5 Things to Know About Pooled Trusts in Florida

October 30, 2022

Healthcare for aging or disabled individuals can become a huge financial burden. Medical treatments, long-term care, and expensive medications can easily blow through someone’s entire life savings. So, if you don’t qualify for Medicaid programs, how can you prevent yourself from going broke paying for your care later in life? That’s where pooled trusts come into play.

An elder needs lawyer in Florida can work with you to ensure your money is protected legally and ethically using estate planning strategies and financial tools.

Here are five things to know about pooled trusts in Florida.

Number one: If you're on a long-term care Medicaid plan, anything in a pooled trust does not count against your $2,000 asset limit. This is really important for folks who are on the waiver program or the Medicaid ICP program. Whether you’re receiving care at home or in a facility, you are typically only allowed to have $2,000 to your name. You could have any amount more than that if it's in a pooled special needs trust. 

Number two: Money placed into a pooled special needs trust is not a gift. That's very important because these long-term care Medicaid plans prohibit gifting. If you take money out of your name – within five years of applying – and transfer it to a friend or a family member, that's considered a gift and there will be a resulting penalty. However, transferring money instead to a pooled special needs trust will not result in a gift penalty.

Number three: Money in a pooled trust can be used for anything that the disabled Medicaid recipient needs or wants with very, very few restrictions. The only time that there are restrictions is if the Medicaid recipient is also a social security income (not social security retirement, but social security income benefit). Then there is a list of 10 items that the trust cannot pay for, but if you're not on SSI – if you're only on Social Security retirement – then a pooled trust can pay for anything that the Medicaid or disabled beneficiary needs or wants.

It can pay for necessities like additional home care hours, or entertainment expenses, like going to a baseball game or going to the theater or travel expenses. However, pool trust will not allow you to abuse this.

What I mean by that is, let's say that a special needs individual wants to take a vacation or a trip. The pool trust is not paying for a family reunion. The pool trust will pay for whatever is reasonable for the disabled beneficiary to be able to handle traveling. So, they'll pay for their hotel, their airline expenses, and maybe for the hotel and airline expenses for one other individual if they need someone's assistance in order to successfully travel. But they're not going to pay for the whole family to go on their trip.

Another way pool trust companies sometimes see this – the attempted abuse – is, for example, if a disabled elderly relative is living with someone who isn't disabled and who isn't on Medicaid, and let's say there's a mortgage payment. Let’s say there are home expenses. Well, there are three people living in the home, one of which is on Medicaid, who is the beneficiary of a pooled trust. They are not going to pay for all of the housing expenses that go along with maintaining that house, but they may pay for a third of it, right? If there's three people living in a house, that might make some sense. So, these trusts really are designed to only pay for what the disabled individual needs or wants or their fair share of expenses.

Number four: A relative cannot be the trustee of a pooled trust or a pooled special needs trust. You have to use a non-profit professional trustee. These are not free, but typically their fees are very reasonable. You'll typically find a one-time entrance fee – usually around $500 to $1,000 – and that's their welcome to the family fee. Then, on a yearly basis, they'll charge somewhere typically between two and 3% of whatever they're managing.

You have a choice, typically, with pooled trusts as to whether or not you want that money invested to try to do better than the two to 3% fee or if you want to hold the money in cash and accept the fact that the administrative fees will somewhat eat into the principal. And that's a very personal decision.

Number five: If there are funds left in the trust when the Medicaid beneficiary passes away, the trust is obligated to notify Medicaid, and Medicaid will then send a bill. They keep track of whatever anyone over the age of 55 has – what bills they've incurred while on the Medicaid program – and Medicaid wants to get paid back first. Only if there's money left over after Medicaid is paid back is there a chance that family members might get to inherit.

There are a couple of exceptions to this. If there is a married couple, and both of them are on Medicaid, you can't have both of them in the pool trust, and if the first spouse to pass away has funds leftover, typically the pooled trust will allow you to transfer whatever's leftover into the surviving spouses account. So that's kind of one exception to that.

But generally, what I tell people is that if you're putting money into a pool trust you do so feeling comfortable that no matter what happens to anyone, money is going to be there for the individual on Medicaid. You don't think of it as inheritance. You don't expect to see any of it after the disabled individual passes away, and that's just something we have to live with.

Typically, especially when we're doing Medicaid planning for someone who has substantial assets, we're never recommending the pooled trust as a standalone. It’s not the only thing that we're doing. We'll use it in combination with other strategies that don't have that Medicaid payback requirement.

So, those are five things that are really important for you to know about pooled trust.

If you are anywhere in Florida and you're interested in learning how to protect your assets now to qualify for Medicaid long term care benefits, Elder Needs Law is happy to talk to you. We can discuss pool trusts and all the other great strategies that we have to legally and ethically prevent you from having to go broke before applying for Medicaid.

You don't have to wait five years, that’s another big misconception. If you're interested, please call our office and schedule a consultation. We're here to help.

 

Find more helpful resources:

●     Can I keep Florida Medicaid if I temporarily have more than $2,000?

●     Dual Eligibility for Medicare and Medicaid: What it means for you

●     Medicare Home Health Care benefit explained

●     Can you get Home Health Care while also on hospice?

●     Nursing home ratings: How to find a high-quality home