Self Funded Payback Trust
The Life'sPlan, Inc. Self Funded Payback Trust was created in January of 1997 to provide individuals with disabilities, the elderly and their families with a mechanism for meeting the supplemental needs of the individual. The Self Funded Payback Trust is an individual or pooled trust which is available to individuals with disabilities, the elderly, and their families to permit them to use assets of the individual or the individual's spouse to supplement services for the individual while maintaining or becoming eligible for state and federal entitlements. The Trust operates through individualized Life Care Plans to arrange for supplemental services for the individual. The Self Funded Payback Trust is available to any individual with a disability and the elderly who has assets which they would like to place in a trust. Medicaid and other government benefit programs consider the resources and income of an individual for purposes of determining eligibility for assistance and the amount of such assistance. A supplemental needs trust may be established for an individual with a disability and the elderly without jeopardizing the individual's eligibility for Medicaid and other government entitlements.
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How does the trust operate?
The Self Funded Payback Trust enables an individual to place assets, savings, investments, real estate, insurance payments or settlements, etc. in a protected mechanism which will result in the individual being able to maintain or become eligible for Medicaid benefits. The funds in the Trust can then be used to supplement the lifestyle of the individual with a disability and the elderly by providing extras to meet personal needs, leisure time activities, training, clinical services, and transportation.
The Trust accepts, holds, and invests the assets of each family participating in the Trust.
Life'sPlan, Inc. Pooled Trusts
Life'sPlan, Inc. Pooled Trusts assets are commingled for investment purposes and all returns on investments are credited proportionately to each "private trust." All funds received by the Life’sPlan, Inc. Board of Trustees are invested in the Growth and Income Balance Portfolio offered through the financial institution that provides investment services for Life’sPlan, Inc. pooled trust account funds. Expenditures for specific individuals are charged against that individual's account.
Growth and Income Balanced Portfolio: The Growth and Income Balanced portfolio is designed for long-term growth of principle and income. The portfolio will usually be allocated equally between equity and fixed income securities with a small commitment to money market.
Model |
Money Market Funds and Cash |
Fixed Income Funds |
Equity Funds |
Growth and
Income Balanced |
0-10% |
30-50% |
40-60% |
Distributions from the assets are made to fund the supplemental goods or services as defined by the individualized Life Care Plan disbursement agreement.
An individualized Life Care Plan disbursement agreement is developed for each Trust Beneficiary to outline the priorities and designate the specific supplemental services to be provided. The Agreement will outline acceptable disbursements, frequency and amount.
Each family should involve their private attorney and financial advisors in developing their participation in the Self Funded Payback Trust.
Life’sPlan, Inc. Individual Trusts
Life’sPlan, Inc. Individual Trusts allow the family more options for investment of the funds. Old Second Bank and Life’sPlan, Inc. have established several investment options for Individual Trust participants to choose from.
All funds received by the Life’sPlan, Inc. Board of Trustees shall initially be invested in the Growth and Income Balance Portfolio offered through Old Second Bank the financial institution that provides investment services for Life’sPlan, Inc. individual trust account funds. Until the account exceeds $50,000.00 all investment decisions shall be made by the Board of Trustees.
When the account balance exceeds $50,000.00, the Donor shall have the right to select one of the Modeled Portfolio investment options, in accordance with Life’sPlan, Inc. Individual Trust Investment Options Agreement.
When the account balance exceeds $200,000.00, the Donor shall have the right to select the Individually Managed investment option, in accordance with Life’sPlan, Inc. Individual Trust Investment Options Agreement. Families work with a Portfolio Manager that will along with the family develop a customized portfolio that fits their long-term needs and objectives.
Life’sPlan Board of Trustees has approved the Modeled Portfolio and Individually Managed Portfolio investment options offered through Old Second Bank.
The Modeled Portfolio offers six model investment portfolios from low risk, modest return, to high risk, high return for families to choose from. Families work with a Portfolio Manager that will help the family select the portfolio that fits their long-term needs and objectives.
Trust Asset Consideration
An individual's participation in the Trust can be financed by making a transfer of cash or other assets, either immediately, or over time as through a structured settlement. Assets an individual receives as a result of a personal injury settlement or inheritance could be placed in the Trust.
What are the fees?
An initial enrollment fee of $775.00 is charged for the initiation of an account and the development of the initial individualized Life Care Plan disbursement agreement. An annual fee of $750.00 is charged each year thereafter.
An Annual Bank Management Fee and an Annual Asset Value Fee are charged on all accounts to cover the usual and customary services of the account Click here for more »
How does participation affect public benefits?
The Health Care Financing Administration (HCFA) of the United States Department of Health and Human Services has provided that assets of an individual which are placed in a trust of this nature will not count in determining Medicaid eligibility for the individual.
These assets will not count as resources in determining eligibility under the Supplemental Security Income (SSI) program.
These two federally funded entitlement programs are the primary sources of means-tested support to people with disabilities.
What happens to the funds remaining in the trust when the individual dies or terminates their participation?
With Life’s Plan, Inc. Individual Self Funded Payback Trust the assets remaining in the Trust Fund are first distributed to the State of Illinois to the extent necessary to provide for reimbursement of expenditures (to the extent such expenditures have not already been reimbursed from any other source) on behalf of the individual by the Illinois Department of Healthcare and Family Services and the Illinois Department of Human Services.
The balance of the account is distributed as designated in the instrument of transfer into the Trust or as the individual may appoint or if no direction is made then to Life's Plan, Inc. 
With Life’s Plan, Inc. Pooled Self Funded Payback Trust the assets remaining in the Trust Fund can either be distributed in the same manner as an individual trust or can be retained by the pooled trust.
If retained by the pooled trust the funds are allocated as follows:
- 15% of the balance of the “value of the account” shall be distributed to the trust for administrative costs
- 10% of remaining balance shall be distributed to the Charitable Fund to provide for supplemental services to indigent individuals with disabilities
- HFS is paid back for the beneficiary’s Medicaid costs
- The remainder left is then distributed as designated by the creator of the trust.
The balance to the account for the individual is distributed to the State of Illinois to the extent necessary to provide for reimbursement of expenditures (to the extent such expenditures have not already been reimbursed from any other source) on behalf of the individual by the Illinois Department of Healthcare and Family Services and the Illinois Department of Human Services.
The balance of the account is distributed as designated in the instrument of transfer into the Trust or as the individual may appoint or if no direction is made then to Life'sPlan, Inc.
Please Note:
The average cost for nursing home care is over $50,000 per year but can exceed $70,000. The average cost to support an individual with a disability in the community is approximately $45,000 per year. Unless the individual has a sizable trust it is very likely that the payback lien imposed by the Illinois Department of Healthcare and Family Services and the Illinois Department of Human Services will exceed the balance of the account in the trust.
Opting to have the balance of the account retained by the pooled trust to support not for profit entities that provide services to indigent individuals with disabilities may be a more preferred option.
Summary
The Self Funded Payback Trust allows individuals to use their assets to provide for supplemental services or supports, while remaining or becoming eligible for Supplemental Security Income and Medicaid benefits.
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