How a pooled trust can keep people stay qualified for Medicaid

This article looks at how to use a pooled income trust to stay on Medicaid if one exceeds income limits.

As America's population ages, more families are dealing with concerns about elderly care. Many older Americans would prefer to avoid living in a nursing home, but they worry that because their income or assets exceed state limits, that they don't qualify for Medicaid to help cover the cost of homecare benefits. As the New York Times reports, this is an especially common problem for middle-class families whose incomes are too high for Medicaid but not high enough to cover medical and homecare expenses on their own. However, what many people don't realize is that with a pooled income trust, they can still qualify for Medicaid even if their income exceeds state limits.

Medicaid income limits

Medicaid eligibility is partly based on financial need. Each state sets its own monthly income limits and those who exceed that limit often don't qualify for Medicaid (although there are numerous exceptions). For 2018, the net monthly income limit for a single person who is blind, disabled, or over 65 is $842 or $10,100 annually. There are different limits for those who are married or living in larger households. These limits are updated each year in accordance with Federal Poverty Levels.

Setting up a pooled income trust

In New York, when a Medicaid application has a monthly income greater than the monthly income limit, they are required to contribute that "excess" income to Medicaid to offset their cost of care in order to receive Medicaid benefits at home. However, a 1993 federal law allows people who are suffering from disabilities (certified by either the Social Security Administration previous to the Medicaid application or a Medicaid Disability Review Team at the time of a Medicaid application) to put the monthly income that exceeds Medicaid limits into a pooled income trust. The pooled trust is then used to pay for essential monthly bills, including rent and utilities. Medicaid, meanwhile, can still be used to help pay for homecare expenses.

There are also different options for disabled people who have spouses, including a combined income option. This option would allow one spouse to keep all of the couple's income while still allowing the disabled spouse to stay on Medicaid.

With a pooled income trust, the disabled individual can continue receiving Medicaid, freeing up the income above the Medicaid monthly limit to pay their normal living expenses. The ability to maintain themselves in their own home means they can avoid being sent to a nursing home against their wishes. However, setting up a pooled income trust can be complex coordinating the home care application with the additional submissions to certify the disability of the applicant as well as the joinder and set-up of the pooled income trust itself. Furthermore, the pooled income trust should be using to exhaust the funds in the trust while the Medicaid applicant is living since when the Medicaid recipient passes away, the funds remaining on deposit in the trust are retained by the nonprofit that is running the trust.

Talking to an attorney

Pooled income trusts are just one reminder of why it is so important to talk to an attorney who specializes in elder law when making decisions about Medicaid planning. An experienced attorney can assist families with various issues related to Medicaid and elder care. That assistance can give families a sense of relief and comfort about how their older loved ones will be cared for.