The New York State Department of Health has recently issued a policy instruction (GIS 19 MA/04) to all local Medicaid offices that will have the effect of causing unnecessary nursing home placements. The new rule requires the local Medicaid agency to reject enrollment in a pooled income trust made under a power of attorney lacking a statutory gift rider. The legal basis for the directive is highly questionable.

Pooled Income Trust

The Medicaid home care program restricts the amount of monthly income that an applicant may retain. Any monthly income above $859 is considered surplus income. To maintain Medicaid eligibility, the applicant is required to spend down the surplus income on medical care. The surplus can be spent down only on medical expenses and not on ordinary living expenses. Seniors who cannot cover living expenses such as rent, food, clothing and utilities using just $859 per month are forced into nursing homes. The use of the pooled income trust enables the applicant to remain in the community rather than an unnecessary nursing home placement. Instead of spending the surplus income on medical expenses, the applicant is permitted to send the surplus income to a pooled income trust which can use the surplus income pay the non-medical living expenses of the individual. The Medicaid home care applicant maintains eligibility because surplus income that is sent to the pooled income trust is disregarded by Medicaid.