How Does a Pooled Income Trust Work? - Including a Flow Chart

Many clients, and people who attend our presentations, have questions about how a Pooled Income Trust (“PIT”) works.  These Trusts are indispensable tools for managing your income if you need Community Medicaid services.  Using a PIT is not complicated, once you get used to using it, but it requires thinking about your income in a different way. 

The process is explained below, and we’ve also created a flow chart infographic.  The flow chart will help you visualize the different ways income is spent under different scenarios.

A. Before You Need Community Medicaid:

    If you are not receiving Community Medicaid, there is no reason to have a Pooled Income Trust.  All your income comes to you, and you can spend it however you want.  Usually, people think about their expenses as falling into two categories:  necessary expenses, and discretionary expenses. 

    Necessary expenses typically include rent, utilities, phone, groceries, taxes, home maintenance, and the like.  Discretionary expenses might include restaurants, theatre, concerts, travel, gifts, and charitable or political contributions.

    B. Now You Need Assistance in the Home

    The cost of home care, or other care in the community, can escalate to the point where it can wipe out your entire life’s savings.  Fortunately, you can take action to protect yourself.  You can choose to transfer your assets to a family member or a trust, and then access Community Medicaid to pay for your care.  This is often a crucial step to avoid becoming impoverished by the cost of your long-term care.  To learn more about Community Medicaid, click here.

    If you apply for Community Medicaid benefits, you will need to re-think how your income is categorized and can be spent.  This is when you will decide whether to join a Pooled Income Trust.

    1. If You Choose NOT to Join a Pooled Income Trust

      Medicaid considers all your income above a certain limit ($1,836 per month in 2026) to be “surplus income.”  You are permitted to keep ONLY $1,836 each month.  If you do not join a PIT, that is all you will have to cover your monthly expenses. This includes rent, utilities, gas, clothing, food, housekeeping, home maintenance – everything.  Medicaid rules require that you contribute all your “surplus income” toward the cost of your care. 

      Very few people can remain in their homes with only $1,836 per month to pay all their expenses.  This is where the Pooled Income Trust comes in.

      What is a Pooled Income Trust?

      Medicaid permits (and expects) Community Medicaid recipients in New York to join Pooled Income Trusts. PITs manage bank accounts as Trustees for Community Medicaid recipients. They are charitable organizations that support their causes from the money they earn or receive from their Trust services. 

      People who join PITs arrange to have each month’s “surplus income” deposited into a Pooled Income Trust account in their name.  The PIT’s role is to monitor, regulate, and pay clients' expenses from their individual accounts. 

      2. If You Join a Pooled Income Trust:

      Once you have joined a PIT, you need to think differently about how you spend your monthly income.  

      - Permitted Disbursements:
          1. The money in your Pooled Income Trust account can be used for all necessities, such as those listed above.
          2. Your PIT account can also be used to pay for discretionary purchases for you. These could include entertainment, a new television, new appliances, etc.  – again, as long as the expenditure is for your benefit.
          - Disbursements Not Considered Valid For a PIT:

          You may want to use your money for purposes that do not specifically benefit you. This would include gifts, political or charitable contributions, paying for grandchildren’s educations, or spending money on someone else. Money in your Pooled Income Trust is not permitted to be used for these purposes.  You can only make expenditures like these from the $1,836 per month you keep in your personal account. 

          C. What Happens When You Are No Longer Receiving Community Medicaid?

          At some point you will pass away or move to a different living situation. At that point you will no longer receive Community Medicaid. Any funds that remain in your Pooled Income Trust account will not revert to you. They will also not be included in your estate.  They remain with the PIT organization, to be used for the PIT's charitable causes.

          Flow Chart:

          We have created the flow chart infographic below. It shows your different sources of income, and how you might spend it if you do not need long-term care. It then shows how your income is categorized once you are receiving Community Medicaid, and how it is disbursed if you do, or do not, join a Pooled Income Trust. 

          The chart can help you picture the different ways your income can be spent, once you are receiving Community Medicaid.  If you click on it, you can also download and print it.

          Contact Us to Schedule a Consultation or to Get More Information About Community Medicaid and Pooled Income Trusts!

          Infographic - How a Pooled Income Trust Works

          5 Reasons a Comprehensive Paid Consultation with an Estate Planning or Elder Care Attorney is a Valuable Investment

          Consultation with Elder Care Attorney

          “Free Elder Law Consultation” - or - “I Just Need a Will”: Two Misguided Ideas

          You're right to be concerned about your senior years, and about what will happen once you pass away. It’s crucial to become informed about the risks that you face. You can take action to protect yourself, your family, and other heirs.  Doing nothing often leads to unanticipated and sometimes disastrous consequences.  A paid consultation with an Elder Care attorney can give you vital information, show you the path forward, and provide invaluable peace of mind.

