A special needs trust (SNT) allows you to meet your needs while receiving government benefits, such as Medicaid and Supplemental Security Income (SSI). When you have a special needs trust, you can use it to pay for goods and services government benefits do not cover, such as therapy, education, housing, and travel.
Since receiving income directly from your trust would jeopardize your eligibility for benefits, your trustee cannot give you cash from your SNT. When you use a credit card for permitted transactions, and your trustee pays off the balance with funds from your trust, these payments to a credit card company are not considered income. An SSI or Medicaid recipient who is capable of managing their own affairs can therefore use a credit card to make small purchases, and the trustee of the special needs trust need not micromanage every transaction.
In the past, beneficiaries of SNTs sent their bills to their trustees for payment. Today, an individual with an SNT who qualifies for a personal credit card may find that using a credit card is more convenient.
Credit cards have several benefits. Using a credit card to manage payments from your special needs trust allows you to maintain independence, gain access to some of the advantages of a credit card, and easily keep records while preserving your eligibility for Medicaid and SSI.
Although credit cards can help people manage their special needs trusts, there are also several important restrictions and considerations to keep in mind. Consult with a special needs planner to ensure all transactions are acceptable under the trust’s rules and comply with government regulations.
If you have a special needs trust, using a credit card has many benefits, including:
While you can use a credit card to access funds from your special needs trust for certain transaction restrictions apply. If your trustee sees a charge on your card that could affect your benefits they can flag it for review.
When using a credit card for a special needs trust fund, remember several best practices.