Disabled Americans frequently are faced with difficult choices in terms of financial planning. Exceeding maximum levels of income, even by a couple of dollars, may make you unqualified for the benefits you need to sustain a decent quality of life. That is where outside-of-the-box solutions come into play: enter pooled income trusts.
Why Are Such Trusts Necessary?
Usually, assets put into standard kinds of trusts will still count against income maximums for coverage by Medicaid. Although, you can work around it. Assets that are placed inside a pooled income trust do not count and instead are disregarded by Medicaid once the program checks out your month-to-month expenses and income. This means a pooled income trust is useful for:
- Seniors who are faced with the idea of either a stay at a nursing home or making pricey changes at home so they can age in place
- Younger residents who have special needs or disabilities
- Accident victims who’ve obtained a personal injury settlement yet still require Medicaid assistance
- Anyone thinking about applying for benefits from the government
How a Medicaid Pooled Income Trust Works
Are you wondering how a Medicaid pooled income trust works? To benefit from a pooled income trust, you either must be disabled or over age 65. If you’re eligible, it’s possible to join a current pooled income trust as a beneficiary and then are assigned an individual account. Within some instances, the account may be established by a disabled individual’s parent, grandparent, guardian, or count-appointee instead.
Every individual who joins as a beneficiary will deposit funds from their routine income to the trust account every month. This income might derive from sources such as IRA distributions, social security, retirement funds, settlements, etc.
You cannot withdraw these assets from the trust using cash. You’ll instead submit the cost of living bills—such as electricity, cell phones, mortgage, etc.—that might’ve been paid with these assets. Someone working at the trust utilizes the funds inside your account to pay them on your behalf as they skirt Medicaid’s requirements for income spend down.
It’s a helpful method of using income for necessary costs and still using Medicaid, but there are limitations you should know about beforehand. For example, assets inside your account only can be utilized to pay for personal costs, meaning purchases have to be approved by the trust. The benefit is that it’s possible to use a credit card for payment for any necessities such as travel or clothing expenses on a credit card then submit the credit card’s bill to be paid by your trust. Now that you know how a Medicaid pooled income trust works, you can consider the next steps.
Take the Next Steps
There are other upsides and downsides you should consider, as every trust is administered differently by a variety of nonprofit organizations, and they may have various fees. A skilled lawyer may assist in determining which trust may be the best match for you. After you join a pooled income trust, a lawyer also can help if you experience a hard time with the paperwork or have to figure out why specific bills were denied or approved.