QUESTION PRESENTED
Does the Idaho Charities Pooled Trust (“Idaho CPT”) qualify as a pooled trust under
42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.B.2, such that the trust must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for Supplemental Security Income (SSI)
purposes?
BRIEF ANSWER
Yes. The Idaho CPT qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and
POMS SI 01120.203.B.2. Accordingly, it must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.
SUMMARY OF FACTS
In April 2017, M~, a disabled individual receiving SSI, executed a joinder agreement
with Idaho CPT. See Charities Pool Trust Joinder Agreement (“Joinder Agreement”). The purpose of the agreement
was to “establish an Individual Benefit Account” in Idaho CPT for M~’s sole benefit.
Id. M~ placed approximately $400,000 in her account. See id. (“Beneficiary is funding an IBA with the property listed in Schedule A below.”).
This money came from a settlement. Id. M~ passed away in February 2018.[1]
ANALYSIS
A. To be a pooled trust, a trust must meet six requirements.
To be eligible for SSI, the dollar value of a claimant’s countable resources cannot
exceed certain statutory limits. 42 U.S.C. § 1382(a)(1)(B) & (3)(B); 20 C.F.R. §§
416.202(d), 416.1201, 416.1205; accord POMS SI 01110.003(A). A trust that meets the requirements of 42 U.S.C. § 1396p(d)(4)(C) is considered
a pooled trust, which must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.
First, to be a pooled trust, the trust must contain “the assets of an individual who
is disabled.” 42 U.S.C. § 1396p(d)(4)(C); accord POMS SI 01120.203.B.2.b. Second, the trust must be “established and managed by a nonprofit association.”
42 U.S.C. § 1396p(d)(4)(C)(i); accord POMS SI 01120.203.B.2.a. Third, the association must maintain “[a] separate account . . . for each
beneficiary of the trust, but, for purposes of investment and management of funds,
the trust pools these accounts.” 42 U.S.C. § 1396p(d)(4)(C)(ii); accord POMS SI 01120.203.B.2.a; see also POMS SI 01120.203.B.2.d. Fourth, the accounts must be “established solely for the benefit of individuals
who are disabled.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.B.2.a. Fifth, the trust account must be “established . . . by the parent, grandparent,
or legal guardian of such individuals, by such individuals, or by a court.” 42 U.S.C.
§ 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.B.2.a. Sixth, and finally, “[t]o the extent that amounts remaining in the beneficiary’s
account upon the death of the beneficiary are not retained by the trust, the trust
pays to the State from such remaining amounts in the account an amount equal to the
total amount of medical assistance paid on behalf of the beneficiary under the State
plan . . . .” 42 U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.B.2.a.
A trust that qualifies as a pooled trust must still be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.
B. The Idaho CPT qualifies as a pooled trust.
The Idaho CPT meets all six requirements for a pooled trust.
1. Disabled Individual
To begin, the trust must contain “the assets of an individual who is disabled.” 42
U.S.C. § 1396p(d)(4)(C); see also POMS SI 01120.203.B.2.b. (“[T]he individual whose assets were used to establish the trust account must
meet the definition of disabled for purposes of the SSI program.”). That requirement
is satisfied here. M~ was a disabled individual receiving SSI payments when she enrolled
in the Idaho CPT. See Joinder Agreement (stating she receives SSI); 2/9/18 email from the Assistant Regional
Commissioner’s office (stating that M~ is disabled). Moreover, M~ established her
account with assets from a settlement. See Joinder Agreement (funding account with over $400,000).[2]
2. Established and Managed by a Nonprofit Association
Next, the trust must be “established and managed by a nonprofit association.” 42 U.S.C.
§ 1396p(d)(4)(C)(i); accord POMS SI 01120.203.B.2.a. (trust is “established and maintained by a nonprofit association”).
This requirement is satisfied, as well. According to the Idaho CPT, CPT is the settlor
and manager of the Idaho CPT and is a not-for-profit corporation under Section 501(c)(3)
of the Internal Revenue Code. See Idaho CPT Art. 2, § 2.1.[3]
3. Separate Accounts, Pooled for Investing
To be a pooled trust, the trust must maintain a separate account for each beneficiary.
