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Payback Trust

What is a Payback Trust?
 
·        The Social Security Act created the concept of a “Payback Trust”. See 42 U.S.C. §1396p(d)(4)(A). The parent, grandparent or guardian of a person with a disability, or a Court can create a Payback Trust to protect the person’s eligibility for Medical Assistance, Waiver Services and Supplemental Security Income.
 
·        Once the Payback Trust is created, the person with a disability can add his or her assets to the Payback Trust. In this way, the person can save funds rather than spend down for unnecessary things just to preserve eligibility for essential supports and services.
 
·        The assets in the Payback Trust are used for the benefit of the person with a disability -- to improve his or her quality of life.
 
·        If all the funds in the Payback Trust have not been spent by the time the person with a disability dies, the remaining money is used to “pay back” the Pennsylvania Department of Public Welfare for the cost of providing Medical Assistance to the person. If any money remains after the “pay back”, the trust agreement will direct the trustee how to distribute those funds.
 
·        ACHIEVA Family Trust serves as trustee or co-trustee of Payback Trusts. ACHIEVA Family Trust adds case management and social work expertise to the traditional role of corporate trustee.
 
Advantages of a Payback Trust
 
1.      A person with a disability can add his or her assets to the trust and avoid unnecessary spend down.
 
2.      Trusts large enough to provide for all the supplemental needs of the person with a disability and a complete pay back at death to the Pennsylvania Department of Public Welfare can direct residual funds to other family members.

Requirements of a Payback Trust
 
1.      Created by the parent, grandparent, or legal guardian of a person with a disability, or by a Court.
 
2.      The beneficiary must be under 65 years of age when the trust is created.
 
3.      The trust agreement provides for a “pay back” to the Pennsylvania Department of Public Welfare upon the death of the person with a disability.

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ACHIEVA, formerly Arc Allegheny, played the lead organizational role in creating Special Education in the United States