As a person ages, it’s possible they may become incapacitated, or simply unable to safely live on their own and require care in a nursing home or long-term care center. Because these facilities can be extremely expensive, people often need to rely on Medicaid to pay for the costs. However, qualifying for Medicaid assistance is a complicated process with strict financial guidelines. Pooled Income Trusts | New York Elder Law Medicaid Attorney

If your loved one needs the financial benefits from Medicaid but isn’t eligible because they have too much money or too much in assets, you need a skilled elder law and Medicaid attorney to help show you how to establish a pooled income trust, so your loved one is eligible for assistance. 

What to Know About Medicaid

Generally, people can begin receiving Medicare when they turn 65. This federal health insurance provides coverage for many types of medical expenses. However, the program doesn’t cover long-term health care needs. So if your loved one becomes incapacitated, ill, or disabled, they may need long-term care in a nursing home or assisted living facility, but most people can’t afford it, and look to the other federal financial assistance program, Medicaid, to help pay the costs. 

However, Medicaid only pays these costs if the applicant meets unyielding financial requirements. The program sets a monetary limit for eligibility, and those who need help from this program can’t earn an income or have assets worth more than that amount. Many New Yorkers make too much to qualify for financial assistance from Medicaid, yet they don’t earn enough to pay for a long-term care facility on their own, either.

In New York, a person must have an earning limit of just under $900 a month to be eligible for Medicaid. Any income above this threshold, often referred to as surplus or excess, must be reduced for an individual to receive Medicaid. This “spend down” is often difficult—if not impossible—for many people to achieve.  

How a Pooled Income Trust Helps With Medicaid Eligibility

Because many people can’t afford to spend down their total assets to meet Medicaid eligibility, they may choose to place their overage assets into a pooled income trust. This income trust is generally used to protect people with special needs to ensure their access to government benefits such as Medicaid.  

New York Medicaid rules state that income over the earning limit can’t be used to pay for cost of living expenses, such as utility bills or rent. Instead, the overage amount must be used to pay for in-home care or long-term care. If the Medicaid applicant places their assets in a standard trust, those assets are still counted when determining financial eligibility.  

However, assets placed into a pooled income trust aren’t considered by Medicaid as part of the applicant’s earning limit. So they’re not counted when Medicaid assesses your expenses and monthly income. This means a pooled income trust can be a beneficial tool for meeting eligibility requirements. 

How a New York Pooled Income Trust Works

If you’re over 65 and have disabilities or are incapacitated, you can join an existing pooled income trust, and you become a beneficiary. As such, you’re assigned an individual account. 

Once you become a beneficiary, you make monthly deposits into the trust from your regular income. You might fund the trust through money you receive from Social Security, retirement accounts, IRAs, and other sources. This money can be used to pay your cost of living expenses—however, you can’t withdraw the money and pay the bills yourself. The person managing the trust uses the funds in your personal account to pay them for you. So, you’re still able to pay your monthly expenses while meeting Medicaid’s financial limits.

Medicaid’s Look Back Period

It’s important to know that institutional Medicaid looks at all the financial transactions of any person applying for benefits during what’s called a “look back period.” Typically, Medicaid looks back five years. It investigates whether you: 

  • Gave away money to other people as a way to spend down your total assets.
  • Transferred assets for less than their market value.
  • Gifted assets to get under the Medicaid limit for qualification. 

For example, if you had $10,000 in your bank account and you gave it all to a child within the last five years, Medicaid will flag that as a strategy for reducing your total assets to qualify for benefits. It knows that after the look-back period, your child could return that money to you. If the agency discovers you’ve done this, it imposes a penalty period—an amount of time the applicant won’t be eligible for financial assistance. This is Medicaid’s way of ensuring that people don’t give away their assets to appear that they have less money than they really might have. 

For Community Medicaid in New York—which includes, adult day care, assisted living services, home health care, and personal care assistance—a new 2.5-year look-back period begins in 2024.
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