          Many people don’t understand the financial and long-term care risks that arise as they grow older. These risks can decimate their assets.  You might insist that you only need a Will, to distribute your estate after you die.   A few years later, while still very much alive, you find you’re spending money on long-term care like it’s coming out of a fire hose. You may run out of money long before you die. If you had created a Trust instead of a Will, you could have protected your money and your lifestyle, and avoided potential disaster.

          Even if you are only thinking about what will happen when you die, it would be wise to bring in an experienced Elder Law and Estate Planning attorney.  The attorney can conduct a thorough analysis of your situation and provide you with personalized recommendations. 

          Estate planning and long-term care planning can and usually should be integrated.  An in-depth consultation with an Elder Care attorney who does both can lead you to an effective, dual-purpose strategy. First, the strategy will protect your life’s savings, your lifestyle and your peace of mind while you are alive. Second, upon your death, an integrated plan will ensure the efficient and private distribution of your assets according to your wishes.

          You don’t want to rely on a “free consultation” when making such consequential decisions.  Here’s why:

          1. Commitment and focus – on both sides 

          When attorneys offer prospective clients a “free consultation,” neither has a sufficient commitment or investment in the process or the outcome. Time is valuable. Attorneys who have businesses can’t afford to spend hours talking with you or thinking about your issues, without charging a fee.  The saying “you get what you pay for” is applicable here.  Usually the free consultation ends with, “Yes, we can help you.”  You paid zero, and you got zero useful advice. As a prospective client, you get to “kick the tires,” but any advice you might actually receive feels as though it has less value, because it was free.  You have a few questions, but you haven’t expended much effort to prepare for the meeting.  The end result is incomplete advice at best, and an unsatisfying experience.

          At our firm, we speak at length with people who call or email to inquire about our services.  Our Client Information Specialist, or a Lamson & Cutner attorney, can determine whether an in-depth paid consultation with an Elder Care attorney is appropriate and cost-effective in your circumstances, while you are still on the phone.  If such a meeting is indicated, you can arrange it then. 

          We will tell you what to bring to the meeting so that we can provide you with appropriate advice.  You’re already ahead of the game by the end of the initial phone call.  You have confidence that the consultation will give you valuable information, you learn something about the attorney you will be consulting with, and you find out what information you need to bring to make the meeting as productive as possible.

          2. Education – on both sides 

          At a good consultation, your attorney will first learn about your particular situation – your health, your finances, your family, your concerns, and your goals.   All of these factors and more are vital in developing a plan that fits your unique circumstances. As the consultation progresses, the attorney will explain your options. He or she will discuss the laws and rules that apply to your situation, and what strategies might work best for you. 

          The more the attorney knows about you, the better and more accurate the advice you will receive.  The more you know about the proposed course of action, the better you will feel. You will be confident that you are making the best decisions every step of the way.

          3. Thoroughness 

          You are far more likely to go to the trouble of gathering the information the attorney needs to assess your situation fully, if you are spending money on the meeting.  Before a consultation with a Lamson & Cutner attorney, you will receive a checklist of documents to send in advance to the firm, or to bring to the consultation.  The time and effort you take to gather the documents and information will be well worth the effort. 

          With a complete picture of your situation, the attorney will be able to provide better and more precise advice to you. For example, you may not believe that a time share in Florida, or your whole life insurance policy, or your 1/8 share in family property in a foreign country, are important parts of your financial picture.  However, for long-term care planning, all of them count and can affect the result. For the attorney, knowing that the client is invested in the process is extremely important.   Good advice is always based on knowledge of the relevant facts.

          4. Appropriate Recommendations 


          At the completion of our firm’s consultation, we propose a plan. We recommend the steps we feel would best serve your purposes.  In addition, and very importantly, we also tell you how much it will cost to implement that plan.  At our firm, the right plan is always a cost-effective plan.  Yes, a law firm is a business, and we need to keep the lights on.  However, the long-term success of our firm is and always will be based on producing excellent results for clients, at a fair price.

