By Jennifer Katz, Esq.
Individuals who have “surplus” monthly income, such as a pension, Social Security, etc. and want the benefits that come with Medicaid eligibility, should join LIFE’s pooled income trust.
Medicaid Eligibility
In order to qualify for Medicaid, a patient must meet both the medical and financial criteria. The financial criteria encompass both assets and income limitations. A Pooled Income Trust is a type of Supplemental Needs Trust that functions as an income-sheltering device, to serve Medicaid patients who are elderly, blind and/or disabled. Signing up for LIFE’s pooled trust is the best way to qualify clients for community Medicaid when their income does not meet the strict guidelines established by Medicaid. For 2015, Medicaid allows only $840 of monthly income for an unmarried individual or $1,209 for a married couple. Any income beyond these threshold numbers is considered a surplus
Even if the individual is over the income limits, Medicaid allows beneficiaries to “spend-down” their surplus income to remain Medicaid eligible. The allowable ways to dispose of the excess income are to: (a) Write a monthly check for the surplus amount to Medicaid, (b) write a monthly check for the surplus amount to the Managed Long Term Care Plan (MLTC), or (c) join a pooled income trust, which must be administered by a not-for-profit Trustee.
The Benefits of a Pooled Trust
LIFE’s pooled income trust is the best and most efficient way to keep clients with a monthly surplus qualified for Medicaid, without affecting eligibility for SSI, food stamps, Section 8 or other governmental benefits. Being part of the trust allows the beneficiary an extensive list of payable expenses, with the funds being used for the beneficiary’s “care, comfort, well-being and training”.  Depositing the surplus amount into the trust each month ensures that the client will be automatically eligible for Medicaid. 
There is a common misconception among clients that in order to qualify for Medicaid a person must give away all their money, which quite understandably is something that clients are hesitant to do. But the trust is a flow-through for the client’s money. The money doesn’t remain in the trust, illiquid and out of their reach. As soon as the check clears in the trust account, the funds are immediately accessible for the client’s use. The money also rolls over each month, so the client is under no pressure to spend more money than necessary in any given month. 
For clients with higher net worth, more complex financial assets, or property owners, an elder law attorney is always needed to ensure proper financial planning. Establishment of other types of trusts may be necessary, and the involvement of the attorney is crucial. However, LIFE’s trust deals solely with the issue of monthly income and an elder cannot create the trust on their own. Under New York Medicaid law, the trust must be administered by a 501(c)(3) non-profit, such as     LIFE.
Joining LIFE’s trust allows clients to experience a higher quality of life, paid for by Medicaid, and not the client.  This allows people with disabilities to maintain greater independence. Medicaid may be able to pay for environmental upgrades to the client’s living space, which can make the home more accessible for the disabled person. The most common benefit that LIFE’s trust beneficiaries are seeking is a home health care aide, someone that can assist with daily household tasks and attend to certain medical needs.
A Broad Range of “Covered” Expenses
The client can instruct the flow-through trust to make monthly payments on their behalf, covering a very broad list of expenses. The expenses are not limited to those of a medical nature; rather they are wide-ranging and expansive, from necessities to enjoyment and even indulgences. The allowable expenses include, but are not limited to: rent, utilities, mortgage, cable, cell phone, groceries, real estate taxes and certain medical expenses. But trust funds can also be used for travel, shopping, entertainment and many other things, so long as it is directly for the benefit of the client. The Trustee’s job is to make sure that the expenses are allowable and that they benefit the client.
One of the increasingly common expenses that can be covered using trust funds is the Consumer Directed Personal Assistance Program, more commonly referred to as “CDPAP”. This is a program that offers patients a more flexible way to arrange their care. Under the guidelines, a Medicaid recipient may select and train their own caregiver, rather than one contracted by a home health agency or MLTC. The care can include activities of daily living or skilled nursing services. The patient is then responsible for the hiring, firing, training and supervising of that caregiver. See the following website for more information (
Inquiries regarding the type of health-related expenses that can be covered by funds in the trust are common. The surplus funds can be used to pay for most medical expenses that are not otherwise covered by Medicaid. Although the funds cannot generally be used to pay a home health care aide, they can be used in two particular circumstances: first, where the patient requests more hours than what is covered by Medicaid; second, if the rate charged by the aide is more than what Medicaid pays, the Pooled Trust can pay the additional rate. Health insurance cannot be paid for by trust funds.
A beneficiary can use trust funds to pay for vacations, a hairdresser, and most other types of ordinary living expenses. The money must be exclusively spent on the beneficiary and not be used for the benefit of friends or family members. The Trustee’s role is to safeguard the financial well-being of the beneficiary.  In the event that a beneficiary passes away, the trust will give a certain amount of time to allow the family or designated representative to submit eligible expenses for reimbursement. In order to be eligible, the expenses must have been incurred during the beneficiary’s lifetime. The trust cannot pay for burial or funeral expenses that were incurred after death, but pre-paid funeral plans are a popular use of trust funds. If there is any remaining balance in a trust account, Medicaid law mandates that the funds be donated to a charity that service the developmentally-disabled.  LIFE’s extensive programs include many programs which directly benefit the developmentally disabled.
All too often we hear about instances of elder abuse; one of the major types of this is abuse of a person’s finances. By placing their money into the LIFE trust, managed by a reputable not-for-profit, the beneficiary has the protection of the Trustee, who has discretion over whether to make certain requested disbursements. This is an important service that a PIT can offer to a vulnerable population, the elderly and disabled.
Jennifer Katz, Esq. is the Trust Outreach Coordinator for the LIFE, Inc. Pooled Trust I, a division of Labor & Industry For education, Inc., 501(c)(3) non-profit trust which has been operating for over three years, serving clients all across New York State.  She can be reached at, 516-374-4564 X1037.



  1. Sandra Hexner says

    Thanks for all this great information about a trust fund. I find the most interesting point is where I could use a trust fund for prepaid funeral expenses. It’s great to be prepared and knowing details like this really help. My husband was thinking about using his trust to pay for medical expenses and insurance, but with your information we will now have time to plan for something else.

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