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Simple English definitions for legal terms

payback provision

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A quick definition of payback provision:

A payback provision is a rule that can be included in a special needs trust. This rule says that when the person who the trust was made for dies, any money left in the trust must be used to pay back Medicaid for any benefits the person received while they were alive. This is because the purpose of a special needs trust is to set aside money that won't be counted as income or assets for Medicaid or SSI. If the money used to make the trust came from the person who it was made for, then the payback provision must be included. But if the money came from someone else, then the payback provision isn't needed. In California, a payback provision isn't required unless the person who the trust was made for can change or cancel it.

A more thorough explanation:

A payback provision is a rule that can be included in a special needs trust. This provision requires that any remaining funds in the trust be used to repay Medicaid for any benefits the beneficiary received while alive, upon the beneficiary's death.

Special needs trusts are designed to set aside funds that cannot be considered assets or income for the purposes of SSI or Medicaid disbursement calculations. However, the type of funds used to establish the trust may subject it to additional restrictions.

For example, if the funds used to establish the special needs trust were the beneficiary's own, then a payback provision must be included in the trust instrument. If the funding was provided by a third party instead, then no payback provision is necessary.

In California, a payback provision is not required unless the trust is revocable by the beneficiary. However, California includes payback provisions in litigation special needs trusts, substituted judgment special needs trusts, and special needs trusts with a beneficiary under age 65.

John has a disability and receives Medicaid benefits. His parents want to set up a special needs trust to provide for his future needs. They use their own money to fund the trust, so they include a payback provision in the trust instrument. When John passes away, any remaining funds in the trust will be used to repay Medicaid for the benefits he received during his lifetime.

This example illustrates how a payback provision can be used to ensure that Medicaid is repaid for the benefits provided to the beneficiary. It also shows how the type of funds used to establish the trust can determine whether a payback provision is necessary.

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[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
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