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Medicaid Home Care While Preserving Income: Pooled Income Trusts
By: Roman Aminov

As practitioners in a country whose population is quickly aging, it is not uncommon to encounter clients who may be in need of assistance with their daily activities. However, many New York City residents who are in need of community Medicaid services such as home care, adult day care, or prescription drugs find that they exceed New York Medicaid's income allowance, of $800 a month (plus a $20 personal needs allowance) in 2013. Many seniors receive social security, pension, and investment income which easily surpass this meager allowance and disqualify them from receiving much needed health services. Although Medicaid does give an otherwise qualified person the option to "spend down" their income by paying the difference to their health care providers and still receiving benefits; that option leaves a single person with only $820 to pay for rent, groceries, clothing, and other essential expenses. The amount for married couples, $1175 (plus $40) is even stingier. Who among us, especially in New York City, can afford to live on $820 a month? The solution for many of your clients, regardless of whether they are under 65 or over, is the use of Pooled Income Trusts, which are unique trusts permissible under both New York and Federal Law.

Let us take an example to illustrate how a pooled income trust works: Harry is a single 72 year old man living in Flushing, Queens, who recently suffered a stroke and needs assistance with his basic daily activities. He currently receives $1100 a month from Social Security, $500 a month from his pension plan, and $400 a month from an annuity for a total of $2000 a month. His basic living expenses are $1800 a month. If Harry applied for Medicaid to assist him with home care, he would be allowed to keep $820, and the rest would need to be spent on his home health care service. Medicaid would then pay the difference. In effect, there would be no way for Harry to maintain his current lifestyle. There is another option which many Medicaid recipients are using to help them maintain their lifestyles while receiving the care they so desperately need.

If Harry is determined by Medicaid to be disabled, or if he was already classified by Social Security as being disabled, he would be eligible to participate in a pooled income trust. Pooled income trusts are administered by not for profit organizations, such as the United Jewish Appeal or NYSARC. Instead of having to pay his health care bills until he only has $820 left each month, Harry would send his "excess" income to the non-profit instead of his health care provider. The non-profit would then be able to pay for any services not covered by Medicaid including rent, mortgage payments, clothes, recreational activities, etc. Harry would simply send the bills to the organization which would use the "excess" income to pay the bills on his behalf. The assets in the Harry's trust carry over from month to month, but any money which is left after Harry passes away belongs to the non-profit organization to continue their charitable work. There are fees associated with setting up and continuously managing pooled income trusts, but they pale in comparison to the amount which a client can save. In addition, if Harry was disqualified from Medicaid because he had assets over the allowable limit of $14,400 in 2013, he would be able to transfer the excess in the pooled trust as well.

Pooled income trusts have certain drawbacks, although not nearly enough to avoid them in most cases. In addition to the initial setup and monthly fees, any assets which are transferred by an individual over the age of 65 will be subject to a five year look back period for institutional Medicaid services such as nursing home coverage. Secondly, Harry will not be able to directly withdraw the money from his trust; instead, he must submit his bills to be paid by the trust. Additionally, if Harry does not fully use his excess funds, they will be turned over to the non-profit organization when he passes away, and his heirs will not inherit them.

It is always recommended that a potential applicant, especially one with income over $820, consult an attorney familiar with Medicaid and pooled income trusts prior to applying for Medicaid. Working with an attorney can potentially save your client months of waiting for much needed care.

Roman Aminov is a trusts and estates attorney concentrating in estate planning, elder law, and probate. He is experienced in the drafting of wills, powers of attorney, health care proxies, and trusts of all types. Contact Roman Aminov at (347)766-2685 or

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This page contains a single entry by Erin Flynn published on August 20, 2013 11:03 AM.

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