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HB 5987

AN ACT RELATING TO BEHAVIORAL HEALTHCARE, DEVELOPMENTAL DISABILITIES AND HOSPITALS -- CORE STATE BEHAVIORAL HEALTH CRISIS SERVICES SYSTEMS-988

2025 Regular Session Introduced by Edith Ajello and 9 co-sponsors

Allows retirement payments to be directed to certain special needs trusts for disabled beneficiaries under 65, via written direction.

03/12/2025 Withdrawn at sponsor's request
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Bill Summary · HB 5987

Summary — HB 5987 (Public School Employees Retirement Act amendment)

What the bill does (purpose)

HB 5987 amends section 85 of the Public School Employees Retirement Act of 1979 (MCL 38.1385) to allow retirement allowance payments to be directed into certain “special needs trusts” (SNTs) established for disabled individuals under age 65. The change enables a retirant (or, after the retirant’s death, the designated retirement allowance beneficiary or that beneficiary’s legal representative) to send pension payments directly to an SNT by written direction to the retirement system.

Key provisions

  • Adds a new payment option permitting the retirement system to pay the retirement allowance to a trust when:
    • The retirement allowance beneficiary is a beneficiary of a trust established under 42 U.S.C. §1396p(d)(4)(A) or (C) (federal special needs trust exceptions for Medicaid), and
    • There is a written direction to the retirement system from the retirant, or, after the retirant’s death, from the retirement allowance beneficiary (or the beneficiary’s legal representative if the beneficiary is a minor or incapacitated).
  • The amendment is incorporated into the existing payment-option framework in MCL 38.1385 (section 85) and applies to beneficiaries designated under the existing payment options.
  • The bill does not add other procedural or documentation requirements in the text (it authorizes the payment upon written direction).

Who is affected

  • Primary: Public school retirees (retirants) and designated retirement allowance beneficiaries who are disabled individuals under age 65 and beneficiaries of qualifying special needs trusts.
  • Secondary: Retirement boards and administrators for the Public School Employees Retirement System—these entities would accept written directions to pay benefits to qualifying trusts.
  • Tertiary: Medicaid-eligible disabled beneficiaries and their families/caregivers, attorneys and trustees involved in creating or administering SNTs.

Expected impact

  • Policy effect: Facilitates coordination of pension benefits with public benefit eligibility (e.g., Medicaid) by allowing payments to court‑ or parent‑established SNTs that preserve means-tested benefits.
  • Fiscal effect: House Fiscal Agency reports no direct fiscal impact on the retirement systems.
  • Administrative effect: Retirement systems will need to accept and process written directions to make payments to trusts; the bill does not specify verification steps or trustee qualifications.

Procedural status & timeline

  • Introduced: September 26, 2024 (Rep. Jenn Hill).
  • House actions: Substitute (H-2) adopted; passed the House (recorded Dec. 11, 2024) with immediate effect; transmitted.
  • Subsequent referrals: Referred to Committee on Government Operations (Dec. 18, 2024); later referred to Joint Committee on Finance, Revenue and Bonding (Jan. 22, 2025).
  • Current status (per provided data): Referred to committee(s) for further consideration.

Legal references / notes

  • State law amended: MCL 38.1385 (Public School Employees Retirement Act of 1979, section 85).
  • Federal reference: 42 U.S.C. §1396p(d)(4)(A) and (C) (special rules for certain first-party and third-party special needs trusts to avoid Medicaid estate recovery/eligibility issues).

Support

  • Reported supporters include the State Bar of Michigan (Elder Law & Disability Rights Section), Michigan Association of Public Employee Retirement Systems, and other law/benefit stakeholders.

If you want, I can draft a short explainer for trustees and retirement system administrators summarizing operational steps needed if the bill becomes law (e.g., recommended verification checklist, sample written-direction form).

Compiled from official sources — confirm details with the bill’s official record.

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