OBRA SPECIAL NEEDS POOLED TRUSTS: PERMISSABLE DISTRIBUTIONS AND FEDERAL REGULATIONS

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OBRA SPECIAL NEEDS POOLED TRUSTS: PERMISSABLE DISTRIBUTIONS AND FEDERAL REGULATIONS


Many of our readers have asked us for more information about OBRA trusts. OBRA trusts were originally created for disabled people with long-term needs, so they could move into public aid facilities and have funds left for their special needs. An appropriate situation would be for a disabled child who received a malpractice award meant to cover long-term needs. In order to prevent the child's funds from being quickly drained by nursing home costs, OBRAs were created to allow the disabled child to be placed into a public aid facility, and have their estate available throughout their life for those things not provided by public aid. Once the OBRA is created though, private pay facilities are no longer an option for the child, in accordance with OBRA laws.

In the Cook County Probate Courts, these OBRA trusts are being abused. The elderly disabled are having their substantial estates (their hard-earned life-long savings) placed into OBRAs. Wards who lived at home or in beautiful private pay facilities prior to their guardianships have their funds placed into OBRAs (despite having enough funds to enjoy their private pay facilities for the rest of their lives), and are moved to less desirable public aid facilities (at the cost of the taxpayer). The wards' estates are then VERY quickly depleted by the guardians, GALs, and attorneys.

Although the OBRA laws were created for the purpose of providing for a high quality life for the ward while on public aid, this is not occurring. Over 65% of the Public Guardian's elderly wards' estates are placed into OBRA accounts, and these substantial estates are rapidly depleted by the guardians and attorneys, with the approval of certain judges, rather than being spent on the wards special needs.

Below is a comprehensive list of what is allowed by law to be paid from OBRA trusts, FOR THE BENEFIT OF THE WARD; also included are our comments to show what is actually occurring to wards on the 18th floor of the Daley center. These examples are substantiated with public court records. Case numbers will be provided to investigators upon request.

SELF-SETTLED TRUST LIST OF PERMISSIBLE DISTRIBUTIONS (OBRA Special Needs Pooled Trusts)

The Trustee(s) of a Pooled Account Trust may utilize any of the foregoing listing for expenditures from the Trust. The following list of non-support items is provided for purposes of description and shall not limit the Trustee(s) in making other distributions for other items of amenities that the trustee may believe are in the best interest of the beneficiary. These items are meant to be for the SOLE benefit of a disabled beneficiary which may include, but are not limited to:

Accounting/ Professional Services We have had reports of double-billing for accounting services when the wards' funds are placed into an OBRA; these double-billings were approved by the judge. This is obviously not to the benefit of the ward.

Acupuncture/Acupressure, Holistic Therapies, elective surgeries not covered by Medicaid

Alterations or mending to clothing, shoe repair

Appliances (TV, DVD player, WII, IPOD, Microwave, Stove refrigerator, washer/dryer including maintenance/repairs)

Assistive Technology

Bottled Water or water service

Bus pass/public transportation costs

Cable TV

Camera, film, reorder and tapes, development of film, photo albums, scrapbooks and supplies

Caregivers, Care Managers/Case Management Services

Clothing, coats, shoes

Clubs and club dues, membership (record clubs, book clubs, health clubs, service clubs, zoo, Advocacy Groups, museums)

Companion Services Though allowed, we have reports of guardians refusing these services for the ward, even though there is an obvious need, and there are estate funds to support this type of service. We have reports of wards who are not even permitted to enjoy the day outside, as the guardian will not provide a companion to allow them to safely go outside.

Computer hardware, software, program, maintenance and internet service

Conferences and the travel costs

Courses, trainings or classes (academic or recreational) including the course supplies

Curtains, blinds, drapes, or paint for decorating room or home We have reports of broken curtain rods hanging off the windows, making it impossible for the ward to even open the window and get fresh air or regulate the temperature in the room.

