Governor Signs Pooled Trust Notification Bill into Law

May 11th, 2018 by David Goldfarb

Medicaid provides healthcare for millions of New Yorkers, and constitutes one of the state’s most important benefits programs. However, the government also means tests Medicaid, so it has a spenddown for people who earn too much income and may exclude people who own too many assets.

Many seniors find that they have trouble maintaining eligibility for Medicaid. Fortunately, pooled trusts are an option for reducing countable income to maintain eligibility or to reduce or avoid a spenddown, but too few people know about this option. The recent notification bill, which goes into effect in June 2018, should hopefully increase the visibility of pooled trusts by letting more people know about this option to preserve eligibility for benefits.

Maintaining Eligibility—What Happens if You Earn Too Much Income?

Imagine a senior, Emily, who earns $920 in monthly income, which is more than the $842 monthly income limit in New York for elderly or disabled people. Because Medicaid doesn’t count the first $20, she is $58 above the limit. Ordinarily, Emily would have a $58 per month spenddown in order to qualify for Medicaid, even though she has very little income.

Nevertheless, Emily has options to satisfy the spenddown. First, she could turn over the surplus to the Department of Social Services and thus qualify for Medicaid.

Second, Medicaid’s “spend down” provision will not count any income Emily contributes to her medical care. So if she spends at least $58 a month on medical care, she can deduct it from her income, thus making her eligible for Medicaid.

Neither option is ideal. Emily could probably use that $58 for monthly living expenses like groceries, shelter, and utilities. Although she now qualifies for Medicaid, she is still $58 poorer—either because she handed the money over to the local Medicaid agency or because she spent the money on medical services Medicaid would otherwise cover.

This is where a supplemental needs trust comes in. To preserve that income, Emily can place any surplus above Medicaid’s eligibility cut-off into a pooled trust. Doing so will allow the pooled trust to use the income for her benefit while she will still qualify for Medicaid.

Giving Seniors Notice of their Choices

The new notification bill requires that Medicaid tell seniors about the pooled trust option. Currently, they are only told that they can qualify for Medicaid if they turn over the surplus to the local Medicaid agency or if they spend enough on medical bills to lower their income. Because they will now receive notification of the trust option, more seniors may choose to protect their income using the trust method.

Currently, the notification law should go into effect on June 18, 2018. However, the Department of Health might need to adopt regulations or rules to help implement the provision, which could cause additional delay.

Contact a New York Elder Law Attorney To Preserve Your Benefits

If you or a loved one is trying to qualify for Medicaid, consider whether a supplemental needs trust can help you come in under the income eligibility limits. To schedule a consultation with an experienced elder law lawyer in New York, please reach out to one of the attorneys at Goldfarb Abrandt Salzman & Kutzin LLP today by calling (212) 387-8400. We are happy to discuss your options.

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