As we’ve reported before, Massachusetts is on track to bar the use of (d)(4)(C) or “pooled disability” trusts for people age 65 or older. To clarify, Massachusetts residents age 65 and over may continue to be beneficiaries of such trusts. But beginning on March 1, 2024, they will no longer be able to create or fund such trusts — unless the legislature acts before then.
One of the last acts of Governor Charlie Baker’s administration was to implement a regulation barring the funding of (d)(4)(C) trusts after reaching age 65. As my partner, Patricia C. D’Agostino, explained in another post, the effective date of the regulation was delayed for a year due to rules around Covid pandemic Medicaid funding. Now those protections have expired.
What is this All About?
Thirty years ago in 1993, Congress enacted 42 USC Sec. 1396p(d)(4) creating two safe harbors for people with disabilities. Supplemental Security Income (SSI) and Medicaid (MassHealth in Massachusetts) have strict asset limits for eligibility, depending on the program as low as $2,000. While it has left this figure unchanged since 1983 (which would be about $6,000 in today’s dollars), it passed legislation allowing individuals to shelter assets in excess of these limits in two types of special needs trusts. The rules for such trusts are quite strict, including requirements that upon the death of the beneficiary the state Medicaid program be reimbursed from remaining trust assets for its expenses on their behalf.
The legislation allowed for both individual trusts under 42 USC Sec. 1396p(d)(4)(A), known as “(d)(4)(A)” or “payback” trusts, and pooled trusts managed by nonprofit organizations under 42 USC Sec. 1396p(d)(4)(C). The federal statute has always limited the creation of (d)(4)(A) trusts to individuals under age 65 (though already created and funded trusts may continue for their benefit after age 65), but is a bit ambiguous about the creation and funding of pooled (d)(4)(C) trusts after age 65. As a result, the Centers for Medicare & Medicaid Services has left it up to the states to determine whether to impose an age-65 limit on their funding.
For three decades, Massachusetts has permitted individuals age 65 and over to create and fund pooled (d)(4)(C) trusts after age 65. This right will end on March 1st unless either the legislature acts before that or Governor Maura Healey reverses Governor Baker’s regulation.
Why is This Important?
Readers may wonder why the right to fund pooled (d)(4)(C) trusts after age 65 is important. They even may agree with former Governor Baker’s apparent position that no one should be eligible for public support until they are down to their last impoverished dollar. But MassHealth does not cover beneficiaries’ entire care needs. For those beneficiaries in nursing homes, being able to set aside some funds in reserve allows them to pay for their extra needs, such as:
- Maintaining a cell phone and other electronic device.
- Maintaining subscriptions to magazines, Kindle, Netflix or other services.
- Hairdressing.
- Clothing.
- Holding a nursing home bed during an extended hospitalization.
- Hiring extra help after a hospitalization.
- Maintaining a home.
- Hiring a geriatric care manager or a companion.
- Paying for Uber or Lyft to take trips from the facility.
Few of these needs can be paid for with the meager $72.80 of income MassHealth beneficiaries in nursing homes are allowed to keep each month, another number that has remained unchanged since 2007 despite inflation.
Being able to use a (d)(4)(C) trust may be even more important for individuals living at home and receiving services under a home and community based waiver. MassHealth has done an admirable job of expanding coverage of home health care in recent years, but its assistance is often insufficient by itself to maintain a frail senior at home. A combination of MassHealth and private dollars from a pooled (d)(4)(C) trust, however, can be used to meet the need.
Readers also should be aware that in Massachusetts there is neither an asset limit for most MassHealth programs before age 65 or a restriction on sheltering assets in a pooled (d)(4)(C) trust before that age. The Baker restriction will only apply to seniors.
What Should You Do?
If you would like to reverse this regulation, contact your legislators to support House Bill 1202 and Senate Bill 756 introduced by Senator Patricia D. Jehlen and Representative Kate Hogan that would preserve the ability to fund pooled disability trusts after age 65. Also contact Governor Healey to ask her to reverse Governor Baker’s regulation.
However, just in case neither the legislature or the governor takes action, and you or a loved one may require the benefit of a pooled disability trust, create and fund it now. Here are the pooled trusts available in Massachusetts: