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The Pooled Income Trust

There are a number of different types of trusts that Elder Law and estate planning attorneys use in advancing the best interests of their clients.  Not surprisingly, understanding the differences can be confusing.  Recently, I wrote about the Medicaid Trust.  Today, I’m going to focus on the Pooled Income Trust.  In future articles, I will explain the other kinds of trusts that we use in our law practice.

The Pooled Income Trust is very frequently used for individuals who are applying for Community Medicaid (which includes Home Care and Assisting Living).  In order to understand its role, you’ll need first to understand how monthly income is treated by Medicaid.

I have often heard the comment:  “I have too much income to qualify for Medicaid.”  In fact, such comments are incorrect.  Income does not affect Medicaid eligibility for individuals 65 years of age and older.  Eligibility is based on “countable resources” (financial assets and real estate).

However, Medicaid does not ignore monthly income.  There is an income limit, currently (in 2018) of $862 per month.  Under Medicaid’s rules, if your income exceeds the limit, you have “surplus income” which must be contributed towards the cost of your care.  So, for example, let’s say you are receiving Medicaid home care benefits, and you have $2,862 in monthly income from Social Security, pension, and distributions from your retirement accounts.  You would be allowed to keep $862, but you would have to pay $2,000 per month to your home care provider.

This is where the Pooled Income Trust comes to your rescue.  Instead of paying your surplus income towards the cost of your home care or other health care services, you deposit your surplus into your Pooled Income Trust account.  If you have such an account, and you are depositing your surplus income into it, Medicaid will determine that you have no surplus and that you need not pay any money to your health care provider.

Pooled Income Trusts are public trusts that are created and operated by non-profit organizations.  Here are a couple of examples:  http://www.ucstrustservices.org/ and https://www.nysarc.org/ .  There are a number of others that you can easily find by doing an Internet search for “pooled income trust,” or by consulting this list:  http://wnylc.com/health/entry/4 .

Here is how it works:  you open an account by signing a “joinder agreement” with one of the non-profit organizations that operates a Pooled Income Trust.  Then you deposit your monthly surplus income into your account, and send your bills to the trust.  The trust will pay them with the money that you have deposited.

There are a few important rules to bear in mind.  First, you must be “disabled.”  Age is a factor, and medical conditions are more likely to be seen as disabilities when you are a senior, particularly if you are 72 years of age or older.   Second, you cannot withdraw cash or write any checks yourself.  The trust will pay your bills.  Third, you cannot pay anyone else’s expenses, or give money to anyone else, even to a charity.  Fourth, you cannot designate a beneficiary.  If you die or move into a nursing home, the money remaining in your account will be donated to a charity that benefits disabled persons.

Of course, the trust will charge a modest fee for its services.  The amount of the fee, and its method of calculation, will differ depending on the trust you choose to join.

Despite the restrictions, the Pooled Income Trust is of enormous benefit to those who are applying for or receiving Community Medicaid benefits.   With your trust account, virtually all of your monthly income remains available to pay for your expenses.  Without a trust account, you would be able to keep only $862 of your monthly income, and be forced to live on only that amount.

If you need advice about the Pooled Income Trust, or assistance with joining one and dealing with the logistics once your trust account is opened, the knowledgeable and experienced attorneys and staff at Lamson & Cutner are available to help you.

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