Medicaid, a public health insurance program, is not designed for everyone. Generally, this federal and state program is designed for those who cannot afford health care costs. That said, if your income and assets are above a certain threshold, you won’t be eligible for Medicaid unless you spend down your assets which isn’t a good idea.
Rather than spend down your assets to qualify for Medicaid, you can place your assets in a trust so that it wouldn’t be counted for Medicaid. A pooled income trust is an ideal type of trust for this purpose. If you are new to this type of trust, I bet you’ll have many questions and concerns.
Let’s take a look at what a pooled income trust is.
What is a Pooled Income Trust?
To be eligible for Medicaid, you must not earn more than a specific amount of income each month (the limit is not fixed, it changes from time to time). If you, a Medicaid applicant and you make even $1 more than the limit, you won’t be eligible for the program. But, by setting up a pooled income trust, you can qualify for Medicaid.
The pooled income trust creates a different account managed by a charitable organization. The surplus income of the individual is sent to that separate account each month. Afterward, the individual can inform the charitable organization that handles the account to pay certain allowable expenses with the money in that account.
Requirements of a pooled income trust?
Below are the basic requirements of a pooled income trust:
- The Medicaid applicant must be plagued with a disability. For the purpose of this trust, “disabled” usually include age related symptoms
- The money in the pooled income trust must be used to cater to the Medicaid applicant
- The money can only be used for allowable expenses
- When the Medicaid recipient dies, any remaining funds are forfeited
Pooled Income Trust and Medicaid Asset Protection Trust: Are they the same?
A pooled income trust is not the same as a Medicaid asset protection trust. Medicaid eligibility comes with two financial requirements. The first requirement is that the assets of the applicant must not surpass a specific limit. The Medicaid asset protection trust helps with this first requirement. The second requirement is that the income of the Medicaid applicant must be under a certain amount each month. The pooled income trust helps with the second requirement.
How does a Pooled Income Trust Works?
A pooled income trust works in a simple way. The income you deposit into the trust is not considered when determining your Medicaid eligibility each month, thus allowing you to qualify for community Medicaid services, home care, and other long-term care needs. Funds in the pooled income trust are then used to finance your monthly living expenses so that you can afford to get care in the community without any hindrance.’
After the death of the beneficiary, the remaining balance in the account is kept by the trust to help other individuals with disabilities served by the Arc New York. If you wish to set up a pooled income trust, you can do so by either hiring an elder law attorney. However, it hiring one isn’t necessary.
Do you need an Elder law attorney?
If you need an elder law attorney for matters regarding your elderly loved one, don’t hesitate to call our office. Or if you are a senior and you need help with applying for Medicaid, you can also contact us for assistance.
In addition, in the event that your assets and income are above the threshold, signaling your ineligibility for Medicaid, you can contact us if you wish to set up a Medicaid Asset protection Trust. However, you must have the Medicaid look back period in mind. This means that, after placing your assets in this trust, you are to wait for the next 5 years before applying for Medicaid to avoid any form of sanction.