42 U.S.C. § 1396p(d)(4)(C)(ii); accord POMS SI 01120.203.B.2.d. However, “for purposes of investment and management of funds, the trust pools
these accounts.” 42 U.S.C. § 1396p(d)(4)(C)(ii);accord POMS SI 01120.203.B.2.d (the “trust may pool the funds in the individual accounts . . . for purposes
of investment and management of funds”). This requirement is reflected in POMS, which
notes that “the trust must be able to provide an individual accounting for the individual.”
POMS SI 01120.203.B.2.d.
The Idaho CPT contains these requirements. According to the trust documentation, “[a]
separate Trust Individual Benefit Account (‘IBA’) shall be established and maintained
for the sole benefit of each Trust Beneficiary, but the Trustee may cause the amounts
in the IBA to be pooled for investment and management purposes.” Idaho CPT Art. 4,
§ 4.1. The Idaho CPT also states that the trustee, or its agent, must “maintain records
for each Trust IBA in the name of, and showing the Contributed Amount plus any income
earned from the Contributed Amount for each Trust Beneficiary.” Idaho CPT Art. 4,
§ 4.1. The trustee must provide periodic reports, at least annually, about receipts
and disbursements to and from the individual’s account. Idaho CPT Art. 9, § 9.4. These
provisions satisfy the third requirement for a pooled trust.
4. Established for the Sole Benefit of the Disabled Individual
The next requirement for a pooled trust is that the trust account is “established
solely for the benefit of individuals who are disabled.” 42 U.S.C. § 1396p(d)(4)(C)(iii);
accord POMS SI 01120.203.B.2.e. (trust “must be established for the sole benefit of the disabled individual.”).
The statute does not provide guidance on “sole benefit.” See 42 U.S.C. § 1396p(h) (setting forth definitions, but not defining this term). But
POMS explains that a trust is “established for the sole benefit of an individual”
when it “benefits no one but that individual, whether at the time the trust is established
or at any time for the remainder of the individual’s life.” POMS SI 01120.201.F.2.a.
The trust may pay third parties for goods or services for the beneficiary and still
be for the “sole benefit” of the beneficiary. POMS SI 01120.201.F.2.b. The trust may pay certain travel expenses for the beneficiary’s medical treatment.
Id. The trust also may “provide for reasonable compensation for a trustee(s) to manage
the trust, as well as reasonable costs associated with investment, legal or other
services rendered on behalf of the individual with regard to the trust.” POMS SI 01120.201.F.2.c.
The Idaho CPT meets this definition. The Idaho CPT states that the trustee must “hold,
administer, and distribute all property, and all income therefrom from an Individual
Trust Beneficiary’s IBA, for the sole benefit of the Trust Beneficiary during the Trust Beneficiary’s lifetime.” Idaho CPT Art.
6, § 6.1 (emphasis in original); see also id. § 6.2 (“Trust Beneficiary’s IBA is for the sole benefit of the Trust Beneficiary.”) (emphasis in original).
The Idaho CPT also allows for fees and expenses for administering the trust, in accordance
with a written fee schedule. See generally Idaho CPT Arts. 9 and 10. The trust further states that the trustee will be compensated
for “services rendered and reimbursed reasonable expenses incurred on behalf of the
Trust or a Trust Beneficiary.” Idaho CPT Art. 10, § 10.5. These provisions pass muster.
See 42 U.S.C. § 1396p(d)(4)(C)(iii); POMS SI 01120.201.F.2.b, c.
The Idaho CPT contains an early termination provision that allows the trust to terminate
prior to the death of the beneficiary. See Idaho CPT Art. 8. An early termination provision is allowable under the pooled-trust
exception so long as three criteria are met: (1) “[u]pon early termination (i.e.,
termination prior to the death of the beneficiary), the State(s), as primary assignee,
would receive all amounts remaining in the trust at the time of termination up to
an amount equal to the total amount of medical assistance paid on behalf of the individual
under the State Medicaid plan(s);” (2) “[o]ther than payment for those expenses [for
taxes, reasonable fees, and administrative expenses], no entity other than the trust
beneficiary may benefit from the early termination (i.e., after reimbursement to the
State(s), all remaining funds are disbursed to the trust beneficiary);” and (3) “[t]he early termination
clause gives the power to terminate to someone other than the trust beneficiary.”
