As senior citizens age, many face the dual challenges of maintaining quality elder care and managing their financial resources effectively. In Massachusetts, pooled trusts can be a valuable tool, particularly for solo-seniors that are soon to need care. Pooled trusts afford the ability to supplement their elder care services while preserving their eligibility for Medicaid (MassHealth) benefits.
For couples, or those not likely to need care for 5+ years, other planning techniques or considerations may be available.
What Are Pooled Trusts?
A pooled trust is a type of special needs trust established and managed by a nonprofit organization. It allows individuals who are totally or permanently disabled or age 65+ to pool their resources in a common fund while maintaining individual sub-accounts. These trusts are particularly beneficial for seniors who require Medicaid but have assets exceeding the program’s strict limits.
Key Features of Pooled Trusts:
- Managed by Nonprofits: Each trust is administered by a nonprofit organization experienced in overseeing pooled resources.
- Individual Sub-accounts: Although funds are pooled for investment purposes, each participant has a dedicated sub-account for their benefit.
- Eligibility Preservation: Funds in a pooled trust are not counted as assets when determining Medicaid eligibility.
Why Are Pooled Trusts Important for Seniors in Massachusetts?
MassHealth, Massachusetts’s Medicaid program, imposes strict asset and income limits for seniors seeking long-term care benefits. The asset limit for an individual is $2,000. Seniors with assets exceeding this threshold may face denial of benefits, leaving them to cover significant healthcare costs out of pocket. Once spent down, they’ll only have $2,000 to draw from to supplement care and cover any personal expenses. They may also have income streams, but depending on the situation income could be largely garnished by MassHealth to offset cost of care. In 2024, the personal needs allowance for someone living in a nursing home on MassHealth was only $72.80/month.
By placing excess assets into a pooled trust, seniors can:
- Qualify for MassHealth benefits.
- Use trust funds to pay for supplemental needs not covered by Medicaid, such as but not limited to – dental, hearing and vision care, transportation, clothing, cell phone or other utilities, entertainment and recreational activities, personal care such as hair, nails or massage, or maybe just a favorite cup of coffee! Being able to preserve funds to enhance lifestyle during a time where the focus is all about care make these trusts an amazing planning tool.
How Do Pooled Trusts Work?
- Approval Process: MassHealth reviews pooled trust contributions to ensure they are compliant with program guidelines. They will also review spending over the last 5 years to ensure there was no other trust funding or gifting during that period of time that would otherwise create a MassHealth ineligibility. It’s worth noting that in March 2024, pooled trusts were considered disallowed transfers, but this issue will be rectified by year-end with the passing of the Long Term Care Bill.
- Initial Contribution: A senior deposits excess assets (typically anything above the $2k mark) into the trust.
- Trust Administration: The nonprofit trustee manages the funds, ensuring they are used in compliance with Medicaid rules.
- Permissible Expenses: The funds can be used for a variety of non-Medicaid-covered needs, such as:
- Personal care items
- Home modifications for accessibility
- Companion services
- Remainder Funds: Upon the senior’s passing, any remaining funds typically reimburse Medicaid for services provided. Therefore, this is not a way to protect assets for beneficiaries. And that planning strategy is typically what it sought after most. Instead, this is a way to preserve funds to supplement the senior while receiving Medicaid benefits.
Working with an elder law attorney familiar with Massachusetts laws can help navigate the process.
Choosing the Right Pooled Trust
When selecting a pooled trust, seniors and their families should:
- Research Nonprofits: Ensure the organization managing the trust has experience and a good reputation.
- Understand Fees: Review setup and annual maintenance fees, which can vary among organizations.
- Consult Professionals: Work with elder law attorneys or financial planners to align the trust with overall care plans.
Final Thoughts
Pooled trusts are a powerful tool for seniors in Massachusetts needing elder care. They protect financial resources to help supplement lifestyle, maintain Medicaid eligibility, and provide peace of mind for families navigating the complexities of elder care planning. That said, they are not the best bet to preserve assets for eventual beneficiaries, or for married seniors who may have other estate planning options. By partnering with experienced nonprofits and legal professionals, seniors can determine if pooled trusts are their best fit to enhance their quality of life while securing essential benefits.
If you’re considering a pooled trust, consult with an elder law expert to tailor the solution to your needs and ensure compliance with Massachusetts-specific rules.
