(dissenting). The federal statute that allows use of a supplemental needs trust (SNT) to preserve Medicaid eligibility provides that, after the beneficiary’s death, the State will receive from the SNT “an amount equal to the total medical assistance paid on behalf of the individual” (42 USC § 1396p [d] [4] [A]). The majority reads this to mean “the total medical assistance paid during the individual’s lifetime.” This is a possible reading, but the words can also be reasonably read to mean “the total medical assistance paid as a result of the SNT,” and I think that is the meaning Congress is more likely to have intended. Unless the words are read in that way, a class of disabled people—those who received significant Medicaid payments before they had enough money to fund a trust—will never become SNT beneficiaries, because their families will know that the effect of establishing an SNT will be to impoverish their estates.
*440The statute defines an SNT as:
“A trust containing the assets of an individual under age 65 who is disabled (as defined in section 1382c (a) (3) of this title) and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter.” (42 USC § 1396p [d] [4] [A].)
The law allows the assets of an SNT to be disregarded in determining eligibility for Medicaid, thus producing an unusual situation: a person eligible for Medicaid who is not poor, and may even be very wealthy. Often, as in this case, the wealth is the result of a recovery in a tort action. Congress allows the use of an SNT to preserve Medicaid eligibility for the possessors of such wealth only where the beneficiary of the trust is seriously disabled—if an adult, “unable to engage in any substantial gainful activity,” or, if a child, afflicted with “marked and severe functional limitations” (42 USC § 1382c [a] [3] [A], [C] [i]).
The purpose of the statute is “to allow a person with a disability to have an additional source of support during her lifetime” (Rosenberg, Supplemental Needs Trusts for People With Disabilities: The Development of a Private Trust in the Public Interest, 10 BU Pub Int LJ 91, 132 [2000]). And since the purpose of the trust is to help the beneficiary, not to enrich his or her heirs, it would not be fair to let the heirs get the assets of the SNT upon the beneficiary’s death without reimbursing the State for Medicaid payments. The arrangement may be thought of as a loan—indeed, a commentator has labeled the SNT a “Payback Trust” and “A Bargain for Life” (id. at 131). The essence of the bargain is that the State pays Medicaid during the beneficiary’s lifetime, and is paid back from anything remaining in the trust after the beneficiary’s death.
But what of the beneficiary who was already a Medicaid recipient when he or she was poor—before either the SNT or the assets to fund it existed? This was the situation of Abraham, the beneficiary in this case, for several years before he recovered a large tort award. Most of the Medicaid payments made during that time were recouped by the State through the enforcement of its lien on Abraham’s recovery (see Gold v United Health *441Servs. Hosps., 95 NY2d 683 [2001]), but there remained a period of several months—the period from the date the verdict was rendered to the date it was paid—during which the State paid for Abraham’s care and was not reimbursed for it; during that period, Abraham was entitled to Medicaid simply because he needed medical care and did not have any money. No SNT was necessary to make him Medicaid-eligible. The main issue in this case is whether the State can recover some $472,000 in Medicaid payments made during that interval. (Abraham’s estate disputes a larger sum, but I would resolve that dispute in the State’s favor.)
A similar issue could arise in other cases and involve much larger amounts. Suppose, for example, that an adult who has been a Medicaid recipient all his life, and for whom the State has paid millions, then has an accident resulting in a large tort award—or simply receives a large inheritance. In such a case, the State ordinarily will get none of its Medicaid money back, no matter how immensely rich the former Medicaid recipient has become. With exceptions not relevant here, federal law provides: “No adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made” (42 USC § 1396p [b] [1]). In Abraham’s case, if no SNT had been created, this statute would prevent the recovery of the $472,000 at issue here.
But under the majority’s holding, the creation of an SNT changes the picture, and results in a windfall to the State. Because the majority reads “total medical assistance paid on behalf of the individual” to mean everything paid during the individual’s lifetime, the effect of the SNT in the case of the hypothetical adult is to make the unrecoverable millions in Medicaid payments recoverable from the SNT at the beneficiary’s death. In practice, this probably will not happen for the simple reason that, if correctly advised, the adult’s family will not create an SNT. But surely there is no good reason why that particular disabled person should lose the benefit of a federal statute designed to help people with similar disabilities. I would therefore read the statute in a way consistent with its purpose, taking “total medical assistance paid” to include only the total paid as a result of the SNT’s existence—thus effectuating the loan or “payback” that the authors of the statute plainly intended.
The majority says that its construction advances the statutory purpose because it provides the State with a funding source: *442“For every recipient who depletes the trust before death, the State can expect some trusts to have sufficient assets upon a recipient’s death to offset the additional cost . . . (Majority op at 436.) I am unpersuaded, because the State will actually get its windfall only in the exceptional case where a trust is unforeseeably left with enough assets to pay back pre-SNT Medicaid. Where that event is foreseeable, and where the preSNT Medicaid is substantial, the beneficiary’s family simply will not create the trust at all. In a way, it is true, that this will benefit the State, because there will be no SNT and no Medicaid payments going forward—but it seems highly unlikely that it was Congress’s purpose to benefit the State by deterring the creation of SNTs.
For these reasons, I would reverse the Appellate Division’s order.
Judges Ciparick, Read, Pigott and Jones concur with Chief Judge Kaye; Judge Smith dissents and votes to reverse in a separate opinion; Judge Geaffeo taking no part.
Judgment appealed from and order of the Appellate Division brought up for review affirmed, with costs.