Dental work not covered by Medicaid, including anesthesia

Down payment on home or security deposit on apartment (Non SSI recipients)

Dry cleaning /laundry services for the beneficiary We have reports of laundry piled high in the public aid facilities, and the wards wearing dirty clothing daily

Fitness equipment, athletic gear

Funeral expenses- Prepaid during the life of the beneficiary ($5703) limit plus hardware item costs with the exception of irrevocable insurance policies)

Furniture, home furnishings and insurance

Gasoline, Maintenance and upkeep of automobile

Guardianship Services We have numerous reports of entire estates being depleted with legal fees and guardian fees, while no other items on this list were provided for the ward. The judges rubber stamp these fees, with no consideration of their excessive nature. GALS stand by and watch, and do not advocate for other needs of their wards, but submit bills for their services which are also approved for payment by the judges.

Haircuts/Salon/ Hair stylists We have reports of wards who have not received a haircut after many years of guardianship, yet there are always enough funds available for guardian and legal fees.

Holiday Decorations, parties, dinner dances, holiday cards

Home alarm and/or monitoring/response system

Home improvements, repairs and maintenance (not covered by Medicaid). Including tools to perform home improvements, repairs and maintenance by homeowner

Home Purchase for the beneficiary (Deed must be in Beneficiary’s name, Beneficiary must reside in the home full time) We have reviewed cases which appear to have real estate transactions inappropriately laundered with estate funds, not for the benefit of the beneficiary.


Home cleaning/maid services/lawn services/snow removal We have reports of wards living in filthy conditions, as the guardians will not release funds for these services.

Independent evaluations

Inexpensive Gift purchase ($50 limit/ $600 per year maximum) for immediate family members for birthdays, Xmas, Hanukkah, Kwanzaa, graduations, births, weddings, and anniversaries. We have reports of wards never being allowed this opportunity, while legal fees and guardian fees depleted the estate.

Insurance (automobile, home and/or rental insurance for possessions)

Insurance Co-Payments not covered by Medicaid Private insurance is cancelled, and lesser medical/dental services become available for the ward


Legal Fees/Advocacy Wards' entire estates are depleted with legal fees and guardians' fees, while none of the other opportunites on this list were ever provided to the wards.

Life Insurance (maximum value $1500)

Linens, towels, bedding, area rugs and household furnishings

Massage, facials and other similar spa services/treatments The only ones going to the spas are the attorneys, GALs, and guardians. They need to look good for the vacations they are taking with the wards' funds.

Musical instruments (including lessons and music sheets)

Non-food grocery items (laundry soap, bleach, fabric softener, deodorant, dish soap, hand and body soap, personal hygiene products, paper towels, napkins, kleenex, toilet paper, and any household cleaning products) Wards in public aid nursing homes may not have additional food paid for with their own estate funds (per OBRA laws)------it's strictly institutional food once the OBRA occurs.

Over the counter medications and supplies (including vitamins and herbs, etc)

Personal Assistance Services not covered by Medicaid Despite obvious need, wards are often denied these services, as the estates are being depleted with legal fees and guardian fees instead.

Pet and pet’s supplies including veterinary services

Phone service (Cell/ Home) We hear many reports where the wards are isolated from family and friends, and are deprived of phone service and visitation, especially if family raises concerns regarding the depletion of the estate.

Physician specialists if not covered by Medicaid

Private counseling, psychotherapy, psychiatrist costs not covered by Medicaid

Repair services (appliances, automobile, bicycle, household, fitness equipment)

Snow removal /Landscaping/Lawn Service

Sporting goods/equipment/uniforms/team pictures/travel to games/tournaments

Stationary, stamps, cards, paper supplies etc.

Storage Units for beneficiary

Taxi cab/ Limo service We have reports of wards never leaving their public aid facilities once their funds were placed into OBRA accounts.

