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 New York residents, regardless of whether they are under 65 or over, is the use of Pooled Income Trusts, also known as Pooled Supplemental Needs Trusts, which are unique trusts permissible under both New York and Federal Law. In Queens and Brooklyn, the areas in which The Law Offices of Roman Aminov practices, these pooled income trusts are widely used.
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, described below, 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, and are available to New York residents, including clients residing in Queens, Brooklyn, or Long Island. In Queens, estate lawyers routinely use pooled trusts to meet the needs of their clients. 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 Medicaid Long Term Care Plan (MLTC) which administers his care. 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 supplemental needs trust as well.
Pooled 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 elder law attorney prior to applying for Medicaid. Working with an attorney can potentially save the client months of waiting for much needed care. For a free consultation with a Queens and Brooklyn based elder law attorney, contact the Law Offices of Roman Aminov today at 347-766-2685.