Using a Pooled Income Trust to Access Medicaid Home Care in New York
A common misconception about qualifying for home care benefits through the Community Medicaid program is the belief that the applicant (or their loved one) “makes too much money to get Medicaid.” Often, people who may otherwise benefit from these services avoid applying on that basis.
In reality, there are ways that individuals who believe their income is too high, or that they have too much money in their bank accounts, can still qualify for home care benefits through the Medicaid program. By using a Pooled Income Trust, individuals whose monthly income exceeds the permissible level for Medicaid applicants in New York can receive home care benefits through the Medicaid program.
Medicaid Asset and Income Limits for New York Applicants
In 2026, the financial guidelines for New York applicants seeking home care benefits – or other services covered under the Community Medicaid program – limit applicants to no more than $33,038 in countable resources, and $1,836 in monthly income. (For married applicants both applying for Medicaid benefits, the couple may retain $44,796 in countable resources, and a combined $2,489 in monthly income.)
Although these figures represent a significant increase from the asset and income limits in prior years, many New Yorkers would still argue that these income limits do not realistically reflect what a person actually needs to meet their needs while living in the community. For some, this amount would not be sufficient to cover their existing monthly expenses, especially in areas of New York where the cost of living is particularly high, or where individuals may have significant outstanding financial commitments.
What Counts as “Income” for Medicaid Purposes?
Most sources of monthly income a person receives are included as “countable income” for Medicaid purposes. This includes Social Security benefits, pension benefits, Required Minimum Distributions (“RMDs”) from qualified retirement accounts, annuity payments, income the applicant is entitled to receive from a trust, and other sources of income the applicant receives.
There are some deductions credited to the applicant's monthly income calculation, however. The local social services district calculating an applicant's monthly income will set aside the first $20 of income received and will also permit deductions for health insurance premiums paid by the applicant. Certain sources of income are also exempt, such as certain reparation or victim crime fund payments – although it is important to avoid commingling exempt income with non-exempt income to fully protect it from being counted for Medicaid purposes.
What Happens If Your Income Exceeds the Medicaid Income Allowance?
When a Medicaid applicant receives a Notice of Decision concerning their Medicaid application, it will typically either approve or deny the application; if benefits are approved, the Notice will include a “budget” which reflects the local social services district’s calculation of the individual’s monthly income. If the individual’s countable income exceeds the Medicaid income allowance, the Notice will indicate the amount of the overage – this is called the “Medicaid spend-down” amount, otherwise referred to as “surplus” or “excess income” for Medicaid purposes.
If a Community Medicaid applicant’s countable income exceeds the permissible allowance set forth by the Department of Health, and the applicant is otherwise eligible for Medicaid benefits, there are a couple of options available to them:
Option 1: “Spend Down” the Excess Income on Costs of Care
The applicant can choose to “spend down” their “excess income” by using those additional funds above the Medicaid income allowance threshold on the costs of their care. Once the applicant has spent the entirety of the excess income amount on care costs within a given month, they can provide proof of these payments to the local social services district, and request reimbursement or coverage of additional care costs incurred that month. Under this approach, the applicant may need to spend a considerable portion of their income on care costs, which significantly diminishes the benefit of securing Community Medicaid coverage in the first place.
Option 2: Utilize a Pooled Income Trust
The applicant can utilize a Pooled Income Trust to divert excess monthly income. By establishing and funding a Pooled Income Trust – and providing proof of this arrangement to the local social services district – individuals with excess income can receive and use their Community Medicaid benefits, without first having to spend their own income toward care costs each month.
What is a Pooled Income Trust, and How Does it Help Medicaid Applicants?
A Pooled Income Trust (or “PIT”) is a special type of Supplemental Needs Trust (“SNT”) that disabled individuals can use to maximize the use of their monthly income while receiving Community Medicaid benefits. The primary purpose of the PIT is to allow an individual's excess income to pay their bills and monthly expenses – permitting the Medicaid recipient to use their monthly income above the $1,836 limit to cover ordinary expenses, rather than "spend down" this excess income on care costs. The deposited funds can be used for most expenses a Medicaid recipient may incur, including living expenses such as rent or mortgage payments, taxes, utility bills, food, clothing, and transportation.
A Pooled Income Trust operates differently than a traditional trust used for estate planning purposes. Pooled Income Trusts are specifically designed to divert and manage excess income for Medicaid purposes. While traditional trusts are managed by trustees that are chosen by the grantor, Pooled Income Trusts are administered by third-party nonprofit organizations that receive and manage the excess income deposited into the PIT each month, and then use these funds to pay expenses on behalf of the individual Medicaid applicant, subject to certain limitations.
