Closing the Gap in Cost and Care

It is an irony best classified as cruel: An injury to the spinal cord or brain not only turns a person’s physical world upside down, it also brings the complexity and anxiety of financing treatment and accommodations for a catastrophic injury.

The sad truth is that most families are unprepared for the harsh financial consequences of such an injury. Insurance policies typically cover several weeks of rehabilitation care, but the average stay at Shepherd Center is nearly six weeks.

“Generally speaking, there is a mismatch between the costs of catastrophic care and the insurance coverage people have to cover those costs,” says Mitch Fillhaber, Shepherd’s vice president of managed care and marketing. “As a result, people are surprised to find out what catastrophic care costs.”

Further complicating the issue is the gap in coverage for related costs such as caregiving, ongoing therapy, adaptive technology, home modifications and transportation. So patients and families have to think creatively about how best to generate funds to help cover costs – and how to make sure every available dollar is spent in the smartest way possible.

Creative fundraising often begins at the local level – with patients and their families and friends organizing community support. Former Shepherd patients tell stories of receiving funds from golf tournaments, bike rides, carnivals and other fundraising events held in their honor. Contributions take the form of cash or equipment. Several nonprofit organizations and social networking sites exist to help people generate and accept donations (see sidebar article).

Foundations and nonprofit organizations can also be a resource to help cover expenses. Former Shepherd patients Cindy Donald and Travis Roy have set up foundations that provide grants for equipment and therapy. Other foundations around the country do the same. The challenge is to conduct thorough research to identify a match between a foundation’s focus and the patient’s need.

Finally, government assistance can add support in the form of Supplemental Security Income (SSI) and Social Security Disability Income (SSDI), and through Medicaid and Medicare. People with disabilities who have very minimal income and resources may qualify for Medicaid and SSI, and those who have been gainfully employed and paid into the Social Security system may qualify for Medicare and SSDI.

In most cases of catastrophic care, patients must rely on some combination of public assistance and help from other sources, such as personal income, donations or grants. The added irony: One can cancel the other out. For example, if a patient’s assets from any source – grants, donations, settlements, inheritance or other – exceed $2,000, then Medicaid and SSI benefits can be lost.

This means that if a person is on Medicaid and SSI and receives an outright distribution of settlement money from a lawsuit or from a fundraiser or grant, he or she loses SSI and Medicaid government benefits. The same is not true for Medicare and SSDI, however. Those benefits are not “means tested,” meaning they are not constrained by income thresholds.

Thus, identifying techniques that maximize the value of every dollar is crucial. One way to protect means-tested government benefits is to set up a special needs trust (SNT), which provides financial support to individuals with disabilities while allowing them to remain eligible for public benefits. Funds placed into the trust aren’t counted as an eligible resource and can be used to cover medical costs and other quality-of-life expenses.

“Patients who become eligible for Medicaid and were injured because of the fault of someone else, or those who have community support, should consider asset protection through a special needs trust,” says Liz Schoen, Shepherd Center’s former general counsel. SNT funds can generally be used for everything except food and some shelter items. “That could include Shepherd’s Beyond Therapy^® program, recreational therapy, a modified vehicle, even a trip for the patient and a caregiver,” Schoen explains. “The trust supplements what government programs won’t pay for.”

Special needs trusts generally fall into two categories depending on whether the trust is funded with assets of the trust beneficiary or someone else. First party SNTs are funded with assets that legally belong to the beneficiary. The trust is irrevocable, meaning it can’t be revoked or terminated, and the beneficiary must be under the age of 65 and classified as “disabled” under the Social Security Administration definition. If funds remain in the SNT after the death of the beneficiary, they must first be used to reimburse Medicaid for all benefits paid out during the beneficiary’s lifetime.

A third party SNT is funded by assets that don’t belong to the beneficiary, such as those from a family member, friend or money raised through fundraisers. Also irrevocable, third party SNTs do not give Medicaid any claim to remaining trust assets upon the death of the beneficiary.

While SNTs help protect funds, they can be complex. “Many lawyers don’t know how to set these up,” says Kristen Lewis, an attorney at Atlanta firm Smith, Gambrell & Russell who specializes in estate planning and SNTs. “It is imperative to find counsel who is experienced in this complex area and who knows the proper language to include in the trust document.” The trust document, she explains, details how the SNT assets can and cannot be used, and it must adhere to ever-changing Social Security Administration regulations.

A trustee, appointed in the trust document, is needed to administer and manage an SNT. “A trustee can be an individual, attorney or corporation, such as a bank,” explains Bill Frazier, senior vice president of SunTrust Bank, who oversees a national division handling SNTs. “When choosing a trustee, you need to make sure it’s a good fit from an economic, investment and skill set standpoint. Trustees need to be knowledgeable in special needs trusts.”

Another option for those whose assets may be more modest is a pooled SNT trust. (See the sidebar article for a list of those types of trusts.)

Georgia’s Department of Community Health (DCH) must approve each SNT application in the state, and the DCH turns to HMS Government Services, a private firm, to review applications. William Overman, who directs Georgia’s trust unit for HMS, says once the trust is established, his office tracks the accounting, making sure all disbursements are within the law.

“We look at every single SNT application to make sure all the legal requirements are met when the trust is set up,” Overman says, “and then we review it each year.”

Because closing the gap between cost and care affects the quality of life for patients, Shepherd Center is working to become a greater resource in this area.

“Right now, the legal team at Shepherd can help patients with powers of attorney and advance directives,” Schoen says, “but the hospital wants to do more to help protect our patients. In the future, Shepherd Center hopes to bring in experts such as Kristen Lewis, Bill Frazier and Bill Overman, who can explain special needs trusts and direct patients and their families to people who can help.”

Written by Sara Baxter
Illustration by Justine Beckett