Therapy (Physical, Occupational, Speech), not covered by Medicaid

Testing for any purpose (vocational, medical, psychological)

Tickets to concerts, sporting events (for beneficiary and one companion) We have reports of wards never leaving their public aid facilities once their funds were placed in OBRA accounts

Transportation, (automobile, motorcycle, bicycle, moped, gas, bus passes)

Utility bills (electric, heating)- Not for SSI beneficiaries

Vacation costs (including paying for personal assistance to accompany the beneficiary) We have reports of wards never being offered a vacation from public aid living, while the attorneys, GALs, and guardians vacationed from their fees paid by the OBRA trust. One GAL last year was overheard outside a Cook County Probate Courtroom bragging about the Carribean vacation she had just taken from her fees paid from the wards' estate.

Examples of Distributions that may NOT be paid by the trust

Direct cash disbursements to the beneficiary or third parties


Paying for a service already paid for by another source or any double payments by the trust that would supplant public benefits. This means that if ward is in need of nursing home placement, it must be a public aid facility, since the OBRA allowed the ward to qualify for medicaid. They cannot, by law, use their estate for a nicer private pay facility.

Distribution not in the best interest of the beneficiary (made primarily for the benefit of another person) Sole Benefit Rule

No Funeral lunches, dinners or meals can be paid for by the beneficiary through the trust

Payment of third party debts not owed by beneficiary

Payments to residual beneficiaries before trust is closed and all Medicaid debts are paid in full.

More about OBRAs can be read at this comprehensive website:

http://www.lifesplaninc.org/permissible_distributions.htm

Resources are available at :

Pooled Trust Programs for People with Disabilities: A guide for Families by The Arc, 2002, available at this site. It is a 16 page guide with an overview of pooled trusts, public benefits, principles and rules with descriptions of the many types of Special Needs Trusts and a complete listing of pooled trust programs in the US in 2002.

arc-wisconsin.org

Special Needs Alliance Trustee Handbook

Have you been named as trustee of a special needs trust? Have you created a special needs trust, and wonder what the job of trustee is actually like? Are you a trust beneficiary, trying to figure out what the trustee is permitted -- and required -- to do? The Special Needs Alliance is pleased to offer its free booklet on administering special needs trusts. In plain English, it can help you understand the choices and obligations.

specialneedsalliance.com

The four banks in Illinois which provide OBRA Special Needs Pooled Trusts are:

DayOne Reliance, Inc., Co-Trustee together with Great Banc Trust

Illinois Disability Association, Co-Trustee together with Bank of America (LaSalle Bank)

Options for Living (through American Bank & Trust)

Life's Plan, Inc., Co-Trustee with Great Banc Trust

RULES and FEDERAL REGULATIONS

These trusts should meet the Social Security Administration POM SI 01120.201 rules and federal regulations under 42 U.S.C. Section1396p (d)(4)(A), (d)(4)(c). The trust should be reviewed and approved by the Social Security Administration, VA Administration, and the Illinois Department of Healthcare and Family Services.



As described in the above resources, the ethical use of OBRAs can help disabled people, especially young children whose funds must last a lifetime. Unfortunately, these trusts are often abused in guardianship proceedings for elderly wards in the Cook County Probate Courts. The elderly wards, whose estates are large enough to cover the cost of private pay facilities through the rest of their lives, are needlessly placed into public aid facilities and their estates are placed into OBRA trusts.

Rather than the OBRA being utilized for the special needs of the ward to supplement what the public aid facilities cannot provide, certain judges on the 18th floor are awarding excessive fees to be paid from the estates to guardians, GALs, and attorneys. We have reviewed cases where up to 98% of the value of the estate has gone to attorneys and guardians fees, while almost nothing has been provided for the special needs of the ward.


Not only do the public aid facilities not meet the wards' needs, but the taxpayers are footing the bill, and our current shortage of public aid nursing home beds in Illinois is being exacerbated by the probate court.


This abuse must be exposed for what it is: Financial exploitation of the elderly disabled and medicaid fraud and abuse on the part of some of the judges, guardians, GALs, and attorneys in the Cook County Probate Courts.

Signed,

Your ProbateSharks Team of Medicaid Fraud and Abuse Whistleblowers