Online Fundraising May Affect Medicaid Eligibility

By Ronald A. Fatoullah, Esq. and Yan Lian Kuang-Maoga, Esq.

{2:44 minutes to read} A medical crisis obviously causes emotional strain but often can be a financial burden for the sick and his or her family as well. In this age of technology, many online fundraising methods are available to secure financial support for the individual suffering from an illness. These methods can reach many people very quickly and therefore often result in significant funds being raised. While these fundraising efforts are great options to secure financial support for those affected, such fundraising accounts must be set up properly so as not to affect the medical benefits of the intended beneficiary.

In many instances when a medical crisis occurs, the sick individual may qualify for Medicaid, a government-funded health insurance program, to cover the sizeable medical bills that are sure to come. Many donors of "Go Fund Me" accounts, or other types of online fundraising accounts, do not intend their gifts to be used to pay medical bills, but rather to cover all the other necessities of the sick individual, such as rent and childcare costs. Depending on how the account is set up, fundraising efforts such as a "Go Fund Me" may result in ineligibility for Medicaid coverage for the sick individual if the fundraising account ends up exceeding the applicable resource limit for Medicaid. Generally, if the sick individual has access to the funds, the account is treated as a countable asset for purposes of Medicaid coverage.

A simple way to avoid jeopardizing the individual's eligibility for Medicaid coverage while still providing a source of funds for his/her other basic expenses is the use of a "Special Needs Trust" (also known as a "Supplemental Needs Trust") to hold the proceeds of the fundraising efforts. Special Needs Trusts are routinely used in planning for the financial needs of disabled individuals who are receiving government benefits. There are clear legal guidelines encouraging others to gift funds to disabled individuals to pay for expenses that are over and above what the disabled person can receive from government programs. For example, funds in a Special Needs Trust may be used to pay for travel or for magazine subscriptions.

Trusts are great vehicles to be used for various purposes. A Special Needs Trust is one type of trust designed to protect funds for a disabled beneficiary. For those who intend to organize a fundraiser, it is important to consider setting up a trust that can be designated for the specific supplemental needs of the intended beneficiary and which can avoid unintended consequences. Consult with an experienced trust and estates attorney to discuss the design of such a trust.

Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Yan Lian Kuang-Maoga is an elder law attorney with the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll-free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also the co-founder of JR Wealth Advisors, LLC. The wealth management firm can be reached at 516-466-3300 or 800-353-3775.