Pooled and Special Needs Trusts

This morning's New York Times article describes a little known way for some people in certain states to receive home care through Medicaid without requiring them to impoverish themselves first. Here is how it works..

In 1993 Congress created the Pooled trust to protect this country's most vulnerable and disenfranchised segment of our citizens - the elderly and disabled. Through non-profit organizations who have a Pooled Trust, individuals who meet the definition of disabled under the rules of Social Security to place their assets in the trust, can still meet financial eligibility for Medicaid and Supplemental Security income. The funds are pooled for investments but separately accounted for throughout the individuals life. The funds can be used to enrich the quality of life of the participant instead of being quickly consumed by catastrophic medical an Long term costs.

Individuals may benefit from a Pooled trust if:

• Disabled in need of long term nursing care care at home or in a facility.
• Over the age of 65, or any age with funds from a  medical malpractice, personal injury, or workers compensation claim, or receiving an inheritance.
• Need or receive Medicaid, Social Security Disability or SSI (Supplemental security income).

This Pooled Trust enables some people in certain states to receive home care through Medicaid, without requiring them to impoverish themselves first.  Essentially, this law allows disabled persons to put their monthly income or assets - above the amounts Medicaid allows them to keep - into a special type of pooled trust.  They Can use the money in the trust to pay for their basic monthly bills like rent, a mortgage payment or cable TV bills.  Medicaid in the meanwhile will pay for their home care. 

Monies left in the trust after the person dies is generally kept by the nonprofit organization running the trust or is paid back to Medicaid. 

As the New York Times article states, these trusts are available only in about a dozen states for people over the age of 65.  Please remember that the rules governing Medicaid are intricate and differ in each state, so while you may be able to keep a loved one home in New York State under Medicaid, that may not be true in other states. But with a Pooled Trust, each month, the participant who has been deemed disabled can deposit her or his excess income into the trust to pay the person's bills as long as the expense is for the sole benefit of the participant.  The nature of the trust is to supplement needs that are not met by government programs. 

The trusts work particularly well for those who have few assets, but may own a home.  Many states however, do not allow persons over 65 to use the pooled trusts at all because they have interpreted the federal laws differently and some states have started to impose penalties on people over 65 so speak with an elder law attorney (http://www.naela.org/) or speak with a Geriatric Care Manager (http://www.napgcm.org/) about long term care planning and to find out more.