Founder
Last Updated: March 31, 2025
A pooled trust is a type of special needs trust designed to help disabled individuals protect their eligibility for public benefits—such as MassHealth (Medicaid in Massachusetts) or Supplemental Security Income (SSI)—while setting aside assets for their supplemental care and quality of life. These trusts are established and administered by non-profit organizations and allow multiple beneficiaries to “pool” their resources for management and investment purposes. However, each beneficiary has their own sub-account, and the funds can only be used for their specific needs.
How Does a Pooled Trust Work?
A pooled trust combines the resources of many individuals into a larger trust, which is then professionally managed by a nonprofit organization. Despite the pooled investment structure, each beneficiary has a separate account, and funds are used solely for that individual’s benefit.
Because assets placed into a pooled trust are no longer directly controlled by the beneficiary, they are not counted against asset limits for Medicaid or SSI. Additionally, transfers into a pooled trust are not considered disqualifying transfers, even if made after filing a MassHealth application—making them a valuable planning tool for disabled individuals and their families.
Who Can Set up a Pooled Trust?
If the pooled trust qualifies under 42 U.S.C. § 1396p(d)(4)(C) (commonly referred to as a (d)(4)(C) pooled trust), it can be established by:
- The disabled person
- A parent or grandparent
- A legal guardian
- A court
It’s important to note that a self-settled special needs pooled trust, such as a (d)(4)(A) trust, cannot be established directly by the disabled individual.
What Is Considered a Disability for a Pooled Trust?
To qualify for a pooled trust, the beneficiary must meet the same definition of disability used by the Social Security Administration for SSI:
- A physical or mental impairment
- That has lasted or is expected to last at least 12 months
- And is severe enough to prevent the person from engaging in substantial gainful employment
What Can Pooled Trust Funds Be Used For?
Funds in a pooled trust can only be used for the direct benefit of the disabled beneficiary. Approved expenses may include:
- Medical insurance premiums
- Prepaid burial expenses
- Rent, food, clothing, and other basic needs
- Personal needs allowance
- Education and job training
- Dental care or other uncovered medical treatments
- Occupational or rehabilitative therapy
- Attorney, trustee, guardianship, or conservatorship fees
- Certain tax liabilities
- Entertainment aligned with the individual’s needs
What Can Pooled Trust Funds Not Be Used For?
Prohibited uses include:
- Medical expenses already covered by MassHealth
- Past debts or unpaid bills
- Child support obligations
- Income taxes
- Insurance premiums for others
- Shared household expenses (e.g., rent split with family)
- Family vacations or benefits for others
Do Pooled Trusts Have Medicaid Payback Requirements?
It depends on the type of pooled trust:
- A third-party pooled trust, funded by a family member (not the disabled individual), does not require Medicaid payback.
- In first-party pooled trusts, the non-profit may retain a portion of leftover funds for charitable use, and the remainder may go toward repaying Medicaid.
This makes it essential to consult with a knowledgeable elder law attorney to choose the right type of pooled trust and understand how to structure it to avoid unintended consequences.
Need Help with a Pooled Trust?
Attorney Patricia Bloom-McDonald has years of experience advising seniors and families on pooled trusts, special needs planning, and MassHealth eligibility. Contact our office for a complimentary consultation to determine whether a pooled trust is right for you or your loved one.
Located in Westport, The Law Offices of Patricia Bloom-McDonald proudly serves clients across Massachusetts, including all of Bristol and Norfolk Counties, Plymouth, and the southern coast. Specific areas of service include New Bedford, Fall River, Dartmouth, Acushnet, Taunton, Dighton, Berkley, Swansea, Somerset, Seekonk, Fairhaven, Marion, Raynham, Easton, Mansfield, Attleboro, North Attleborough, Rehoboth, Lakeville, Bridgewater, Rochester, Norton, Assonet, Stoughton, Canton, Sharon, West Bridgewater, Brockton, Whitman, Maynard, Quincy, and Cape Cod. If you cannot come to us, we will come to your home, office, or a convenient location of your choosing. The initial consultation is complimentary.