Those who collect SSI (Social Security Insurance) must meet a resource eligibility test and show less than $2,000 in resources. The purpose of SSI is to provide three things: Food, Shelter and Clothing. Under Section 1917(d)(4)(C) of the Social Security Act, a disabled person may shelter additional funds for education, vocational training, medical and dental expense and other necessities in a vehicle called a Pooled Trust.
Pooled Trusts are managed by non-profits agencies and can be either a First Party or Third Party Pooled Trust. These trusts are funded with any combination of cash assets such as checks, annuities, insurance policies, wills, inheritances and savings account. Additionally, these Trusts are irrevocable, meaning once the funds are invested in the Pooled Trust, they cannot be withdrawn. Like ABLE Accounts and SNTs who provides the cash to fund the Pooled Trust is very important for both continuing SSI/Medicaid eligibility and the Medicaid Payback Exemption.
Previously mentioned shelters, ABLE Accounts and SNTs, are drafted for the benefit of just one person. Pooled Trusts on the other hand are not. A Pooled Trust contains many subaccounts which means more than one person’s money is contained in the Pooled Trust. The funds from each subaccount are “pooled” for purposes of investment and management which helps reduce administrative and management fees. Despite the funds being “pooled,” each beneficiary has access to only his own subaccount. The reason why Pooled Trusts are so popular is that they do not require the beneficiary to have large sums of money to invest as there is no minimum or maximum contribution requirement. Often with ABLE Accounts and SNTs, the administrative, trustee and financial management fees are prohibitive when compared to the actual amount of money being transferred. The Pooled Trust participants share the costs of professional trustees, financial managers and other administrative costs. There is no worry about whether a disbursement is appropriate as the Trustee is a professional well versed in the law.
The Trustee of a Pooled Trust has full discretion to authorize any disbursement from the Pooled Trust. All disbursements must be for the sole benefit of the beneficiary and be a “qualified expense.” As with ABLE Account and SNTs, the disbursements are intended to supplement SSI and not supplant it. These means no disbursements will be made for food, clothes and only in rare cases for housing. Acceptable disbursements are usually medical and dental expenses, rehabilitative and occupational therapy, education, entertainment, cultural experiences and travel. All disbursement are made at the discretion of the trustee (who is tasked with ensuring that the disbursements will not jeopardized SSI and Medicaid eligibility) and are paid directly to the vendor.
With proper planning and foresight, there are several financial vehicles available to ensure a higher standard of living while still remaining SSI and Medicaid eligible. As always, we recommend that you contact a qualified attorney to discuss your needs and develop an appropriate plan.