Have you asked yourself “why do I need a Medicaid spend down trust/pooled trust”?
The short answer is that by joining a Medicaid spend down trust, you are eligible for Medicaid in New York and can avail yourself of the benefits you need if you have Medicaid excess income.
You can make the easiest choice that is also most beneficial to YOU and join our pooled income trust.
You have applied for Community Medicaid. Under Medicaid income guidelines in New York you have been determined eligible for Medicaid but you have too much income. This is determined by New York State at the county where you live. In order to be eligible, you must spend down monthly any excess income (the amount is given to you by Medicaid). You can give the money to Medicaid and it will make you eligible. Each month you must go and make the payment and the money is gone. You can submit to Medicaid paid bills strictly for medical needs. This will be reviewed by Medicaid and if one of your bills is not “medical enough” then you are not eligible. This too requires a visit to your county office.
Sign up with Labor and Industry For Education, Inc. as part of our Trust Program and you get to use your excess money for your personal needs. Every month you send LIFE a check in the amount of your Medicaid excess income. Every month you can direct LIFE to pay your bills in the same amount. The bills are not required to be medical in nature but can be medical. LIFE will pay bills for your personal needs. For example, LIFE will pay for your food, clothing, shelter, activities, big screen TV, and entertainment. There are restrictions on what your money can be used for. LIFE cannot pay for liquor, cigarettes or any illegal or unallowable expense. More importantly, your money in the account cannot be used for the benefit of anyone but you. If you want to go on a cruise with a bunch of people, LIFE will pay for your expenses but not anyone else who is on the cruise not even family members. Your money is to be used for you.
Joining LIFE’s Medicaid spend down trust is the easiest and smartest thing you can do if you have Medicaid surplus income (Medicaid excess income). You can have the benefit of using the money each month. After you put the money in, you can take the money out. LIFE is a professional group that prides itself on excellent customer service with a strong back office to pay your bills correctly and on time.
Please always feel free to call our offices with any questions. We are here to help.
What Your LIFE, Inc. Pooled Trust Team Provides to You as Our Client
You have decided to join the LIFE, Inc. Pooled Income Trust/Medicaid Spend- Down Trust. It is LIFE’s goal to provide the highest quality service to everyone. Your Medicaid excess money is dedicated to you only. When you sign the Trust Joinder Agreement (and we encourage questions about the Agreement), and fund the account, you are given one person who is your point of contact to provide you with answers about the supplemental needs trust and what kind of payments to vendors you want to set up. If your point of contact is busy, someone else here is always available to answer questions and assist you. Our staff will explain the Medicaid income guidelines of New York and help you understand the allowable expenses for your needs that we can write checks for on your behalf. LIFE will keep excellent records and will be focused on any changes in your Medicaid excess income (when you are recertified annually.)
LIFE will work with whoever the family chooses to be the authorized contact to deal with the disbursements. We have found that most clients have their adult child as the person moving all the work forward every month. You will find that many of the check requests are on-going and to the same vendor for the same amount every month. We can set up a recurring distribution that makes this easy.
The pooled income trust run by LIFE is intended to make your life easier. You can simply send a check monthly or set up an automatic electronic debit from your checking account and request payments to vendors from LIFE on your behalf. This will keep you Medicaid-eligible in New York and you can and will receive and continue to receive benefits paid by Medicaid.
LIFE works hard with your estate planning attorney, social worker, or whoever recommended you to us. We take the time to answer all questions especially as we begin the process for you. We do not charge by the hour and are an add-on to your estate planner.
Community Medicaid or Home Care Medicaid, is appropriate for anyone living at home, in an assisted living facility or currently in a short term rehabilitation facility or any living arrangement except a nursing home, it is a good idea to join LIFE’s spend-down trust to remain eligible for Medicaid if you have excess or surplus income.
By: Laura Burns, Esq. and Jennifer Katz, Esq.