          Most of the time our firm charges a flat fee for our services.  Total fees vary, depending on the number of legal documents you need and their complexity. By taking the time to review and analyze your circumstances, and discussing your objectives, an Elder Law and Estate Planning attorney can be confident in recommending steps that will:

          The results of good Elder Law planning are remarkable. You ensure that you can get the health care you need.  Your life’s savings, which might have been wiped out paying for health care, are protected. You create a structure that will enable those savings to last as long as possible.  You safeguard not only your own financial security, but also that of your spouse if you are married, and others such as a disabled child.  In addition, you’re able to leave an inheritance for your children or other heirs once you pass away.

          5. Peace of Mind 

          Committing to the process of your Elder Law and Estate Planning consultation can bring you tremendous peace of mind.  You feel gratified, reassured, and far better educated about your situation. Knowing that you gathered your documents and information, explained your situation in detail, discussed your goals and wishes with your attorney, learned about the actions you could take, and chose the right plan for you is empowering. 

          Best of all, an in-depth paid consultation with an Elder Care attorney gives you the best opportunity to find the path forward. That path will be designed to protect you, your family and your assets in the most cost-effective way possible.

          The attorneys at Lamson & Cutner are focused on making our consultations both productive and helpful.  Consultations include the following:

          Call or email us today to begin the process of planning for your future.  You’ll be glad you did!

          NYC Office:  (212) 447-8690; Harrison, NY Office: (914) 732-3636

          Contact Us for more details

          May is Older Americans Month: Champion your Health AND Plan Ahead

          Eating right, staying active and planning for long-term care can maximize your quality of life

          Celebrated every May, Older Americans Month is a time to recognize older Americans' contributions, highlight aging trends, and reaffirm commitments to serving older adults in our communities.  It was established by the Administration for Community Living, a US government organization.

          This year’s theme, “Champion Your Health,” focuses on prevention, wellness, and personal responsibility as cornerstones of healthy aging. These common-sense recommendations encourage older adults to take an active role in their health. Actions could include advocating for yourself, accessing preventive care, and making informed decisions that support independence.

          Taking care of your health often means accessing care in the home

          An enormous financial risk arises as people get older, that most don’t recognize until they are in the midst of a crisis.  Once you need care to remain in your home, that care is often – literally - ruinously expensive.  It can wipe out your life’s savings and threaten your ability to remain independent.

          The costs often start out as moderate, but quickly mushroom. Often people’s savings are pouring out of their accounts like water out of a fire hose.  One of the best decisions people can make that support independence and avoid financial devastation, is to do long-term care planning.

          Learning about long-term care planning is crucial, even if you are currently in good health.  Understanding the opportunities that are available, and that will be appropriate for you if and when you need health care, will empower you to take appropriate action.  Actions you take can enable you to protect yourself and your assets, and to remain at home and independent as long as possible.

          How can you take charge of your health at every age?

          We can all take action to remain healthy as long as possible.  The list below is not new, but bears reviewing.

          After tobacco use, poor diet and lack of physical activity are the second highest reason for preventable deaths in New York State. You can avoid that with health decisions you make.  Renewing your commitment to the recommendations above will benefit you directly.

          Take care of your health, and plan ahead for the day when you may need assistance.  Both are key components for optimizing your health and your quality of life, and for protecting your financial future.

          Schedule a Consultation

          Finalized NY 2026 Medicaid Resource and Income Levels

          New York State has published finalized Medicaid thresholds and limits for income and assets for 2026. Some of the figures are based on the Federal Poverty Level (FPL), which the Federal Government publishes in February. Other New York State figures were published at the end of last year. Click on the chart below to print it.

          Most of the limits for "resources" (assets) and income increased slightly in 2026, as they normally do each year. For example, to be eligible for Medicaid, in 2026 a applicant who is single can have no more than $33,038 in "countable resources" in their own name, up from $32,396 in 2025. If a single person is receiving Medicaid services in the community, any monthly income over $1,836 is considered "surplus income" in 2026, up from $1,800 in 2025.

          The "regional rates" that are used to calculate a penalty period for Institutional (Nursing Home) Medicaid also rose slightly. A penalty period is imposed if a nursing home resident who applies for Nursing Home Medicaid has made an uncompensated transfer (in essence, a gift) during the five years before the application is submitted. The five year period is called the "look back." The length of the penalty period is calculated from the amount of the transfer. Learn more about the look back and penalty period here.

          Starting the planning process early can be important and is therefore likely to be in your best interest. If you call our firm, we will review your situation, carefully explain the steps we recommend that you take, and will assist you to execute AND implement your plan.

          Call now - (212) 447-8690 or (914) 732-3636, or use our "Contact Us" form to get started!

