Clients who require care at home and have assets below the allowable Medicaid resource level (currently $4,150) often apply for community Medicaid benefits to cover the cost of care. However, there is a monthly income maximum level of $712 per month (plus allowable medical expenses such as insurance premiums). If an individual exceeds the income level, he/she must contribute to monthly home care costs with what is known as the “surplus” income, i.e. the income that exceeds $712.
Of course, it is difficult for an individual in the New York metropolitan area to live on $712 per month. A way to continue to use income to cover living expenses is to contribute the surplus to a “pooled trust.” Pooled trusts are established by non-profit organizations. Individuals sign a joinder agreement with the organization and send the monthly surplus amount to the organization, which in turn, pays the individual's expenses/bills. The organization charges a maintenance fee, which varies depending upon the organization. However, it is usually worth paying the relatively small fee so that monthly income may continue to be used to pay for living expenses.
In New York, the State Department of Social Services must deem an individual disabled in order for the individual to be permitted to contribute the monthly surplus to the trust. First, the individual enters into an agreement with the non-profit organization and subsequently gets a Medicaid approval reflecting the amount of surplus income. Eventually, the individual gets a disability determination from the State, at which time Medicaid can issue a revised budget that reflects a zero surplus. In other words, the Medicaid recipient can then send the surplus amount to the organization to establish a sub-account, out of which the individual's bills will be paid. The organization will keep any income in the sub-account that is in excess of the individual's expenses.
Note that nursing home Medicaid recipients over age 65 may not use a pooled trust because the transfer of funds to a pooled trust will deem the individual ineligible for nursing home Medicaid benefits. An elder law attorney can advise a client under what circumstances a pooled trust is appropriate.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts and wills. The firm has offices in Forest Hills, Great Neck, and Brooklyn, NY. Mr. Fatoullah has been named a “fellow” of the National Academy of Elder Law Attorneys and is a former member of its Board of Directors. He also serves on the Executive Committee of the Elder Law Section of the New York State Bar Association. Mr. Fatoullah has been certified as an Elder Law Attorney by the National Elder Law Foundation. Mr. Fatoullah is a co-founder of Senior Umbrella Network of Queens. This article was written with the assistance of Stacey Meshnick, Esq., who supervises the Medicaid Department at the firm. The firm can be reached by calling 718-261-1700, 516-466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES.
