The gridwork for my basements suspended ceiling is 3.5" below the joists. How do I install a recessed light can that will allow the trim to be flush with the ceiling yet still be attached to the can? I have the kinds thats attach inbetween the ceiling joists but seems like I can only drop is down to about 2 inches or wont stay connected to the can.

Sounds like you need to get the remodel cans from anyone of the major recessed brands: Juno lighting, Lightolier, or Halo. Additionally, you can detach the socket assembly to lower it down so it will sit flush with the recessed trim kit.
Halo can be purchased at either Home Depot or Lowes, and Juno/Lightolier can be purchased from a local lighting showroom or an online vendor.
You need to get the remodel cans
Add blocking to the bottom of the joist.A couple of 12 inch pieces will do the job.Add the two inches and see just where that puts you in relation to the ceiling tiles.
1. You need the type of fixture that mounts to the grid.
2. You are unlikely to find a ‘can that needs less than 3 1/2′
clearance, so you need a layout that misses the joists.