Another important distinction between a traditional trust and a PIT is that the PIT is, by definition, a "pooled" trust. Many individuals each contribute their own funds to the same PIT each month, with each person maintaining a separate designated sub-account managed by the PIT administrator/trustee. Each individual's contributions remain separate and earmarked solely for their use.
There are a variety of Pooled Income Trusts available throughout New York State. Some offer different benefits, such as flexibility in the documentation a PIT enrollee must provide each month, the ability to pay credit card bills, or the use of a prepaid debit card, which many enrollees appreciate for its convenience. Monthly fees vary, with some PIT administrators offering more reasonable rates than others.
All PITs, however, must abide by the same rules regarding what types of expenses they can and cannot pay from the deposited excess income. PIT funds cannot be used for any illegal purposes, nor can they be used for the purchase of alcohol, tobacco, or firearms. The PIT can only pay third-party recipients directly – payments cannot be made directly to the Medicaid recipient, nor can the PIT disburse payment in cash. While PIT funds can be used to pay obligations in the individual's name, they cannot be used to pay bills that are the obligation of, or in the name of, a third party.
Importantly, PIT funds cannot be used to pay for any services or items that Medicaid has already covered. For example, if an individual is approved for certain home care services, the PIT funds cannot be used to supplement those benefits by paying the home care provider additional amounts for the same hours of service that the Medicaid program is covering. The same principle applies to durable medical equipment or supplies that Medicaid already covers – the PIT cannot be used for those specific items, or to supplement the payment made by the Medicaid program for those purchases.
However, funds deposited into the PIT could potentially be used to pay for certain additional services for things that Medicaid would otherwise cover, beyond what the Medicaid program has authorized, under some circumstances. For example, if the individual is approved for six hours per day of home care services, but wishes to have eight hours per day, the PIT funds can potentially be used to pay for the additional two hours per day that the Medicaid program does not cover. (By contrast, PIT funds could not be used to supplement payment to a Medicaid-covered home care provider to pay that provider a higher total rate per hour for services Medicaid has authorized, and is paying for – to do so would violate Medicaid rules and regulations.)
The nonprofit organization administering the PIT is responsible for maintaining records of payments made for the benefit of the Medicaid recipient, ensuring compliance with Medicaid rules, and reporting on these expenditures, when necessary. This recordkeeping responsibility, along with the service of remitting payments to third parties on the individual's behalf, is part of the reason the PIT collects a monthly administrative fee.
What Happens to Pooled Income Trust Funds Following the Applicant’s Death?
The most important thing to remember about a Pooled Income Trust is that the individual funding the PIT with their excess monthly income must “use it or lose it” – the income can only be used for the benefit of the individual, while they are alive, but cannot be passed to any other person upon the death of the individual.
While a PIT is a useful tool for individuals receiving Medicaid home care benefits, the PIT terminates upon the death of the individual, or if they become a permanent resident of a nursing home. Unlike a traditional trust, which functions similarly to a Last Will and Testament in that it typically provides for how assets will be distributed upon the grantor's death, a Pooled Income Trust does not pass remaining funds to the heirs of the individual who funded it. Any funds that remain in the individual’s Pooled Income Trust account are not paid to the individual’s heirs, but become the property of the nonprofit organization.
For this reason, it is advisable to maximize and prioritize use of the funds in the PIT, first, before turning to other sources for payment of monthly expenses in the individual’s name. It’s also recommended that individuals avoid allowing too much money to accrue in the PIT account each month. Depleting these funds, to the extent possible, helps to mitigate the risk of “losing” these funds, while potentially preserving more of the income or property held more traditionally in the individual’s name for their heirs or estate beneficiaries.
Pooled Income Trusts Are an Important Tool for Seniors and Other Disabled Individuals
The availability of Pooled Income Trusts for seniors and individuals with disabilities in New York helps bridge the gap for many who require personal care services and daily assistance and would find it difficult to afford remaining in their homes if they were forced to spend down their income on care costs to access Medicaid home care benefits.
Pooled Income Trusts play an integral role in allowing many seniors to age in place and remain in their own homes without losing the monthly income they receive – and need – to make that goal a reality.
Our Elder Law Attorneys Can Help You Qualify for Medicaid With a Pooled Income Trust
If you have questions about how a Pooled Income Trust may help you or a loved one receive home care benefits and remain in the community without losing access to monthly income, contact the Elder Law attorneys at Falcon Rappaport & Berkman at (516) 599-0888 today!
DISCLAIMER: This summary is not legal advice, and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinions to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.