          5 Reasons a Medicaid Asset Protection Trust is an Essential Planning Strategy for Many

          More so in New York than in any other state, Medicaid is not “just for poor people.” Medicaid serves millions of people in New York, many of whom own homes and have investments and savings. They and their families would be devastated financially without Medicaid assistance for their long-term care needs. Once someone needs long-term care, costs can quickly escalate. Money can start to pour out of their bank account with terrifying rapidity, and with no end in sight.

           

          Some mistakenly believe that Medicare will cover their needs.  It will not.  Health or medical insurance does not cover long-term care.  Only long-term care insurance will cover long-term care and very few people have a policy.  And for those who have a policy, often the coverage and benefits are inadequate.

          Most people will come face to face with the shocking fact that even a modest amount of home care could cost $100,000 per year, or that assisted living or nursing home care could cost $150,000 to $200,000 per year.  Multiply these numbers by 3, 4, or 10 years of increasing long-term care needs.  Most people don’t have this kind of money to spend without rapidly depleting their life’s savings and jeopardizing the ownership of their home.  And, of course, the fees for these services rise every year.

          Fortunately, residents of New York can take steps to avoid financial disaster.  One of the most effective strategies is the Medicaid Asset Protection Trust (“MAPT”).  Here are five reasons why the MAPT is so valuable and effective.

          1. A  Medicaid Asset Protection Trust will facilitate eligibility for Medicaid

            In order to be Medicaid eligible, you can have only a very limited amount of assets in your name.  When you create and fund a MAPT, think of the Trust as another person.  The trust assets no longer belong to you and cannot be counted by Medicaid in determining your eligibility.  Once the amount of your assets is below the eligibility level, you can quickly obtain Community Medicaid benefits, including home care or assisted living care. 

            For Community Medicaid, there is an income limit, but your income is NOT a factor in determining Medicaid eligibility.  In fact, if your Medicaid Asset Protection Trust contains investments that produce income, e.g., interest or dividends, you can continue to receive all of the investment income even though you no longer own the underlying assets.  Receipt of this income will not affect your eligibility for Medicaid.  However, you may need to protect your so-called “surplus income” in a different kind of trust, the Pooled Income Trust.

            While creating and funding a MAPT will allow you to quickly attain eligibility for Community Medicaid, the path to Medicaid Nursing Home eligibility may take more time due to the five-year “look back.” 

            2. A Medicaid Asset Protection Trust helps your money last longer

            The goal of the Medicaid Asset Protection Trust is to protect your assets and make them last as long as possible, so that you (and your spouse and family) can maintain a comfortable lifestyle.  You may have a mortgage or other financial obligations or want to modify your home to make it safer and easier to live in as you age, or need to replace appliances, the roof, or fix the plumbing.

            While the assets in the MAPT are no longer subject to your control, the Trustee can be given the authority to distribute trust assets to others, typically to a Co-Trustee or other family members.  They can use the assets distributed to them to pay for anything that you may need or want.  When you choose the Trustee(s) and beneficiaries of your Asset Protection Trust, you will want to keep this possibility in mind.

            Creating an MAPT is not a “loophole” or an effort to “hide” your money.  Protecting your money and property and attaining eligibility for Medicaid are not improper or unethical goals – they are an optimal outcome.  Medicaid is very well aware of the use of the Medicaid Asset Protection Trust, and will review your trust in the application process.  Elder Law attorneys have been using this strategy for years.

            3. Placing your assets in an MAPT protects them from important risks

              Most seniors are planning to leave their assets to their children or to other family members.  When they learn that they need to reduce the amount of assets in their own name in order to qualify for Medicaid benefits, the obvious conclusion to many is to give their assets now to their family members.  The recipients of such gifts use these funds to pay for whatever the senior may need or want.  This can be the simplest path to Medicaid eligibility, but it is problematic for a number of reasons:

              1. If the recipient of the gift incurs a debt or liability, what you think of as “your” money will be exposed to a claim by their creditor;
              2. If the recipient of your gift is married and subsequently becomes involved in a  divorce proceeding, “your” assets could wind up in the hands of their spouse;
              3. If the recipient of your gift pre-deceases you, "your" money will be distributed as spart of their estate:
              4. While unsuspected and perhaps unlikely, there is always a possibility that “your” money will misused by the recipient of your gift;
              5. The recipient of your gift will have carry-over basis in the investments and property given to them.  This means that the opportunity to avoid capital gains tax on the appreciation in value of the transferred assets that accrue during your lifetime will be lost.

