payback provision

Definition from Nolo’s Plain-English Law Dictionary

A provision in a special needs trust requiring that, after the beneficiary dies, the trustee must use any property left in the trust to reimburse Medicaid for benefits the beneficiary received. Special needs trusts containing property originally belonging to the beneficiary (self-settled trusts) must have a payback provision to avoid having the property considered the beneficiarys resource for program eligibility purposes. Third-party trusts do not have a payback provision.

Definition provided by Nolo’s Plain-English Law Dictionary.