The New York State Medicaid program is a “means based program”, meaning in order to be eligible for coverage, you must financially qualify for services. There are many misnomers and misconceptions regarding financial qualification for the Medicaid program, including income limitations. Many people who could benefit from Medicaid assistance assume that they are ineligible due to their income levels. This is simply not the case.
In order to evaluate how your income would be treated by New York State Medicaid, the first thing to consider is whether you will be applying for home care services or nursing home services. In the event that nursing home care is needed, Medicaid will require that all of the applicant’s income, minus fifty dollars, be provided to the facility where the applicant is receiving care. The fifty dollar allotment is used for small expenses such as haircuts, clothing needs or other small comforts. In the event that the person in need of Medicaid is married and their spouse will continue to live in the community after they move to a nursing facility, the spouse may be entitled to keep a portion of the income, if their monthly income is below $2,980.50. This is known as the minimum monthly maintenance needs allowance, as established by New York State. In the event that the community spouse’s monthly expenses exceed the minimum monthly maintenance needs allowance, a ‘hardship’ application can be made to the local county Medicaid office to increase the $2,980.50 figure. Though this process is available in every county, it is an uphill battle to establish financial hardship.
What about home care Medicaid, also known as Community Medicaid? Income is treated much differently when an applicant is applying for home care Medicaid coverage. The income limitations in New York State for home care are $825.00 per a single/widowed individual, and $1,209.00 per a married couple. Clearly, it would be impossible to maintain a household in the New York City or Long Island areas with either income limitation. For this reason, New York State permits a Medicaid applicant to shelter their additional income, sometimes called “surplus” or “excess” income, by using a ‘pooled income trust’. What is a pooled income trust, and how does it work?
A pooled income trust is a type of special needs trust that is utilized in order for a person to remain eligible to receive Medicaid services without forfeiting their excess income to Medicaid. Any amount of monthly income over $825.00 for an individual, or $1,209.00 for a married couple, is considered excess income, or the “spend down” amount. By depositing that money into a pooled trust each month, you remain eligible for Medicaid home care services, and can use the trust funds to pay your own bills. The money in the trust account can be used to pay for many different types of bills, including your rent or mortgage, utility bills, or even credit cards bills.
Here is an example to depict how a pooled income trust works. John and Mary are a married couple. Social Security pays $800.00 monthly to John and $700.00 monthly to Mary. John also receives a pension of $400.00 monthly and takes a monthly distribution from his IRA of $500.00.
Social Security – John $800.00
Social Security – Mary $700.00
Pension – John $600.00
IRA distribution – John $500.00
John & Mary’s Total Monthly Income $2,600.00
For purposes of this example, Medicaid will consider the couple’s income as one budget, even though they are two separate people, receiving income independently of each other. According to Medicaid guidelines, John and Mary will be allowed to keep $1,209.00 for themselves each month. That means that $1,391.00 must be deposited into the pooled trust each month.
Total Monthly Income $2,600.00
Medicaid Allowance $1,209.00
Deposited Into Trust $1,391.00
(You should be aware that there are administrative fees associated with all pooled trust accounts, so make sure to consult with a representative of the trust before enrolling. For the purpose of this example, we will not consider the fees.)
Every month, John and Mary can submit their bills to the pooled trust for payment. John and Mary own a home. The mortgage is paid off, but they are still responsible to pay real estate taxes, which are $500.00 monthly. They have utility bills totaling $300.00. Also, Mary went shopping at Macy’s this month and spent $300.00 on her Macy’s credit card, buying clothing for herself. John and Mary will ask the trust to make 3 payments on their behalf this month, totaling $1,100.00.
Deposited Into Trust $1,391.00
Real Estate Taxes $500.00
Remaining in Trust $291.00
After the four payments are deducted from their trust account, John and Mary still have $291.00 remaining. One of the great features of pooled income trusts is that any funds remaining in the trust will roll over to the next month. When John and Mary deposit their spend-down amount of $1391.00 into the trust next month, they will actually have $1682.00 available to spend.