              An Asset Protection Trust can protect your assets from all of these risks, and afford your beneficiaries a “step-up in basis” of appreciated assets, meaning that they will avoid capital gains tax (see below).

              4. A Medicaid Asset Protection Trust affords a step-up in basis to its beneficiaries

                If you should decide to sell your home or other investments that have appreciated in value over the years, you understand that you may be required to pay capital gains tax.  The tax would be calculated on the amount of the gain, i.e., the difference between the amount you paid for the asset and the net proceeds of sale.  What you paid for the asset is called your “tax basis.”

                As stated above, if an asset is gifted during your lifetime, the recipient gets carry-over basis, i.e., the same tax basis that you have.  If the recipient sells that asset, they will pay the same capital gains tax that you would have paid had you sold the asset.  If the asset sold was your primary residence but it did not become their primary residence, they would pay even more tax than you would have paid because they would not qualify for the tax exemption available upon the sale of a primary residence.

                However, if your beneficiary inherits the same assets from a Medicaid Asset Protection Trust, the beneficiary receives a step-up in tax basis to the fair market value of the asset as of your date of death.

                Here is a hypothetical example:  assume you purchased your home 30 years ago for $100,000.   Upon your death, the home is worth $800,000 and your children want to sell it and divide the proceeds.  If you had transferred ownership to your children during your lifetime, they will pay capital gains tax on the $700,000 increase in value of the home that accrued during your lifetime when the sell the property.  However, if your children had inherited the property from you under your MAPT, they will not pay any capital gains tax on the $700,000 increase in value.

                5. A MAPT can serve as your estate plan, and avoid probate

                Every Last Will and Testament, without exception, is unenforceable until it is filed with a Probate Petition in the Surrogate’s Court, and the Court determines that it is a valid Will and issues Letters Testamentary to the nominated Executor.  Unfortunately, filing the petition is only the first step.  Potential beneficiaries can demand discovery and  challenge the Will as discussed below.  Even when a Will is uncontested, it can take months (sometimes more) for Letters Testamentary to be issued.  Only at that point does the Executor have the authority to collect the estate assets, pay expenses and creditors, and distribute the remaining assets to the beneficiaries named in the Will. The probate procedure can be expensive, time-consuming, and aggravating.

                A Medicaid Asset Protection Trust will similarly contain your wishes and instructions regarding the distribution of the assets that it owns to your beneficiaries named in the Trust.  The distribution of assets from the Trust can be handled privately and without any court involvement at all.  It is a far more efficient – and cost efficient – process than probate, and it avoids all the unknowns, delays, and expenses that come with a court proceeding. 

                The MAPT is far better at avoiding disputes regarding the estate than if you have a Will.  Probate rules require that “distributees” (next of kin down to first cousins) be notified of the proceeding.  Distributees are entitled to conduct discovery, i.e., they can require production of relevant documents and information and conduct depositions of witnesses.  They are then entitled to object to the validity of the Will on various grounds, which will result in further delay and expense.  Some cases literally take years to resolve.

                When you have a MAPT, however, nobody is entitled to notice apart from the beneficiaries named in the trust.  Nobody is automatically entitled to discovery and nobody is automatically entitled to object.  While a disgruntled family member can always file a lawsuit against a trust, they face an entirely different procedure, with significant obstacles in their path.

                Conclusion

                For all these reasons, a Medicaid Asset Protection Trust is a compelling strategy.  It is extremely reliable and widely accepted as the “gold standard” in Elder Law planning.  Learning more by having a consultation with an Elder Law attorney would be a valuable step in determining whether a MAPT is appropriate for you.

                NY State has published 2025 Medicaid threshold levels and nursing home Regional Rates: Some will change when new Federal Poverty Levels are announced

                The New York Medicaid limits and thresholds for 2025 have been published - but they will probably change in February. The NY Medicaid eligibility limits for income and "resources" (assets) are tied to the Federal Poverty Level ("FPL"). That figure is normally published by the Federal Government in February, so when that happens, NY Medicaid levels will be adjusted to account for changes in the FPL. Nursing Home "Regional Rates," used to calculate the nursing home Penalty Period, have now also been published. Regional Rates will probably not change.

                Below is our currently-valid 2025 Medicaid Quick Reference Chart. It shows useful information regarding the limits imposed on income and resources for people who are applying for (or renewing) Medicaid coverage. The chart can also be found on our website here.

                New Hurdles Imposed for Medicaid Applicants in New York State

                New York state recently enacted legislation, and declined to moderate existing legislation, that makes accessing the state’s Medicaid program more difficult and complicated. 

