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Payback or Obra '93 Trust

Cook County Supplemental Special Needs Payback Trust--OBRA (d)(4)(A) Trust Law Firm

Special Needs Trust

Payback or Obra '93 Trust

Supplemental Special Needs Payback Trusts are also known as OBRA (d)(4)(A) Trusts, Self-Settled Special Needs Trusts and First Party Special Needs Trusts. Usually, a person who owns significant non-exempt assets is ineligible to receive Medicaid. OBRA ‘93 (shorthand for Omnibus Budget Reconciliation Act of 1993) permits Medicaid eligibility for a disabled person (as defined by Social Security regulations), provided a properly established OBRA '93 Trust is created for that person prior to him/her attaining the age 65. After age 65, this option is not available except in a Pooled Trust arrangement.

Compare an OBRA '93 Trust to a Third Party Discretionary Special Needs Trust:

OBRA Trust:

  • Funded with the primary beneficiary (the special needs person’s) own assets, perhaps his/her own savings or a direct inheritance or money from a personal injury lawsuit brought because of the negligence that resulted in the disability.
  • Created by the special needs individual's parent, grandparent, or a guardian appointed by a court with proper jurisdiction.
  • Assets remaining in the trust after the death of the primary beneficiary must first reimburse Medicaid for all the payments it made to or on behalf of the primary beneficiary during that person’s lifetime. After Medicaid is fully paid, any remaining balance can go to designated beneficiaries such as family members or charity.
  • OBRA '93 Trusts ensure that people with disabilities remain qualified for Medicaid, despite owning excess assets that ordinarily result in a Medicaid disqualification. Qualification is immediate. Unlike some other programs that confer Medicaid eligibility only following a five year look-back period, when transferring the assets to an OBRA Trust there is no look-back period.

Third Party Trust:

  • Funded with anyone else's money, usually by lifetime or testamentary gifts.
  • Created by anyone other than the primary beneficiary.
  • Upon the death of the primary beneficiary, remaining assets can be distributed to any specified contingent beneficiaries such as family and charities. There is no Medicaid payback from the Third Party Trust.

If you live in the Chicago or Lake County area, and need an experienced OBRA Trust attorney, please contact Matlin Law Group, P.C..