How a Pooled Income Trust Helps New Yorkers Keep Excess Income for Home Care

Many of the people who come to me needing help at home are in an awkward middle position. Their income is too high for Medicaid, but nowhere near high enough to pay an aide privately at New York rates. In 2026, a single applicant for Community Medicaid in New York is permitted to keep $1,836 per month in income, and a married couple applying together is permitted $2,489. A retired homeowner with a small pension on top of Social Security is often a few hundred dollars above that line. Medicaid does not simply deny the application in that situation. It approves coverage with a spend-down, also called surplus or excess income, which is the amount above the limit that must go toward medical bills each month before Medicaid will pay for anything. For someone already covering rent or a mortgage, utilities, and a Medicare supplement, surrendering several hundred dollars a month to the care system is not realistic. A pooled income trust is the planning tool that resolves this problem.

What a pooled income trust actually is

A pooled income trust is a supplemental needs trust created and administered by a nonprofit organization. Each participant has a separate sub-account held in his or her own name, but the funds of all participants are pooled together for investment and administrative purposes, which is where the name comes from. You do not draft your own trust instrument and you do not name your own trustee. You sign a joinder agreement with the nonprofit that operates the master trust, and your sub-account is opened underneath it. Because the arrangement is a recognized supplemental needs vehicle, income you deposit into it each month is disregarded when the local district calculates your Medicaid budget. Your surplus, for budgeting purposes, stops being surplus, and your Medicaid home care continues without a monthly spend-down obligation hanging over it.

How the money is actually used

The money does not disappear and it is not paid over to Medicaid. Each month you deposit your excess income into your sub-account, and then you submit your household bills to the trustee, who pays them on your behalf out of your own funds. Rent, mortgage payments, real estate taxes, homeowner's insurance, utilities, telephone and internet service, and credit card statements are all commonly handled this way. The limitation is that the trustee cannot hand the money directly to you or write you a personal check, because a direct distribution would be counted as income all over again and defeat the purpose. The practical trade is that you give up the convenience of holding cash in your own account in exchange for keeping the full value of your income while Medicaid pays for the aide. For most households that trade is worth making.

Who is eligible to join one

Pooled trusts are available to people who are certified as disabled. A person already receiving Social Security Disability or SSI has that finding in place. An applicant who is 65 or older and has never had a disability determination will need one made by the local district, which in New York City means submitting a disability determination request to the Human Resources Administration along with supporting medical documentation. New York permits people over 65 to fund a pooled trust for community Medicaid without triggering a transfer penalty, which is precisely why this planning works so well here and why it is worth asking about before assuming that home care is out of reach.

What happens to the account later

Whatever remains in the sub-account when the beneficiary dies does not pass under the will. The nonprofit either retains the remainder for its charitable purposes or pays it over to reimburse Medicaid for benefits provided, depending on the terms of the particular master trust. The City monitors these accounts closely through the Supplemental Needs Trust Program administered by HRA, which reviews trustee expenditures and pursues recovery after death. That is why I advise clients to deposit only their genuine monthly surplus and to submit their bills promptly rather than letting a balance accumulate in the account. As we discussed in a prior article on supplemental needs trusts generally, these vehicles are built to supplement a person's life, not to store wealth for the next generation.

Fees, timing, and expectations

The nonprofit charges a one-time enrollment fee and a modest monthly administrative fee, which vary between organizations and should be compared before you sign. Approval is not instantaneous either. The joinder agreement and the disability documentation both have to be submitted to Medicaid and reviewed, and that review can take anywhere from several weeks to several months, during which the spend-down technically remains in place. I recommend this option to clients who have steady monthly income above the limit and real household expenses to apply it against, and I usually suggest opening the account as early in the application process as possible. Once it is running, the monthly routine is straightforward, and most clients manage it without difficulty.

If you or a loved one has monthly income above the Medicaid limit and needs home care in New York, contact us today at (347) 766-2685 for a free phone consultation.

Contributed by Roman Aminov, Esq, a Queens estate attorney in New York City.