How To Use a Pooled Supplemental Needs Trust To Avoid Institutionalization

SNT’s have been used for decades by the family of disabled persons as part of a long-term plan of care for their loved ones. Pooled trusts are a segment of Supplemental Needs Trusts (SNT’s) which are managed by non-profit organizations and the nonprofit acts as trustee. Separate accounts must be maintained for the sole benefit of the disabled person although the assets may be pooled for investment opportunities. Assets that remain at the death of the beneficiary are subject to the same Medicaid “Pay-Back” as stand-alone trusts, unless the pooled SNT retains the remainder to be used to benefit other disabled persons. In Buffalo, the Western New York Coalition Pooled Trust is managed by the Legal Services for the Elderly, Disabled & Disadvantaged of Western New York, Inc. (LSED) and People Inc.

Ten years ago, LSED decided to form a pooled supplemental needs trust with People Inc. and Key Bank. We did so in response to the closing of the local trust department of the only bank that handled small to medium trusts at that time. We wanted disabled people in our area to have a professional trust option. We also noticed an increase in calls from disabled persons who lost public benefits because family members, acting in good faith as trustees, did not understand the complex Medicaid and SSI rules. Although some family members wanted to make large deposits for the long term care of their loved ones, we expected that most deposits would be from small inheritances or personal injury awards. We expected (and initially found) that these small deposits were spent rather quickly and that the beneficiary left us once the funds were depleted. However, due to an interpretation of the federal pooled trust rules by the New York State Department of Health, we decided to begin taking income deposits from Medicaid-only recipients. This has resulted in long-standing relationships with our trust beneficiaries. In addition, it has enabled hundreds of WNYers to remain in the community, avoid nursing home placement and retain their Medicaid benefits.

Medicaid is a needs-based program. That means that disabled persons with income over the Medicaid Income allowance must pay that “excess” income over to Medicaid each month. Since the Medicaid income allowance is so low, the effect of this rule is that some disabled people cannot both pay their rent and receive Medicaid. As a result, they end up in nursing homes when they could have remained in the community with the proper support.

New York allows individuals on community Medicaid only (not nursing home Medicaid, SSI or many other cash benefits) to deposit their monthly Medicaid spenddown into a pooled SNT. The trustees can then use that income deposit to pay the rent, mortgage or other expenses not covered by Medicaid, but only for the sole benefit of the disabled person. This makes good policy sense, as it costs Medicaid much less to pay for care in the home setting rather than in a skilled nursing facility. “Community Medicaid” is more expansive than it sounds and includes home attendant, home health aide, managed long-term care and the Assisted Living Program. The rules get a bit more complicated if the individual is age 65 or older, but income deposits are still possible. Individuals age 65 and older must have a separate determination of disability done and must be sure to spend the funds deposited, in the entirety, before needing nursing home care.

Our mission at LSED is to use the legal system to help our clients live independently and with dignity. Acting as trustee on the WNY Coalition Pooled SNT directly fulfills this mission, as many of our beneficiaries can now live at home due to this service. Our beneficiaries tell us regularly how much the trust has improved their daily lives. It may be only a small part of what our agency does, but it is one of the most fulfilling.

Once we started accepting income deposits into the WNY Coalition Pooled Trust, we saw a large increase in the number of our beneficiaries. However, we are still considered “small” by pooled trust standards- about 400 beneficiaries. As trustees, we feel it is important to know our beneficiaries and make individual determinations on their disbursement requests. We meet all of our beneficiaries in-person, at least once. Along with an annual fiscal audit and fiscal protocols, we do an annual substantive audit to “check- in” with our beneficiaries and remind them to spend their funds.   Our trust is not supported by any governmental or foundation money, so we must charge fees. However, we think our fees are in-line with other pooled SNT’s in New York and we do not have any additional costs that can add up, such as bounced check fees and charges for additional checks. Information about the trust, including a fee schedule can be found on our website at www.lsed.org. Rachel Shreveport can also answer inquires at 853-3087 (X 227).

Disclaimer:

This blog post may be considered attorney advertising in some jurisdictions under applicable law and ethical rules. This blog post does not establish an attorney-client relationship, nor is it intended to give legal advice.

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