Remaining in Trust $291.00
Next Month’s Deposit $1,391.00
Amount in Trust $1,682.00
The guiding principle to consider when evaluating whether a payment can be made through the pooled trust is if the expense is “for the sole benefit of the client”. Practically, this means that all pooled trust expenditures must benefit John or Mary, but not their friends or family members. Therefore, Mary was allowed to shop for herself at Macy’s and submit the bill to the trust for payment, but if she wants to buy holiday gifts for her grandchildren, she is going to have to use the $1,209.00 that she keeps in her bank account monthly.
There is a short list of items that are prohibited to be paid through the trust: life insurance, health insurance, tobacco products, firearms, liquor, gifts, charity, gambling and illegal activity (i.e. parking tickets). The most common expenditures made from the trust are rent/mortgage, utility bills, cable bills, and credit card bills. However, there are many types of expenses that fall within the definition of “for the sole benefit of the client”, including luxuries. The trust funds can pay for a beneficiary’s vacation – flight, hotel and eating out in restaurants. But remember, only the beneficiary’s vacation can be covered – not any accompanying friends or family members. You can go to the hair salon, nail salon, sporting events, shopping at department stores, and use the funds in the trust to pay for those expenses, without jeopardizing your Medicaid benefits.
Although income qualifications are only one portion of the Medicaid puzzle, it is important to know that your monthly income cannot automatically disqualify you or your loved one from long term care coverage. Whether Medicaid is an appropriate option depends upon a multitude of factors, however, for the right person, Medicaid can ensure that essential medical care and treatment is provided, without causing financial destruction in the process.
*** This article should not be construed to offer legal advice and is written solely for the purpose of providing information. ***
Avoiding the Nursing Home
How a Pooled Trust can help you retain your independence and stay in your home.
Jennifer Katz, Esq., a LIFE Trust attorney, wrote the following article for Well Beyond 55 Magazine. Well Beyond 55 provides the most current education, tools and professional strategies to support individual planning to ensure living well beyond 55. It is designed to bring you valuable resources that will empower you to navigate your physical health, financial wealth, and ongoing prosperity. Visit www.wellbeyond55.com for more information.
Growing older while endeavoring to stay well and live independently is a journey we will all face. As access to resources for seniors continues to improve, it is becoming increasingly easier for seniors to gracefully maneuver the hardships of aging. However, despite the technological and medical advances being made, the availability of high-quality and affordable home-based care remains problematic for seniors. People crave independence and do not want to be confined to nursing homes. The perfect solution for these people might be Community Medicaid.
Community Medicaid refers to services delivered “in the community,” in a home-based setting or an assisted living facility. Some of the benefits offered by Community Medicaid include a home health aide, who can come to your home and provide services ranging from housekeeping and companionship, to skilled nursing services provided by a Registered Nurse. You may also qualify to receive no-cost or low-cost medical supplies, transportation to doctor’s appointments, and even meal services.
To become eligible for Community Medicaid, an individual must meet certain medical and financial criteria. To fulfill the medical requirement, you must be “disabled”, as defined by the Social Security law. Many people in the aging community would qualify under this definition; the word “disabled” is not to be understood in its common form. Ailments such as diabetes, heart disease, anxiety or even arthritis could qualify an individual to receive Community Medicaid. Younger people, who are developmentally disabled, are also qualified to receive this type of Medicaid. For more information about whether you medically qualify, please consult a qualified elder law attorney or Medicaid specialist.
In order to financially qualify to receive Community Medicaid services, an individual’s monthly income must be below $825 with assets below $14,850. If an individual’s monthly income or assets exceed those strict limits, a pooled trust is the best way to protect that money, and remain eligible to receive Community Medicaid services. The purpose of the pooled trust is to shelter your money from Medicaid, and still allow you to use those funds to pay your own bills. Establishing a pooled trust does not affect eligibility for SSI, food stamps, Section 8 or other governmental benefits. By simply making a deposit of your surplus income into a pooled trust every month, you are automatically eligible for Medicaid.
There is a common misconception that in order to qualify for Medicaid a person must give away all their money, which quite understandably, is something an individual might be hesitant to do. But the pooled income trust acts only as a flow-through for the money.
