Supreme Court Upholds Case Striking Down Pooled Trust Age Limit

Special Needs Planning

The U.S. Supreme Court has refused to hear a case involving Pennsylvania’s pooled trust age limit. The case was an appeal by the state challenging a decision by the U.S. Court of Appeals for the Third Circuit that pooled trusts established by people over the age of 65 are not countable resources for Medicaid purposes.

These types of trusts are often used in cases involving disabled and special needs individuals, regardless of age, but there has been a great deal of disagreement as to whether assets could be placed in such trusts if a person was older than age 65. Click here to learn more on how such trusts are used.

The case involves a 2005 Pennsylvania law that was designed to regulate special needs trusts, including pooled trusts. The law stated that in order for the assets in a pooled trust to remain uncountable for the purpose of determining a trust beneficiary’s Medicaid eligibility, the beneficiary would have to be under the age of 65 and have special needs that would not be met without the trust. Trust expenditures would have to bear a reasonable relationship to the needs of the beneficiary and, upon the death of a pooled trust beneficiary, the state could seek reimbursement for the cost of medical care provided to the beneficiary from up to 50 percent of the funds retained by the pooled trust.

A group of pooled trust beneficiaries and several pooled trusts challenged the law in federal court. The 3rd Circuit ruled that under federal law, there is no age restriction for pooled trusts. The court also determined that states may not place restrictions on the amount of funds retained by a pooled trust when a Medicaid beneficiary dies nor may they dictate what types of expenditures a pooled trust can make so long as they are for the sole benefit of a person with disabilities.

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