KY SB85

Allows members of Kentucky's state-administered retirement systems (State Police, Kentucky Employees, County Employees, Teachers', and Judicial) to designate a special needs trust as a beneficiary to receive retirement benefits

Defines "special needs trust" as a trust described in 42 U.S.C. sec. 1396p(d)(4)(A) or (C) established for the benefit of one person with disabilities

Requires trustees of special needs trusts to notify the retirement authority upon the death of the retired member or beneficiary, and to return any improperly paid benefits to the system

Specifies that retirement allowance payments made to a special needs trust are not subject to Medicaid reimbursement claims under any Medicaid payback provision

Permits beneficiaries who are sole beneficiaries of a special needs trust to receive the same survivorship options (such as 100% survivorship, Social Security adjustment options, and term certain payments) available to individual person beneficiaries