The money doesn’t remain in the trust, illiquid, or out of your reach. As soon as the surplus is deposited in the trust account, the funds are immediately accessible for use. It can be used to pay bills like rent/mortgage, taxes, utility bills or even credit card bills. The money also rolls over each month, so there is no pressure to spend more money than necessary in any given month. There are two types of pooled trusts–income and asset.
Both can be utilized to shelter money from Medicaid. The more common type is the pooled income trust. For consistent monthly income, from sources such as Social Security, pension, IRA distribution, etc., Medicaid allows an individual no more than $825 per month, and a married couple (with both spouses on Community Medicaid) $1,209 per month. Any income above those limits is referred to as “surplus income”, “excess income” or “spend down.”
Income Depositing the surplus income into the trusts every month ensures that you remain eligible for Medicaid. And the best part is you don’t have to forfeit those funds to Medicaid. You can use your money to pay your own bills. The funds in the trust account can pay for a rent or mortgage, utility bills, taxes, even credit card bills. The trust simply acts as a pass-through for your money.
Here’s an example to illustrate how a pooled income trust operates. John, a widower, receives $1300 every month from Social Security and a pension of $700 a month.
Social Security $1300
Total Monthly Income $2000
John’s total monthly income is $2000. Abiding by the Medicaid guidelines, John is allowed to keep $825, and therefore must deposit $1175 into the pooled trust account.
Total Monthly Income $2000
Medicaid Allowance $825
Deposited Into Trust $1175
(Please also note that are administrative fees associated with all pooled trusts, so make sure you speak with a trust representative before enrolling. For the purpose of this example, we will not consider the fees.) From that $1175, John can instruct the trust to pay his bills.
For instance, if John’s rent is $800, cable bill is $100 and phone bill is $50, John will ask the trust to make 3 payments on his behalf, totaling $950.
Deposited Into Trust $1175
Cable Bill $100
Phone Bill $50
Remaining in Trust $225
Because John’s bills for the month did not equal his surplus amount, he left $225 remaining in his account at the end of the month. One of the great features of pooled trusts is that the money rolls over month to month, so when John deposits $1175 into the trust the following month, he will have a total of $1400 available to him.
Remaining in Trust $225
Next Month’s Surplus $1175
Amount in Trust $1400
Asset The pooled asset trust functions in a similar way. Medicaid allows individuals to keep resources up to $14,850. If an individual has assets (i.e. cash in the bank) above that amount, the surplus can be deposited into the asset trust to shelter it from Medicaid. The most common situations where an asset trust is necessary is when an individual is already receiving Medicaid services and receives a lump sum of money, usually from an inheritance or a lawsuit settlement. The funds are deposited as a one-time deposit, and distributions may be made from the account in whatever frequency the client desires.
Clients may make expenditures from their asset trust in the same way they do from the income trusts. For both trusts, the list of allowable expenses is wide-ranging. The guiding principle is that the expense must be “for the benefit of the client”. Practically, this means that the expenditure cannot be for a friend or family member. There is a short list of items that are prohibited to be paid through the trust: life insurance, health insurance, tobacco products, liquor, firearms, gifts, charity, gambling and illegal activity (i.e. parking tickets).
The most common expenditures made from the trust are rent/mortgage, utility bills, cable bills, and credit card bills. However, there are many types of expenses that fall within the definition of “for the benefit of the client”, including luxuries. The trust funds can pay for a beneficiary’s vacation–-flight, hotel and eating out.
But remember, only the beneficiary’s vacation can be covered–-not any accompanying friends or family members. You can go to the hair salon, nail salon, sporting events, shopping at department stores, and use the funds in the trust to pay for those expenses, without jeopardizing your Medicaid benefits.
Staying at home in a person’s later years can be the best thing to keep them happy, active and productive people. Having home health aides, and the other benefits of Community Medicaid, are a perfect way to help people remain independent and at home. Pooled special needs trusts are an integral part of this process.