                I. The Consumer Directed Personal Assistance Program (“CDPAP”) will undergo major changes. 

                Currently over 600 companies act as Fiscal Intermediaries (FIs) for the CDPAP program.  These FIs assist people who hire Personal Assistants (“PAs”) through the CDPAP program, by handling payroll and benefits.  FIs sometimes also help consumers find and train Personal Assistants.  These intermediaries are often small, local companies.  FIs are under contract with, and are paid by, Medicaid Long Term Care (“MLTC”) plans, mainstream managed care plans, and local Departments of Social Services that authorize CDPAP services.

                Now the NYS Department of Health will be required to contract with a single Fiscal Intermediary – and that intermediary must already be operating in another state as a statewide FI.  That single FI will subcontract with a small number of existing FI programs.  By April 1, 2025, all 200,000 CDPAP consumers and their PAs will be transitioned to the new SINGLE FI or one of their few subcontractors, and ALL other FIs must stop operating.

                That means that whichever FI is chosen, and its few subcontractors, are likely not to have a local presence in many of the parts of the state, and consumers who hire Personal Assistants will be dealing with a huge corporation rather than a small, responsive service provider.  This will eliminate almost all choice, as well as competition, from the current 600 providers.

                II. CDPAP Personal Assistants may have new training requirements

                The new law authorizes the Department of Health to adopt regulations “to carry out the objectives of the program including … training requirements for PAs.”  Currently, the consumer or their representative trains the PAs, and no outside training is required.  CDPAP PAs are then able to perform numerous critical tasks that long-term care aides are not permitted to perform.  These tasks include assisting patients with taking medications, injecting insulin, administering oxygen, and other duties that would otherwise require the costly services of a nurse. 

                If additional training is required, this obligation will discourage potential candidates from becoming PAs.  These important workers are already in short supply: fewer PAs will mean it will take longer – or it might be impossible – to find an assistant.

                III. Cuts to Medicaid that are still scheduled to occur:

                The 30-month “look back” and transfer penalty for Community Medicaid services, which was enacted but which was delayed due to COVID, was not repealed.  This measure is scheduled to be implemented in 2025.  Implementation will delay or effectively deny home care services that are crucial to enable people to remain in their homes as long as possible.

                This complicated change will be a nightmare to implement.  The look back will impose a penalty period for transfers made in the 30 months prior to a person applying for Community Medicaid services (these services include paying for some Assisted Living residences).  There is currently no look back.

                Currently, disabled people who require assistance with two Activities of Daily Living (“ADLs”) qualify for Community Medicaid services (if financial eligibility is achieved).  Implementation of this measure will require that people need assistance with three ADLs before they are eligible. 

                This increased requirement will make it far more difficult for seniors in declining health to access Medicaid services.  In addition, the New York Legal Assistance Group states that this “will deny Medicaid home care illegally to Those With Vision Impairments, Intellectual & Developmental disabilities, Traumatic Brain Injuries, and many other disabilities.”  This requirement will go into effect in Fall 2024 if not repealed.

                The New York State Bar Association, New York Legal Assistance Group, and the National Association of Elder Law Attorneys are all fighting to repeal this harmful legislation.  Our firm will support their efforts.

                Ongoing changes to New York State’s long-term care regulations mean that it is more important than ever for anyone over 65, or earlier if you have health issues, to consult with an experienced Elder Law attorney.  The sooner you take action, the more long-term care planning can help you.  During a consultation with our firm, our attorney will explore your situation, thoroughly explain your options, and enable you to decide for yourself what plan makes the most sense for you.  

                The most effective planning occurs before you have a need for long-term care, but planning can still have enormous benefits even if undertaken later.  Don’t hesitate to call – a consultation will provide you with important information and can give you priceless peace of mind.

                More information on all of the CDPAP changes is available at this link: Drastic CDPAP Changes and other Medicaid Outcomes of Final NYS 24-25 Budget - New York Health Access (wnylc.com)

                The High Cost of Bad Long-Term Care Advice

                “You need to use up all your savings before you’re eligible for Medicaid.  It’s called the ‘spend down.’”

                “Your home is exempt from Community Medicaid.”

                “You can transfer half your money shortly before you go into a nursing home, and then when you apply for Medicaid, the Penalty Period will be half as long.”

                “You have too much income to qualify for Medicaid.”

