Tag Archives: pooled trusts

Pooled Trusts

Transferred to Pooled Trust Can Be Used to Save Assets

For the past number of years there have been questions as to whether Medicaid transfer-of-assets penalties would apply to transfers to pooled trusts by individuals age 65 and older. A Centers for Medicare and Medicaid Services (CMS) memo dated April 14, 2008, from Gale Arden (Baltimore) to Jay Gavens (Atlanta Region IV) stated that “only trusts established for a disabled individual age 64 or younger are exempt from application of the transfer of assets penalty provisions ( see section 1917(c)(2)(B)(iv) of the Act.)” This was followed in May 2008 by a Boston Regional Office bulletin stating that transfers to pooled trusts are subject to transfer penalties.

Not all states are imposing a penalty; some allow transfers to pooled trusts by people of all ages. The latest such state is Maryland.  CMS stated that after researching this “complicated and nuanced” area of law, it had concluded that “[a]s a matter of policy, there is no age limitation imposed by existing federal or state law on who may transfer assets into a sub-account of a pooled trust. Accordingly, a disabled beneficiary 65 years of age and older may transfer assets into an approved pooled trust sub-account without penalty”.

According to a recent discussion on the National Academy of Elder Law Attorneys’ listserv initiated by a Georgia ElderLawAnswers member, Maryland joins at least 10 other states that permit transfers by those over 65 to a pooled trust. These states are, in addition to Maryland: Alabama, California, Colorado, Florida, Iowa, Massachusetts, Michigan, Ohio, Utah and Wisconsin. (from www.elderlawanswers.com)

However, the use of pooled trusts is not a panacea for asset protection from nursing home costs.  There are restrictions on fund usage, maintenance expenses, and other profound issues.  However, for some people, this may be an attractive way to set aside funds to pay for items Medical Assistance will not cover.  This policy clarification by CMS is an important, and positive, development for Maryland seniors.


Pooled Trusts

In a landmark opinion by the Department of Health and Mental Hygiene, clarity was reached that transfers into a pooled trust can occur without triggering the Medicaid penalty even if the trust beneficiary is over 65 years of age.  The question for many is: 1) when a loved one is in a nursing home can the assets be protected from nursing home expenses and 2) can we set aside and used a loved one’s assets to pay for things Medicaid cannot pay?  For years, the frustrating answer for the use of pooled trusts was “no.”  The problem was the transfer into the trust created a Medicaid penalty.  This is a period of time were the applicant will not qualify for Medicaid (i.e. Medical Assistance in Maryland) under any circumstances for a period of months. So, if the applicant transferred $68,000 into the pooled trust (in 2010), then if she needed Medicaid relief within the next five years she will not qualify for Medicaid relief for ten months (at best, starting when she first seeks benefits).   Removing the penalty period makes sense both from a Maryland policy perspective and a would be applicant’s perspective.  However, even lifting the penalty transfer provisions, the use of a pooled trust is not for every would be Medicaid recipient interested in asset protection.   Please contact your elder law attorney to see if the pooled trust route is the right choice for your circumstance.