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Persons of any age with community Medicaid services including home care, adult day care or prescription drugs are now able to use virtually all of their income to pay for their living expenses by participating in a pooled-income trust. It is not necessary for individuals to contribute their "surplus" income to Medicaid. The program works as follows:

Suppose Mr. Smith has a monthly income of $1,679 in Social Security and pension income and is utilizing Medicaid home care and adult day-care services. Under present Medicaid guidelines he is only allowed to keep $679 of that income.
Currently his monthly surplus is $1,000 ($1,679 - $679 = $1,000). He is sending a check each month for that amount to the appropriate office as a contribution toward the cost of his care.
After Mr. Smith joins the pooled-income trust his $1,000 check will be sent to the trust office. He will keep $679 as he does now. Mr. Smith's expenses (rent, food, utilities, clothing, etc.) as instructed by Mr. Smith or his caregiver, and his Medicaid services will remain in effect.

Established by a non-profit organization, the pooled-income trust is effectively a supplemental needs trust that receives the beneficiary's monthly income and redistributes it on his/her behalf as directed by the beneficiary or his/her representative.

All individuals who are disabled as defined under the Social Security law are eligible to join the trust. (Persons of any age who are eligible for Medicaid home-care or adult-day-care services are presumed disabled and therefore qualified to join the trust.)

In order for a person to participate in the pooled trust, a joinder agreement between the beneficiary and the trust must be completed. The agreement must be signed by the disabled individual (who must have capacity), or a parent, grandparent, guardian, a person acting under a durable power of attorney, or it must be approved by the court. To initiate the process of conserving the "surplus," the individual beneficiary should deposit into his or her separate trust account the equivalent of two months' surplus income - one month as deposit and the other as working capital. There is a nominal monthly service fee determined on a sliding scale.

On the death of the beneficiary, the funds in the account remain with the trust to benefit other disabled individuals. The amount, if any, left in the account is likely to be negligible given the individual's need to utilize the funds each month.

Before proceeding with the trust, individuals and their families are strongly encouraged to consult with an attorney who has knowledge and experience in planning for long-term-care needs.