grandparent, legal guardian, court or the person. Beginning Dec. 13, 2016, people under 65 who meet the SSI program's disability criteria may establish a special needs trust for their own benefit. The trust must include a provision that the state is designated as the residuary beneficiary to receive, at the person's death, funds remaining in the trust equal to the total amount of Medicaid paid on their behalf.

Use Form H1210, Subrogation for Trusts, Annuities and Court Settlements, to report to the Texas Medicaid and Healthcare Partnership (TMHP) any potential paybacks to the state as the residuary beneficiary of special needs trusts.

This trust exception continues even after a person turns 65 if the person continues to meet the disability criteria for the SSI program. However, additions or augmentations to the trust after the person turns 65 are a transfer of assets.

If a person is receiving disability benefits from SSI, Retirement, Survivors, and Disability Insurance (RSDI) or Railroad Retirement (RR), their disability is automatically established. Verify that the SSI, RSDI or RR benefit is a disability benefit. Otherwise, disability must be established.

Additional Information

A legal review of the instrument, device or arrangement that establishes the special needs trust is necessary. Send the special needs trust documents to legal staff following established procedures.

Related Policy

Documentation and Verification Guide, Appendix XVI

F-6711 Treatment as Resource

Revision 09-4; Effective December 1, 2009

The trust is not counted as a resource.

F-6712 Treatment as Income

Revision 18-1; Effective March 1, 2018

Any distribution paid directly from a trust to the individual or to a third party for the benefit of the individual is unearned income to the individual in the month of receipt, except:

• payments for medical or social services for the trust beneficiary (E-1000, General Income, for an explanation of medical and social services); and
• payments to the trust beneficiary’s Achieving a Better Life Experience account (E-3331.4, Treatment of Interest and Dividends Earned on an Achieving a Better Life Experience (ABLE) Account).

A payment to or for the benefit of the individual is counted under trust provisions only if such payment is ordinarily counted as income.

F-6713 Transfer of Assets

Revision 09-4; Effective December 1, 2009

Transfer-of-assets provisions do not apply when such a trust is established. However, if assets are transferred to another party from the corpus or income generated by the corpus, then the policy in Chapter I, Transfer of Assets, applies.

F-6720 Pooled Trust

Revision 25-1; Effective March 1, 2025

A pooled trust is an irrevocable trust containing the assets of a person who meets Supplemental Security Income (SSI)'s definition of disability. A pooled trust must satisfy the following conditions:

• The trust is established and managed by a non-profit association.
• A separate account is maintained for each beneficiary, although the accounts may be pooled for investment and management purposes.
• Accounts in the trust are established solely for the benefit of people who meet SSI's disability criteria. The accounts are established by the disabled person themselves or a parent, grandparent or court-ordered legal guardian of the disabled person.
• The trust must include a provision so that amounts remaining in a person's account at their death are not kept by the trust, and the state is reimbursed in an amount equal to the total amount Medicaid paid on the person's behalf.

Note: Zebley funds may be used to establish pooled trusts.

Use Form H1210, Subrogation for Trusts, Annuities and Court Settlements, to report to the Texas Medicaid and Healthcare Partnership (TMHP) any potential paybacks to the state as the residuary beneficiary of pooled trusts.

Examples of pooled trusts are:

• The ARC of Texas Master Pooled Trust, established in 1997.
• Declaration of Trust for the Travis County Master Trust; Founders Trust Company, Trustee, adopted by decree of the District Court of Travis County, Texas, 201st Judicial District, effective Aug. 1, 1993.
• Declaration of Trust for Children for Whom the Texas Department of Protective and Regulatory Services is Managing Conservator or Who Are or Have Been Under its Jurisdiction;
• Boatmen's National Bank of Austin, Trustee, adopted by decree of the District Court of Travis County, Texas, 98th Judicial District, effective June 1, 1993.

Additional Information

A legal review of the instrument, device or arrangement that establishes the pooled trust is necessary. Send the pooled trust documents to legal staff following established procedures.

Related Policy

Documentation and Verification Guide, Appendix XVI

F-6721 Treatment as Resource

Revision 09-4; Effective December 1, 2009

The trust is not counted as a resource.

F-6722 Treatment as Income

Revision 18-1; Effective March 1, 2018

Any distribution to or for the benefit of the person from corpus or income generated by the trust is countable income, except the following distributions:

• payments for medical or social services (See E-1000, General Income, for an explanation of medical and social services); and
• payments to an Achieving a Better Life Experience account (E-3331.4, Treatment of Interest and Dividends Earned on an Achieving a Better Life Experience (ABLE) Account.).

A payment to or for the benefit of the person is counted under trust provisions only if such payment is ordinarily counted as income.

F-6723 Transfer of Assets

Revision 09-4; Effective December 1, 2009

Transfer-of-assets provisions do not apply when a pooled trust is established for the benefit of a person under age 65. If the person is age 65 or older, or if the person's portion of the assets in the trust are transferred to another party, then the policy in Chapter I, Transfer of Assets, applies.