Using a Pooled Income Trust to qualify for Medicaid coverage.
Several of our clients are concerned about their ability to continue receiving care at home after depleting most of their assets. They have substantial income from Social Security, pensions, and annuities and are concerned that it will disqualify them from Medicaid eligibility.
Income above a threshold can go into a Pooled Income Trust to qualify for Medicaid. New York State’s 2024 income threshold is $1,732 for single-person households and $2,351 for two-person households.
Medicaid determines the amount clients need to “spend down,” with their excess income available to continue to pay for living expenses such as housing, utilities, food, and other personal needs. This enables them to remain at home, even in high-cost areas like New York City.
Our experience helping clients interact with Pooled Income Trusts has given us insights into their distinguishing features. There are several noteworthy ways in which Trusts operate that affect their ease of use and suitability to each situation. Here are some factors to consider when deciding which Trust to sign up with.
How a Pooled Income Trust Works
Trusts contain multiple individuals’ assets, which are combined. A not-for-profit organization and a financial institution serve as co-trustees and manage and administer the funds.
Each of our clients has a separate account, which can be used only to pay for their eligible expenses and purchases when they submit the required documentation.
Finding the Right Pooled Income Trust
While all Trusts serve a similar function, their fees, services, contracts, and operations vary significantly. Selecting a Pooled Income Trust as part of Medicaid enrollment demands thorough consideration.
Drawing from our experience assisting clients with Trusts, we’ve gained insights into their unique features. We recommend our clients carefully consider ease of use and suitability to their needs and circumstances when deciding on a Trust.
Cost
Before deciding, make sure you ask about and understand all fees the Trust charges. Some Trusts may negotiate fees, particularly if you transfer balances from other Trusts. Additionally, flexibility in the timing of fee payments and requirements for holding reserves may differ among Trusts.
A low cost may be the key consideration if the Trust has to pay only a few bills.
These are the fees Trusts typically charge:
- One-time enrollment fees may be a deposit of one month’s spend down amount.
- Monthly administrative fees typically range from about $45 to $350.
- Annual fees may be charged but are usually nominal.
Special Services
Consider whether the Trust offers services like debit or credit cards, which can be invaluable when other forms of credit are inaccessible.
Deposits
The time between funds being withdrawn from the participant’s bank account and availability for Trust bill payments varies among Trusts, necessitating careful planning to avoid gaps in covering expenses.
Bill Payments
Trusts differ in their bill payment processes, including submission methods, payment speed, and modes of payment. Consider these policies in relation to your needs.
Some Trusts offer an online portal for uploading bills. Others require submission via email or fax, accompanied by a signed distribution request form.
Payment processing also varies, with some Trusts paying as soon as bills are received and others paying within a defined number of business days of receipt.
Whether vendors are set up to receive payments via checks or electronically may impact the speed at which a Trust will post payment.
Flexibility
Trusts must adhere to Medicaid guidelines but differ in flexibility regarding expense documentation and payment procedures. This can be crucial for complex client situations.
Requirements ensuring that charges are for the exclusive benefit of the participant vary significantly among Trusts, as do payments of expenses charged to credit cards. Some require receipts for all credit card charges, while others need receipts only for unusual charges.
In some cases, Trusts will process payments without complete information. For example, to effectively increase a credit line, they may make a payment mid-billing cycle with only a list of charges instead of a statement.
Communication and Availability
Upon enrollment in a Trust, our clients are assigned a client service manager/advisor. We have observed variations in their communications and services.
Consider factors such as responsiveness to queries, preferred communication methods – phone, email, or via a portal– and response times.
Also, inquire about staff availability, especially during holidays. Unique time-sensitive situations may require instructions for submitting bills for taxes or for credit card payments between statement dates.
Post-Death Policies
Each Trust has its own protocols for handling account balances after a participant’s death, including paying outstanding expenses and allocating excess funds to affiliated charities.
Some Trusts will pay only expenses incurred before death for bills submitted within a defined period after the participant’s death.
Others may consider using excess funds to pay certain expenses incurred after death. These expenses may include renovations for an apartment’s sale, clean-outs, etc.
Still, others may not pay anything once a participant has died. If it is known that death is imminent, rushing payment requests, including pre-paid funeral plans, is advisable.
How Excess Funds are Used After Death
Each Trust is affiliated with a charity. The charity is the beneficiary of the funds left in the trust after death. Some participants like to ask what charity they will be supporting.
Changing Pooled Income Trusts
A change should be made if a Trust does not serve the participant’s needs well, so understanding the process for transitioning between trusts is vital.
Consider the ease of transferring account balances from one Trust to another. Learn if the first Trust will permit the transfer of all funds, including any reserve.
Inquire if the new Trust will forego enrollment and other fees and/or match the prior Trust’s monthly fee, if lower.
The complexity of transition may make engaging an attorney a wise move.