                Coming face to face with the enormous cost of long-term care can be a huge shock for seniors who need assistance.  When they begin to ask questions about how to pay for it, all too often they receive incorrect or incomplete answers from people who are not Elder Law attorneys.  Time after time we have seen potential clients who took these answers as fact, with disastrous consequences.

                Sometimes the “advice” comes from nursing home personnel, or it can be nurses, hospital discharge planners, or Social Workers who are not fully informed about current Medicaid regulations.

                It is disheartening to us to speak with seniors who come in seeking advice only when they are almost out of money, when our timely advice would have saved them tens of thousands of dollars – and in some cases, much, much more.

                Consider a senior woman who needs long-term care, who hears from Medicaid, or from a Medicaid application service, that her mortgage-free house is exempt from being considered a resource for Community Medicaid.  Even if she did other planning, such as transferring her money to a family member or to an irrevocable trust, and then applied for Medicaid, there’s a hole in her plan as large as her entire house.

                That’s because Medicaid keeps track of how much they are spending on her care.  Yes, the home is exempt – as long as it’s her primary residence, and her home equity is less than $1,097,000 in 2025.  Once she moves out for any reason (such as assisted living, nursing home, or other), or dies, then wham! – the situation changes. 

                Now Medicaid can put a lien against the home, and demand reimbursement from the home equity for any amounts spent on the person’s care.  That can easily eat up every penny of her equity in the house, leaving nothing to help pay for any future care needs (for example, if she goes into an assisted living residence), and nothing for her heirs when she dies.

                If she had transferred the house to a child, or had put it into an irrevocable trust, Medicaid would not be able to seek reimbursement from the home equity.  This incomplete understanding of the rules could literally cost her hundreds of thousands of dollars.

                Other times, people learn that Medicaid will only provide services if a person has less than a certain – very low – amount of assets.  They hear from friends or family that they need to spend all their savings before they can apply for Medicaid.  So, they glumly use up their entire nest egg to pay for their care – when they could have protected that money.  It could have been transferred to an irrevocable trust or gifted to children or others, and remained available to supplement their care, instead of being rapidly and completely consumed by health and long-term care providers.

                Income misinformation is out there as well.  Many people believe that if they have a lot of income, they won’t be eligible for Medicaid services.  This is also incorrect information.  If you’re over 65, your income is NOT a factor in determining your eligibility for Medicaid. 

                However, for those who qualify for Community Medicaid benefits, Medicaid does have a monthly income limit. Any amount above the limit is called “surplus income.”

                If you do not take steps to protect your “surplus,” Medicaid will require it to be contributed to the cost of your care.  Fortunately, there is an established strategy that will enable you to protect your “surplus income” and allow you to continue to use it to pay for your expenses, or goods or services you desire.

                We feel terrible when we have to tell people that the huge amount of the money they spent on their care could have been saved, if only they had come to us sooner.

                Elder Law planning, and creating and implementing your plan, takes a lot of legal work, and the costs can seem high.  However, the alternative – doing nothing, or doing the wrong thing – can and often does cost many multiples of the amount people would have spent on implementing a plan with an Elder Law attorney.

                Our firm has always helped our clients not only to create and document a plan, but also to help them implement it.  We do not and would not recommend a plan for a potential client unless we feel that it will clearly be cost-effective for them.  We also explain the options, as it is always a client’s decision as to whether and how to proceed.

                Don’t fall prey to the belief that people who deal with seniors know the ins and outs of the Medicaid program and how best to pay for long-term care.  Even if you believe your affairs and wishes are very simple, every situation, including yours, is unique, and requires its own analysis, discussion, and actions.

                Do yourself the favor of having a consultation with an experienced Elder Law attorney.  Talking through your family situation, your needs, and your goals, will point to the steps you can take to protect what you’ve worked a lifetime to save.  Not doing so could cost you everything.

                Medicaid Nursing Home Care

                If you need long term skilled nursing care and are financially eligible under New York’s laws, you can have your nursing home care paid for by Medicaid. This is different from Community Medicaid, the other type of Medicaid available to New Yorkers. Since New York has a generous Medicaid program, it is possible for nursing homes to operate profitably even if most of their income is coming from Medicaid. The result is that there are many nursing homes in New York, and almost all of them accept Medicaid. In most nursing homes, Medicaid pays for a large majority of their residents.

                Nursing Home is the type of Medicaid that involves the “five year look back.” In brief, this is how it works. If you are over 65 and single, you are not eligible to apply for Medicaid unless you have a very low level of total “resources,” as defined by Medicaid, in your name.  The level is $16,800 in 2022, and usually changes slightly each year.

