Special needs trust fails to protect WC benefits

Unless and until an injured worker is deemed disabled by the Social Security Administration, she cannot exempt her workers' compensation benefits from counting as income through a special needs trust.

Case name: J.C. v. Division of Medical Assistance and Health Services, et al., No. A-5632-07T2 (N.J. Super. Ct. App. Div. 02/08/10).

Ruling: The New Jersey Superior Court, Appellate Division affirmed the New Jersey Department of Human Services' denial of an applicant's Medicaid, general assistance, and food stamp benefits application.

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What it means: Unless and until an injured worker is deemed disabled by the Social Security Administration, she cannot exempt her workers' compensation benefits from counting as income through a special needs trust.

Summary: A former worker was totally and permanently disabled in a fall at work. A special needs trust was established for her. The trust's stated purpose was to "supplement rather than supplant, impair or diminish governmental entitlements." The Department of Human Services denied the trustee's application for assistance benefits, finding the trust did not comply with federal law because a special needs trust requires a disability determination. The court upheld the department's denial and noted that unless the threshold disability determination is made in the authorized manner, the court would not consider her other arguments. Absent that determination, the trust could not exempt the workers' compensation benefits from inclusion in the determination of her general assistance and food stamp eligibility. The court determined that the weekly compensation payments counted as income for purposes of the state assistance programs.

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March 8, 2010

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