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Supplemental Needs Trusts for
Disabled Individuals
Unfortunately, a person suffering from Alzheimer’s
disease may require home care or nursing
home care at some point, whose cost can exceed
$10,000 per month. Life savings can easily be depleted.
A Supplemental Needs Trust (SNT) allows disabled
individuals to protect assets and income and improve
the quality of their lives while maintaining eligibility
for government programs such as Medicaid.
Medicaid has strict financial eligibility limits and rules
regarding gifting of funds. In New York State in 2009, a
Medicaid recipient who lives at home is only allowed to
have assets of $13,800 and income of $767 per month.
Without proper planning, Medicaid would not cover any
expenses for an individual with assets and/or income over
these limits until the excess is spent on care. With proper
planning, however, individuals may be able to preserve and
protect assets in the event they need long term care.
An SNT supplements, not supplants, government
benefits. Generally, government entitlements cover such
basic needs as health care, food and perhaps shelter,
whereas an SNT can be used to provide necessities such
as additional private caregivers or goods and services that
will enhance overall quality of life, such as education,
training, hobbies, vacations, transportation, entertainment
and other needs or comforts.
Though there are different types of SNT’s, an individual
over the age of 65 who is seeking to place his own funds
into an SNT is restricted to the use of a specific type of SNT
referred to as a pooled trust (because the funds deposited
by individual members are pooled together for investment
and administrative purposes). The trustee maintains an
individual sub-account for each individual and provides
periodic statements.
(Pooled trusts can only be established by certified nonprofit
organizations such as NYSARC, Inc, Community
Trust II; CLC Pooled Trust 2; Lifetime Care Foundation
Community Trust III and Life’s WORC Community Trust.)
Asset transfers to a pooled
trust will trigger penalty periods
of ineligibility for nursing home
Medicaid. However, no penalty
period is created if the individual
applies for Medicaid home care.
The transferred assets as well as
monthly surplus income (funds
over $767 per month) are used
to supplement the individual’s
care while that person is receiving
Medicaid (including home health aides).
The individual’s surplus income is sent each month
to the pooled trust. Afterwards, the individual or a
representative forwards bills in the name of the disabled
individual to the trust, which in turn issues checks to pay
the bills. The pooled trust will provide more detail as to
monthly processing arrangements.
The use of a pooled trust for Medicaid planning
purposes is available only to those who have been found
to be disabled. For Medicaid recipients over the age of
65 this determination of disability is made by the State
Disability Review Team in Albany, New York, who relies
on documentation completed by the individual’s doctor(s)
and, perhaps, other caregivers. Your elder law attorney can
assist in ensuring that proper forms are used and sent to the
appropriate office.
Participation in a pooled trust is irrevocable, and upon
the death of the disabled individual unused funds in the
sub-account generally remain with the pooled trust for the
benefit of similarly disabled individuals.
One should seek the counsel of an elder law attorney
before proceeding with a pooled SNT, which may be
one of many planning options available. However, the
use of pooled trusts in appropriate cases can be extremely
beneficial to a disabled individual.
Clifford Meirowitz’s practice concentrates on elder law, asset protection, Medicaid planning and trusts and estates matters. He is chair of the New
York County Lawyers’ Association pro bono Elder Law Project, past chair of NYCLA’s Elder Law Committee and an adjunct professor at NYU’s School of
Continuing and Professional Studies.
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