Pooled Trusts have long been considered a planning option for disabled adults and seniors in need of a skilled nursing level of care.  Now a significant change in the regulations has eliminated this tool for seniors.

What is a Pooled Trust?

A pooled trust is a trust which “pools” money belonging to disabled individuals into a trust which is managed by a non-profit organization.  These non-profit pooled trust corporations are permitted to invest and manage these pooled funds for the benefit of their disabled beneficiaries.  Although the money is invested and managed as one fund (which provides a greater return on the investment), the disabled individual has access to his or her personal contribution to the fund for permitted reasons.  One of the advantages of a pooled trust is that distribution decisions are made by professionals.  These professionals work with the beneficiary to ensure that distributions to that beneficiary will not disrupt any public benefits received by the beneficiary.  Such professional oversight minimizes any possibility that a beneficiary will inadvertently become disqualified from public housing, MassHealth, or SSI due to an impermissible distribution from the trust.  For example, beneficiaries of SSI are not allowed to receive money for housing from any source.  Yet well intentioned family members will often give a beneficiary extra money to help with rent.  Unfortunately, these monetary “gifts” can either disqualify the beneficiary from SSI or reduce the benefit level.  Professional trust administration avoids these pitfalls and their subsequent consequences. 

When Would a Senior Use a Pooled Trust?

For unmarried Medicaid applicants, there are few spenddown options for attaining financial eligibility for MassHealth Standard, either under a Frail Elder Waiver in the community or as a skilled nursing facility resident.  The countable asset limit for this MassHealth program, for a single person or an institutionalized spouse, has been $2,000 for many years even though the community spouse resource allowance has incrementally increased over the years (currently $154,140). 

For MassHealth applicants with assets above the $2,000 limit, spending down could involve a decision to join a pooled trust, such as Guardian Community Trust or PLAN of MA & RI.   For these individuals, the ability to place money aside for future needs such as clothing, haircuts, eyeglasses, or special medical equipment, was an invaluable benefit.  Previous to March of 2024, the Commonwealth of Massachusetts had a special exception to the $2,000 asset limit and did not include funds held in an approved Pooled Trust in an applicant’s countable assets.  That said, there are fees inherent with joining a pooled trust and, perhaps more importantly, the Commonwealth of Massachusetts is the first named beneficiary for any remaining funds upon the death of a pooled trust member so these pertinent details should be carefully considered before joining a pooled trust.

The New Rule Eliminates the Pooled Trust Option for Persons 65 or Older

Per the Executive Office of Health and Human Services, Office of Medicaid, Eligibility Operations Memo 23-15 in May of 2023, MassHealth advised that it was revising its regulations concerning certain transfers into pooled trust accounts and that this change would take effect on March 1, 2024.  Therefore, the regulations now state that transfers of resources to pooled trust accounts are not permissible if the applicant, member, or spouse is age 65 or older and, thus, such transfers would be subject to a period of ineligibility for MassHealth benefits.  While there remains hope in the elder law and pooled trust communities that this new regulation could still be overturned, admittedly, that possibility appears to be diminishing. 

The Eligibility Operations Memo specifically states that transfers of assets to a validly established and administered pooled trust that occurred before an individual turned 65 are not subject to a penalty period.  This implies that while a 60 month lookback period applies, if the transfer was done within 60 months but before the MassHealth applicant turned 65, it should not be considered a disqualifying transfer or, at a minimum, an applicant would prevail with this argument if a Fair Hearing is necessary before the Office of Medicaid’s Board of Hearings.

Pooled Trusts Established Prior to Implementation of the New Rule

The good news is that current MassHealth members who transferred assets into a pooled trust at age 65 or older, and then began receiving MassHealth benefits, are not subject to the penalty period.  If that were not the case, there would certainly be a far greater number of people impacted by this new regulation and annual MassHealth eligibility reviews could have become a daunting exercise.  Further, pooled trusts, authorized by the Social Security Act § 1917 (D)(4)(C), are still allowed for individuals aged 64 or younger and are exempt from the transfer of assets penalty.