                Download our Nursing Home Medicaid Handout

                Resources are assets such as savings accounts and investment accounts, cash value of life insurance policies, and your home.  Once you are at or below this level and you apply for Nursing Home Medicaid, Medicaid requires you to provide all of your financial records for the past five years.  They are extremely thorough in this regard, and the application is complicated under the best of circumstances.

                Once the application is filed, Medicaid will carefully examine your records, looking for gifts and uncompensated transfers of money or property.  Any non-eligible transfers to third parties (such as gifts to children or relatives) at any time within the past five years will result in a “penalty period.”  There is no accusation of wrongdoing, and it does not mean that Medicaid will sue anyone, or that the nursing home will refuse to take you. What it means is that Medicaid will not begin paying for the nursing home until after the penalty period is over. You will have to find a way to pay privately until then.

                Theoretically, the penalty period is approximately the amount of time in the nursing home that the transferred funds would have covered. However, in practice, the nursing home bill incurred during the penalty period is almost always larger than the amount gifted or transferred.

                If you need to enter a nursing home, depending on the amount of your assets, there are strategies that can permit you to save some of your money by reducing the length of the penalty period.  Private annuities and promissory notes are a time tested way to minimize the nursing home penalty period. For a discussion of how this strategy works, click here.

                The sooner you take action to protect your assets from being completely depleted, the better.  Don't let the ruinous costs of nursing home care eat up your life's savings - contact us now.

                Trusts in Elder Law and Estate Planning

                Trusts are among the main workhorses of Elder Law and estate planning, and are some of its most powerful and valuable tools.  They serve a number of useful purposes.  Most people understand the concept of a Will, but a Trust can serve the identical function as a Will without its inconveniences, and provide significant additional advantages as well.

                The grantor names the “trustee,” to hold and manage assets on behalf of a beneficiary or beneficiaries.  The trust itself is legally a “person,” and is the owner of the assets that the grantor (or others) transfer to it.

                Download our Estate Planning Handout

                If you create a trust and place your assets into your trust, you might not need a Will at all.  You can designate in the trust agreement what happens to your assets upon your death, in the same way that you would in your Will.

                Assets that are in your name alone at the time of your death are subject to your Will, and are required to go through a court process called “probate” before they can be distributed.  Probate is public, and often expensive, frustrating, uncertain and time-consuming.

                A benefit of all trusts is that assets in the trust are not subject to probate.  Distributions can be made quickly and efficiently, the process is private, and far less costly and time-consuming than a probate proceeding.

                Different kinds of trusts have different requirements and benefits, and different levels of control by the grantor. Revocable trusts are used for estate planning, avoiding probate, and maintaining privacy.  Irrevocable trusts also avoid probate, but at the same time they afford asset protection and facilitate eligibility for government benefit programs such as Medicaid.

                Supplemental Needs Trusts, also known as Special Needs Trusts, provide support for persons with disabilities without compromising their eligibility for government benefit programs.

                The first step in creating a trust generally involves meeting with a trust lawyer who will review your assets, income, goals, and objectives.  Then, he or she will create the trust agreement and help you “fund” the trust.  The experienced attorneys at Lamson & Cutner have the knowledge and skills in elder law trusts to help you preserve your assets and income to the greatest extent possible, while ensuring efficient and prompt distribution of your assets to your chosen beneficiaries upon your death.

                The types of trusts for the elderly typically used in Elder Law planning include:

                Every case is individual and unique, and you’ll need proper advice on what trust configuration will deliver the maximum advantage for you.  Different trust strategies apply to various economic and family situations, and often depend on whether you need, or want to plan against the risk of needing, home care or nursing facility care.   Trusts are the most effective and prudent way to hold and protect your assets, and they’re fully authorized for this purpose under Federal and New York State laws.

                If you already have a trust created for estate planning purposes, your trust should be evaluated by an Elder Law attorney.  Make sure that you have focused on the serious financial risks that you may face, in particular the potential need for long-term care at some point. The goal of our services is always to put you in the best position possible to maintain your lifestyle, and to protect your and your family’s financial future.

                When you need a trust attorney, choose the caring, experienced legal professionals at Lamson & Cutner.  With offices in both NYC and Westchester County, we are conveniently located and prepared to help you create or update elder law trusts.  You can speak to us from the comfort of your own home, if you prefer, via Zoom or conference call.  To learn more about your options or to schedule a consultation with an estate planning attorney or Medicaid trust attorney, contact us today.