The Secrets of a Pooled Income Trust

Learn the Advantages

A pooled income trust is a way of making someone with too much income-eligible for Medicaid.  Medicaid is a means-tested program, which means recipients must have less than a certain amount of income and resources. Since the income threshold in New York is very low, most middle-income people would not qualify.  

When it comes to getting home health aides for seniors or disabled people, health insurance companies, including Medicare, do not cover this type of health care.  So for people who cannot afford to privately pay for home health aides (which can be quite a significant expense), the only other alternative is to ask Medicaid to pay for the care.  Without this type of care, many seniors and disabled people would not be able to remain in their homes.  Therefore, New York allows people to utilize pooled income trusts as a method of sheltering their income so they can have the care and still afford to pay their bills.

Why do I need one?

You would typically need a pooled income trust if you are receiving Medicaid Home Care and your income is higher than the Medicaid threshold (in 2021, the threshold is $884/mo.).  The income of seniors may typically be their Social Security retirement, pension, IRA income, income from annuities and possible rental income.  This quite often is more than the Medicaid threshold.  This is why pooled income trusts exist.  They are a vehicle to shelter surplus income so the Medicaid recipient doesn’t have to pay that surplus over toward the care, which would leave the recipient without money to pay the bills.

How does it work?

Let’s say Mrs. Smith has a monthly income of $2,500.  We would subtract the $884 (plus an extra $20 if she also has Medicare) – so $2,500 minus 884 minus 20 = $1,596.  This $1,596 is the surplus income – the amount of monthly income over the allowable limit.  In order to preserve this income for Mrs. Smith’s bills, we would join her to a pooled income trust.  These pooled trusts are community trusts operated by nonprofit agencies authorized by the state for this purpose.  Once we join Mrs. Smith to the pooled trust, she would begin depositing her monthly surplus into the pool and instructing the pooled trust which of her bills she wants them to pay with that money.  Typical bills might be rent, food, utilities, credit card or copays.  The pooled trust gets paid either a flat fee or a percentage of the surplus for doing this work. 

We usually advise clients to sign an ACH agreement with the pooled trust, authorizing them to automatically withdraw the surplus each month on a certain date.  Then each month, the clients give them the bills to pay.  If there are any bills that are the same amount every month, those bills can be automated rather than faxing, emailing or mailing the bills over to the pool.  This will eliminate the amount of work the client or family member has to do.

And that’s it.  Most clients are a little confused by the pooled income trust concept, but once it’s set up and approved, it really works like clockwork.  

If you think a Pooled Income Trust could be an answer to your situation, please call me today. 718-740-3300

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