New York Estate Planning & Elder Law Blog
Medicaid is a safety net for millions of senior citizens across the country, providing funding to pay for home care, adult day care, or prescription drugs. However, the program is designed for low income individuals and can leave many on the fence financially over whether to choose to spend down assets or pay for these necessary services themselves.
Currently, the threshold to receive Medicaid services is only a few hundred dollars for individuals and just over $1,000 for married couples, which leaves these individuals with little income to pay rent, utilities, or buy groceries. Even financially secure seniors can find themselves needing vital Medicaid services like in-home or nursing home care in the event of a catastrophic health event, making planning for the future and keeping options open all the more vital.
One option that may be viable for certain individuals is joining a Pooled Supplemental Needs Trusts, also known as a Pooled Income Trust. Pooled income trusts work by the individual sending his or her income from Social Security, pensions, or annuities to non-profit organizations to pay bills and other expenses to stay below the Medicaid threshold. Any income left over after the individual passes away goes to the non-profit.
Types of individuals eligible for pooled trusts also include:
- Young people with special needs
- Personal injury victims with settlements or annuities applying for government benefits
- Elderly persons who have become infirm and are living at home
- Persons receiving government benefits
- Applicants for government benefit programs
A pooled income trust can cover expenses such as:
- Living expenses, including clothing, food and shelter for non-SSI beneficiaries
- Homeowner expenses like real estate taxes, utilities and insurance
- Paying rent
- Supplemental home care services
- In home nursing services
- Entertainment and travel expenses
- Medical procedures not provided through government assistance
- Attorney and guardian fees
- Any other expense not provided by government assistance programs
Requirements to join a pooled income trust are:
- The beneficiary must be legally disabled which can include age-related infirmities
- The assets going into the beneficiary’s trust account must belong to the individual beneficiary
- The account must be established by a family member, the individual beneficiary, or by a court
- The trust account only be established solely for the benefit of the individual beneficiary
However, the program is not without its drawbacks and individuals considering joining a pooled income trust must be aware of the limitations. These programs come with set up fees and recurring fees as well. Furthermore, individuals over the age of 65 are subject to a five-year lookback period or institutional Medicaid services such as nursing home coverage.