SSI, Pooled Trusts, Penalties, oh my!

We have posted several times in the past few years about being able to utilize a Pooled Special Needs Trust (SNT) in Florida for individuals ranging from newborns to centenarians. 

The good news is that individuals of any age can still utilize a Pooled SNT for Medicaid purposes with no problem. However, if the person is age 65 or older we need to also ask the question - are they receiving Supplemental Security Income (SSI) benefits?

We still frequently field inquiries regarding individuals over age 64 that are looking to maintain their SSI income, as well as their Medicaid benefits, by using a Pooled SNT.

Unfortunately, Social Security penalizes individuals that are over age 64 who are receiving SSI if they fund a Pooled Trust.  The penalty is one month for every $735 put into the Pooled Trust, up to a maximum of 3 years.  The $735 figure comes from the maximum monthly SSI benefit as of January 1, 2017.  Note, the maximum SSI penalty is only 3 years and not 5 years like Medicaid.

In many cases this is not an acceptable penalty and other strategies for sheltering the assets need to be explored, however, there are circumstances when it still makes sense to fund a Pooled SNT even though there will be a SSI penalty.

Often times the individual over age 64 is receiving a combination of Social Security Retirement and SSI. In these cases only the SSI is affected by the transfer of assets to the Pooled Trust, but the Social Security Retirement income and Medicare medical insurance is not affected. The individual can place the assets in the Pooled SNT, forgo the SSI payment and then “convert” the Medicaid insurance they were receiving through SSI to the state dual eligible program, Qualified Medicare Beneficiary (QMB), or pursue another state Medicaid program. They then continue to receive the benefits that the SSI-derived-Medicaid was providing. This is a benefit for the individual, who would otherwise lose both the SSI and Medicaid for being over the asset limit, and then have to pay Medicare premiums and copays. By using the Pooled SNT  the individual can keep the Medicaid and also benefit from of the funds in the Pooled SNT .

Finally, if the individual is institutionalized in a skilled nursing facility or other medical facility and applying for Medicaid then the SSI would be reduced to $30 anyway and the institutional Medicaid program would be picking up the entire expense of the facility.  Thus losing the $30 in this instance would likely not be a great concern.

Please feel free to contact our office with any questions.

Travis D. Finchum
Board Certified Elder Law Attorney

Co-Trustee, Guardian Trust