Using Pooled Trusts for Medicaid Planning

When you or your loved one needs Medicaid, such as benefits for long-term care or Supplemental Security Income (SSI), a Pooled Trust is one of three type of first party special needs trust that may be helpful. In looking to access Medicaid/SSI, there are a number of strict rules and regulations as the program is "needs based," meaning the applicant may only have a set limit on income and assets. Pooled Trusts can help people receiving SSI and they can be helpful for people looking for long-term care Medicaid in Florida.

Generally, a disabled individual, including those needing long-term care in a nursing home, is only allowed to have some $2,000 in countable assets for Medicaid purposes. Asset and income rules somewhat vary for people looking for long-term care Medicaid v. Supplemental Security Income (SSI), but a Pooled Trust can be helpful for both.

One of the first rules of Medicaid and asset protection planning is that you are not allowed to give money away within five years of the Medicaid "look back" period. If assets were transferred, a penalty period is created. One exemption for transfers is gifts to a special needs trust such as a Pooled Trust. Pooled Trust assets are not counted as an available resource, nor is the interest on the assets counted as income. The beneficiary will be a beneficiary of Pooled Trust and can continue receiving public benefits (such as long-term care Medicaid or SSI) for meeting essential needs and still have resources available for his or her special or supplemental needs from the Trust.

What is a Pooled Trust?

A Pooled Trust is a type of special needs trust established under Federal and State law for the benefit of disabled beneficiaries. OBRA '93 allows a charity to establish and manage a special needs trust called a Pooled Trust. Medicaid and Supplemental Security Income (SSI) provide a basic level of support for food, shelter, and medical care. A Pooled Trust can "fill the gap" between basic support and the needs and comfort of a beneficiary and supplement the basic support. In a Pooled Trust, the income and assets of an individual with a disability may be managed by a not-for-profit association. Separate sub-accounts are maintained for each beneficiary.

Why use a Pooled Trust?

A disabled/elderly beneficiary needs Medicaid and there are assets that would otherwise disqualify him or her from benefits. As an example:

A disabled person is receiving government benefits, such as SSI or long-term Medicaid in the nursing home or assisted living facility. The disabled person is allowed to only have $2,000 in countable assets at this point due to eligibility guidelines. Now, the disabled person inherits $50,000, which would take the disabled person off of Medicaid/SSI. The disabled person cannot give these funds away without creating a transfer penalty, importantly. The inheritance can, however, be placed into a Pooled Trust for that person's use and benefit during their lifetime under Medicaid rules.

What happens with funds placed into a Pooled Trust?

Monies placed into a Pooled Trust can generally be used to help the beneficiary by spending funds for the following purposes:

1. Geriatric care services

2. Guardianship fees

3. Differentials in housing costs between shared and private rooms in institutional settings (such as assisted living)

4. Supplemental nursing care

5. Medical procedures not provided through governmental assistance

6. Travel expenses

7. Entertainment expenses

8. Maintaining the family home

9. Any other expense for the beneficiary not provided by government assistance programs.

Transfers to Pooled Trusts are not Transfers (i.e,. gifts) for Medicaid Purposes

Giving money away to protect it from the nursing home is not allowed within 5 years of the Medicaid "lookback" period. Learn more about the calculating the Florida transfer penalty for Medicaid purposes.

Pooled Trusts sounds amazing! Are there any drawbacks?

Pooled Trusts can be great in the right situation, but there is one big drawback - any funds that remain in a beneficiary’s account at the beneficiary’s death must be retained by the Trust or used to reimburse the State for expenses while on Medicaid. Upon the recipient's death, the Pooled Trust can pay Florida's Medicaid lien, then remainder beneficiaries may receive what is left over. This means that for Medicaid and asset protection planning purposes, our elder law practice mostly looks to Pooled Trusts in very specific circumstances, such as when the applicant does not have any children or heirs they are trying to protect money for.

Of note is that in Florida, Pooled Trusts can be used for those over age 65. Some states do not allow pooled trusts for those over age 65.

Pooled Trusts as a part of Spend Down Planning

We typically think about pooled trusts as a useful part of spend down planning for an elderly or disabled person. We have more information on Medicaid spend down planning on this webpage. Of course, if you are looking to help your elderly or disabled loved one, do not attempt to do this without good legal counsel!

How would I learn more about Pooled Trusts?

Pooled Trusts are used only in very specific circumstances, but then can be wonderful in the right situation. We would be glad to meet with you or your family to discuss how placing assets into a Pooled Trust can help your disabled or elderly loved one. You can also sign up here to attend one of our free virtual webinars on Medicaid and asset protection planning to learn more.