Many adult children go to great lengths to help keep their elderly parents living at home and out of a nursing home environment. However, arranging home care for seniors can be challenging for middle-class families who are caught between having too much income or assets to qualify for Massachusetts Medicaid programs (MassHealth) but not being able to afford private home care. While some senior’s health conditions may make home care impractical, .
A pooled trust allows seniors to put their monthly income or assets — above the amounts MassHealth allows them to keep — into a trust account managed by a non-profit organization. The trust pools the money of many seniors and then uses that money to pay for their members’ basic monthly bills like rent, mortgage payments or cable television. MassHealth, meanwhile, pays for the seniors’ home care.
In Massachusetts, a single person applying for MassHealth benefits is allowed to keep only $2,000 in assets. Anything above this amount — minus the cost of health care premiums and a small monthly stipend — must first be spent on medical bills before MassHealth will kick in.
However, with a pooled trust, a person can deposit their excess income into the trust, which can help pay the supplemental living costs of the senior (i.e. costs not covered by MassHealth), often allowing them to remain in their home. Expenses charged to the trust must be paid directly to vendors and must be for the sole benefit of the participant. Further, the trust can refuse to make payments that look questionable.
While a helpful option for some, pooled trusts are not for everyone and do have their drawbacks. Signing up for the trust and submitting the bills each month requires a lot of paperwork and many elderly people will need to rely on a relative to handle it for them. Also, after a participant dies the trust will keep anywhere up to 50% of the remaining funds, depending on the trust, while MassHealth may recoup their costs from the remainder, often leaving little for the family. This may not be a huge loss, however, if the participant is contributing only monthly income to the trust.
There are currently five different pooled trusts available in Massachusetts, each with different qualification rules and associated costs. Persons considering participating in a pooled trust should first seek professional guidance on whether other options exist for transferring assets above the MassHealth minimums to a healthy spouse or other individuals. There is never a one size fits all solution to long-term care planning, but a pooled trust may be a useful component in your estate plan.