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.