What is a Pooled Income Trust?

Under current New York law, a single individual receiving community-based Medicaid benefits may retain $845 of their income. This $845 is comprised of a $20 disregard and income of $825. Any monthly income over that amount must be spent on medical care or home care services before Medicaid will begin paying for care at home. Unfortunately, excess income cannot be spent on living expenses, such as food, rent, clothing, or utilities. As a result, the Medicaid Recipient will not be able to keep their monthly income to pay their normal monthly living expenses and obtain benefits. The use of a Pooled Income Trust is a tremendous tool for assisting the Medicaid Recipient in “spending down” their excess income.

A Pooled Income Trust is a special type of trust operated by a non-profit organization for the benefit of many people with disabilities. Rather than spend their excess income on medical care, the Medicaid Recipient’s excess income may instead be contributed to a Pooled Income Trust. Most Pooled Income Trusts then operate as a bill-paying service for the Medicaid Recipient.

The end result is that a qualified enrollee of a Pooled Income Trust can continue receiving their Medicaid benefits and still have their income to pay their expenses.

For example: Tom applies for Medicaid benefits to pay for his community-based home care services. Tom’s monthly income is $2,896.00. Tom’s monthly expenses are $2,200.00. Because the current threshold amount is $845.00, Tom’s monthly excess income is $2,051.00. This amount is also called the Net Available Monthly Income or NAMI amount. It is this NAMI amount that Tom would have to either use to pay for his medical or home care services or contribute to a Pooled Income Trust. Without the Pooled Income Trust, Tom would not have enough income to pay his monthly expenses. With the Pooled Income Trust, however, Tom keeps his monthly income, pays his bills, and gets his Medicaid benefits.

The Pooled Income Trust can, generally, pay any and all expenses of the Medicaid Recipient, other than expenses not already paid for by government assistance programs. Examples of expenses that may be paid by the Pooled Income Trust are: living expenses, such as food, shelter, and clothing; housing expenses, such as rent and utilities; personal care not already paid for by government benefits; and entertainment and travel expenses. Generally, most Pooled Income Trusts will not pay for such expenses as tobacco, alcohol, pornography, firearms, or anything related to illegal activities (such as, bail). All expenses paid by the Pooled Income Trust must also be for the sole benefit of the person enrolled in the Pooled Income Trust.

When Medicaid eventually approves the application for community-based home care services, the approval letter will specify the Medicaid Recipient’s “spenddown” or NAMI Amount. Upon notification of the Medicaid Recipient’s enrollment in a Pooled Income Trust, Medicaid will reduce the Medicaid Recipient’s spenddown to $0 retroactive to the month the Medicaid Recipient began contributing to the Pooled Income Trust and for so long as the Medicaid Recipient continues to contribute their NAMI to the Pooled Income Trust.

Setting Up Your Pooled Income Trust

While not necessary, you should let a qualified and competent attorney help you enroll in a Pooled Income Trust.

About Jeffrey A. Asher

Jeffrey A. Asher is admitted to practice in NY and CT. Mr. Asher is a member of the New York State Bar Association, where he serves on the Executive Committee of the Elder Law and Special Needs Section, the Executive Committee of the Trusts and Estates Law Section, is co-chair of the Legislation Committee of the NYSBA Elder Law and Special Needs Section, is co-chair of the Committee on Elderly and Disabled of the NYSBA Trusts and Estates Law Section, and is Chair of the Elder Law Section of the New York County Lawyers’ Association. Mr. Asher recently appeared in the HBO Documentary “Bobby Fischer Against the World: Fight for the Fischer Estate.” Mr. Asher also is a legal commentator on Trusts and Estates and Elder Law matters for Court TV, TruTV, and CNN Headline News.

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