Understanding
Pooled Special Needs Trusts

PSNT

A Pooled Special Needs Trust is a powerful legal tool that protects your assets while preserving your eligibility for government benefits like Medicaid and SSI. Whether you have a disability or are over 65 years of age and facing the unexpected cost of long-term care, a PSNT may be your best option.

Who Qualifies for a PSNT?

There are two qualifying paths. You do not need to meet both — either one makes you eligible.

1

Individuals with Disabilities

A person of any age who has a qualifying disability can join a Pooled Special Needs Trust. This includes individuals who:

  • Receive SSI (Supplemental Security Income) or SSDI (Social Security Disability Insurance)
  • Have a physical, intellectual, or developmental disability
  • Receive an inheritance, settlement, or other funds that would jeopardize their benefits

Key benefit: Funds placed in the trust are not counted as the individual's assets, preserving Medicaid and SSI eligibility while supplementing their quality of life.

2

Seniors Age 65 and Older

This is the qualification that most seniors don't know about. If you are 65 or older, you can join a PSNT to protect your assets — especially if you:

  • Face the sudden need for assisted living or nursing home care
  • Need to qualify for Medicaid but have assets that would disqualify you
  • Did not plan ahead and are now worried about losing your home and savings to long-term care costs

Key benefit: Joining a PSNT can resolve the Medicaid 5-year lookback problem, allowing you to qualify for Medicaid coverage of nursing home care while protecting your assets in the trust.

THE SCENARIO NOBODY PLANS FOR

"I Never Planned for Assisted Living — Now What?"

This happens more often than people think. A health crisis strikes. Your loved one suddenly needs nursing home or assisted living care. The cost? $8,000 to $12,000+ per month. Without planning, Medicaid requires you to spend down nearly all your assets before it will help pay.

Without a PSNT

Home sold to pay for care

Savings depleted entirely

Nothing left for your family

With a PSNT

Assets protected in trust

Medicaid covers your care

Legacy preserved for loved ones

What Exactly Is a Pooled Special Needs Trust?

A PSNT is not a do-it-yourself document. It is a legally established trust managed by a nonprofit organization.

How a PSNT Is Structured

Managed by a Nonprofit

A qualified nonprofit organization establishes and manages the trust. This is required by federal law.

Pooled for Investment

Funds from multiple beneficiaries are pooled together for investment purposes, allowing better returns and lower fees.

Separate Sub-Accounts

Each beneficiary has their own individual sub-account. Your funds are tracked separately and used only for your benefit.

What a PSNT Does for You

Protects Your Assets

Assets in the trust are not counted as your personal resources for Medicaid eligibility purposes.

Preserves Government Benefits

Maintain your Medicaid, SSI, and other means-tested benefits while having funds available for supplemental needs.

Resolves the 5-Year Lookback

For seniors 65+, transferring assets into a PSNT can address the Medicaid lookback period, enabling you to qualify for coverage sooner.

Supplements Your Quality of Life

Trust funds can pay for things Medicaid doesn't cover — personal care items, recreation, transportation, technology, and more.

Professional Management

The nonprofit trustee handles investments, accounting, tax filings, and compliance — no burden on you or your family.

Lower Costs Than Private Trusts

Because funds are pooled, administration costs are shared among beneficiaries — typically much less than hiring a private trustee.

How Is a PSNT Different from a Living Trust?

These are fundamentally different tools for different situations. Understanding the difference is critical.

Pooled Special Needs Trust Revocable Living Trust
Primary Purpose Protect assets while maintaining government benefits eligibility Avoid probate and manage assets during life and after death
Who Manages It? A nonprofit organization (required by law) You (the grantor) during your lifetime
Revocable? No — Irrevocable
Assets cannot be taken back once placed in trust		 Yes — Fully Revocable
Change or cancel anytime during your lifetime
Medicaid Protection? Yes — Assets are not counted No — Assets are still counted
5-Year Lookback? Can resolve it Does not help
Who Qualifies? Individuals with disabilities or age 65+ Anyone — no restrictions
Avoids Probate? Yes Yes
Upon Death Remainder may go to the nonprofit or the state (varies by state law) Distributed to your named beneficiaries
Setup Join an existing trust via "joinder agreement" — simpler process Create your own trust document with an attorney

Important distinction: A revocable living trust does not protect your assets from Medicaid. Because you retain control and can revoke it at any time, Medicaid considers those assets as yours. A PSNT, because it is irrevocable and managed by a third-party nonprofit, removes assets from your countable resources.

Learn more about Revocable Living Trusts

What Can PSNT Funds Be Used For?

Trust funds can pay for a wide range of needs that improve your quality of life — things that government benefits typically don't cover.

Personal care items & clothing

Medical expenses not covered by Medicaid

Dental, vision, and hearing care

Transportation & vehicle expenses

Recreation & entertainment

Technology (phone, computer, tablet)

Home modifications & furnishings

Education & training programs

Travel to visit family

Important: Trust funds generally cannot be used for food or shelter, as these are covered by government benefits. Paying for them from the trust could reduce your benefit amount. Always consult with the trust administrator before making distributions.

How to Join a Pooled Special Needs Trust

The process is simpler than creating your own trust. Here are the typical steps:

1

Consultation

Meet with an elder law attorney or the PSNT provider to discuss your situation, assets, and eligibility.

2

Joinder Agreement

Sign a joinder agreement to establish your individual sub-account within the existing pooled trust.

3

Fund the Account

Transfer your assets (cash, investments, property proceeds) into your sub-account within the trust.

4

Ongoing Support

Request distributions for supplemental needs. The nonprofit trustee manages everything for you.

Common Questions About PSNTs

Will I lose my Medicaid or SSI benefits?
No. A properly established PSNT is specifically designed to protect your eligibility for government benefits. Assets held in the trust are "disregarded" by Medicaid and SSI when determining your eligibility.
Can I get my money back once it's in the trust?
A PSNT is irrevocable — you cannot simply withdraw the funds like a bank account. However, the money is still used for your benefit. You can request distributions for a wide variety of supplemental needs. The irrevocable nature is what provides the Medicaid protection.
How does the PSNT help with Medicaid's 5-year lookback?
Medicaid reviews the past 5 years of asset transfers to determine if you gave away assets to become eligible. Transfers into a PSNT by individuals 65+ are treated differently under federal law — the transfer is considered for the benefit of the individual, not a prohibited gift. This can help you qualify for Medicaid even if the transfer was recent. Laws vary by state, so consult an elder law attorney for your specific situation.
What happens to the remaining funds when I pass away?
This varies by state and by the specific PSNT provider. In many cases, the state may reclaim amounts paid for Medicaid services. Any remainder after Medicaid reimbursement may be retained by the nonprofit to continue serving other beneficiaries. Some trusts may allow a portion to pass to your designated remainder beneficiaries. Ask the PSNT provider about their specific remainder policy before joining.
Are there fees to join a PSNT?
Yes. Most PSNTs charge an enrollment fee and ongoing management fees (typically a percentage of the account balance). Because funds are pooled, these fees are generally much lower than establishing a private special needs trust. Ask the provider for their fee schedule upfront.
Can a family member set up a PSNT on my behalf?
Yes. A parent, grandparent, legal guardian, or the individual themselves can establish a sub-account within a PSNT. A court can also order the creation of a sub-account. This makes it an accessible option for families caring for a loved one with special needs.

Need Help Understanding Your Options?

A Pooled Special Needs Trust is a specialized legal tool. We strongly recommend working with a qualified elder law attorney who can evaluate your specific situation.

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