A recent case in our office highlighted the benefits of using a pooled trust when spending down for MassHealth eligibility. Our client, who has Lou Gehrig's disease, paid privately for his care until he ran down his savings. When we met with his daughter, the client still had about $12,000 in the bank. We explained the option of transferring this money to a pooled trust for her father's benefit as a reserve for her or whatever her father may need.
Under the MassHealth rules, there's no transfer penalty for money deposited in a pooled trust for the benefit of the applicant for coverage. Pooled trusts, also known as (d)(4)(C) trusts in reference to the federal authorizing law, are run by non-profit organizations. Under their rules, if there's any money remaining in the client's account upon her death, some remains with the pooled trust and the rest must be used to reimburse Massachusetts for its MassHealth expenditures on the beneficiary's behalf. Only if there are still funds remaining after the state is fully reimbursed can funds go to family members. So in most instances it's not a great device for saving money for the family.
In our client's situation, his daughter decided that it wasn't worth the effort of creating a pooled trust account for the $12,000 and she paid it to the nursing home. Unfortunately, during the application process she received a $3,000 tax bill and paid it with her father's monthly income rather than paying the income to the nursing home as is required under the MassHealth rules. The result is that unless the family comes up with the money itself, the nursing home will be short $3,000. If the client had a pooled trust, this shortfall could be paid from the trust.
- Cushion. So the first reason to use a pooled trust is to provide a cushion for situations like our client's one. Things happen and the MassHealth rules are very rigid. Having some money set aside can provide some flexibility when needed.
- Extra care. Often people in nursing homes or those receiving MassHealth covered care in assisted living facilities or at home can benefit from extra occupational therapy, or visits from home health aides, or just someone to take them out for walks or other activities. The pooled trust funds can be used for these purposes.
- Professional fees. Situations arise where MassHealth beneficiaries need the assistance of a geriatric care manager, an accountant or an attorney. Visits from a geriatric care manager can be especially important when family members live far away. Pooled trust funds can be used for these purposes.
- Home maintenance. MassHealth permits nursing home residents to keep their homes, but not to use their income to maintain the homes. All income except for a small monthly stipend must be paid to the care facility. Pooled trust funds can be used to maintain a family home.
- Move expenses. Sometimes care facilities don't work out or it makes sense for the person receiving care to move to another part of the country to be near family members. MassHealth won't pay for the move. A pooled trust can.
The use of a pooled trust is more important for single MassHealth beneficiaries than for married ones, since presumably the healthy spouse will have some funds to pay for the nursing home resident's needs as they arise. The principal pooled trusts in eastern Massachusetts are the PLAN of Massachusetts and Rhode Island and Bristol County ARC Community Trust. The Academy of Special Needs Planners maintains a directory of pooled trusts nationwide.