POMS SI 01120.199.F.1 (emphasis in original). The trust may pay taxes, reasonable fees, and administrative
expenses before reimbursing any state(s) for medical assistance. POMS SI 01120.199.F.3.
The Idaho CPT satisfies these criteria. Specifically, the Idaho CPT states that, if
the trust terminates during the beneficiary’s life, all remaining funds in that account
will be paid to reimburse each state for medical assistance paid on behalf of the
beneficiary. See Idaho CPT Art. 8, § 8.1. The Idaho CPT also states that, after paying the state, “if
there are any assets remaining [after Payback], the Trustee shall distribute all of
the remaining assets to the Trust Beneficiary.” Idaho CPT Art. 8, § 8.1. Additionally,
the beneficiary does not have the power to terminate the Trust or her trust account.
Idaho CPT Art. 8, § 8.1.
In the end, the Idaho CPT provisions comport with the statute and POMS’s description
of a trust that solely benefits the disabled individual. See
42 U.S.C. § 1396p(d)(4)(C)(iii); POMS SI 01120.201.F.2.b, c. Accordingly, the Idaho CPT satisfies the fourth requirement for pooled
trusts.
5. Established Through the Actions of the Individual, Parent, Grandparent,
Legal Guardian, or Court
To qualify as a pooled trust, the trust account must be “established . . . by the
parent, grandparent, or legal guardian of such individuals, by such individuals, or
by a court.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.B.2.f. M~ executed a joinder agreement, which established her account in the Idaho
CPT. See Joinder Agreement. Therefore, because M~ established her trust account through her
own actions, the Idaho CPT meets the fifth requirement.
6. Remaining Amounts Paid to the State
Finally, “[t]o the extent that amounts remaining in the beneficiary’s account upon
the death of the beneficiary are not retained by the trust, the trust pays to the
State from such remaining amounts in the account an amount equal to the total amount
of medical assistance paid on behalf of the beneficiary under the State plan.” 42
U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.B.2.g.
The Idaho CPT reflects this concept. Specifically, the Idaho CPT allocates remaining
assets between the trust, the state, and the trustee’s heirs. See
Idaho CPT Art. 7, § 7.2. If the state medical assistance amount is equal to or greater
than the total amount left in the beneficiary’s trust account, the non-profit will
retain 50% of that amount as a trust remainder share and the trustee will pay the
remaining amount to the state. Idaho CPT Art. 7,§ 7.2(D)(1). If the state medical
assistance amount is less than the total amount left in the beneficiary’s trust account,
the non-profit will retain the first 5% of the amount as the trust remainder share;
the trustee will pay the full amount owed to the state; and the trustee will pay any
remaining amount to the beneficiary’s heirs. Idaho CPT Art. 7, § 7.2(D)(2). This distribution
scheme comports with the statute, according to available case law. See Lewis v. Alexander, 685 F.3d 325, 348-49 (3d Cir. 2012) (Section 1396p(d)(4)(C)(iv) “leaves it to the
trust to decide how much—if any—money should be provided to the State to reimburse
it for Medicaid expenses,” while at the same time giving the state priority over the
deceased’s estate).
In addition, the Idaho CPT allows certain administrative expenses, like taxes and
reasonable fees and costs, to be paid before paying the state for medical assistance.
Idaho CPT Art. 7, § 7.4(A). The Idaho CPT also excludes expenses that POMS disallows.
See id. Idaho CPT Art. 7, § 7.4(B) (citing POMS). This, too, aligns with the statute and
Agency policy. See 42 U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.B.3.a. Accordingly, the Idaho CPT satisfies the last requirement.
CONCLUSION
In sum, the Idaho CPT qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C)
and POMS SI 01120.203.B.2. Accordingly, the Idaho CPT must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI eligibility.