How Does a Pooled Income Trust Work?

Does your parent need home care, but you just don’t know how you’re going to afford it? Many options exist and determining which financial strategy is best for your loved ones can be hard to decipher. However, one option that can provide you with peace of mind is a pooled income trust.

For example, with proper planning, you can get Medicaid home care for your mother and then protect her income with the Pooled Income Trust.

What is a Pooled Income Trust?

A pooled income trust is a trust established and administered by a non-profit organization. A separate account is established for each beneficiary of the trust, but for the investment and management of funds, the trust pools these accounts, hence its name. This type of trust protects the income of a person who is disabled, while still allowing that individual to receive government benefits such as Medicaid home care. The income placed in a pooled trust can then be used to pay for supplemental needs not covered by public assistance such as:

• Living expenses such as food, shelter, and clothing
• Housing costs like rent, real estate taxes and utilities
• Supplemental nursing care
• Private pay care services
• Medical procedures and care not provided by government assistance
• Travel expenses and entertainment
• Guardian and attorney fees

What are the benefits of a Pooled Income Trust?

Under current Federal Law, any income of the Medicaid home care recipient or from an ordinary trust will be counted against the recipient and this money will have to be spent down before Medicaid will cover the unpaid care provided at home.  As a result, oftentimes seniors with Medicaid home care will not be able to afford to stay at home because all of their income is being spent down on home care services.

With a pooled income trust, the senior can keep a certain amount directly and the excess monthly income can be paid into the trust, which then can be used for house and living expenses instead of for home care services.  A pooled income trust can protect the beneficiary’s income and allow him/her to still receive public benefits. Pooled Trust beneficiaries receive the added value derived from pooling funds for investment and management purposes. After the person passes, any remaining money left in the Pooled Income Trust goes to the Charity which managed the Pooled Income Trust.

Setting up a pooled trust for your loved one can make a big difference in his or her quality of life while requiring home care in the community. You will then have the comfort of knowing your parent or family member is home getting needed home care without forcing them to move into a nursing home. Plus, knowing that your parent or family member is also giving back to a charity, is a win-win situation.