When applying for Medicaid Home Care, the amount of your income will not affect your ability to qualify for benefits. However, Medicaid will not ignore your income. If you receive more than $862 in monthly income from any source, including Social Security, Medicaid will require you to contribute the amount in excess of $862 towards the cost of your care. Fortunately, there is a very effective solution to this problem: the Pooled Income Trust.
The Pooled Income Trust is a special trust designed for the purpose of protecting your excess income when you are applying for or receiving Medicaid benefits in the community. Rather than contributing your excess income to the cost of care (when it is most likely needed to pay for rent, utilities, food, and other necessities), you can deposit it into a Pooled Income Trust where it will be available for your needs. Pooled Income Trusts can be established with certain non-profit organizations authorized to operate these trusts for the benefit of elderly and disabled persons. For the investment and management of funds, your income would be pooled together with that of other participants. However, the money you contribute is held in a separate account to be used for your needs only.
Using this strategy, you would send all income you receive each month that is in excess of the $862 Medicaid ceiling to the trust. The money in your account is then used by the Trustees, at your direction, to pay your bills on your behalf. The money in your Pooled Income Trust account can be used for food, housing, utilities, home repairs, or basically any expense you may have (except medical insurance and many medical bills).
The non-profit organization essentially functions as a bill paying service, and takes a small monthly processing fee. When you pass on, whatever is left in your account will be used by the organization for charitable purposes. While you are alive the money can only be spent on you for your expenses and needs, that’s the only major limitation. This is an excellent strategy to protect your income while still qualifying for Medicaid coverage.
To learn more about strategies to protect your financial security while receiving long-term care, read our special report: 25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs.
A qualified Elder Law Attorney can help you set up a Pooled Income Trust. If you’d like to discuss how to get started, contact Lamson & Cutner today.