NYSARC, Inc. Community Trust II(Spend-Down Trust)

NYSARC, Inc. is a not-for-profit voluntary organization which was originally created in 1949 to provide services to thousands of New York residents who have mental retardation or other developmental disabilities. However, in response to the needs and concerns expressed by families and advocates of individuals with other physical disabilities who are in need of government benefits to help pay for the cost of their home care needs, NYSARC. established The NYSARC, Inc. Community Trust II, which was created to enhance the quality of life of an individual by sheltering his or her income, without jeopardizing the person’s eligibility for community-based Medicaid benefits.

The New York State community based home care Medicaid program has strict income and asset guidelines for eligibility. This Trust was created specifically for individuals who have excess monthly income for purposes of qualifying for Medicaid. Under the current 2010 law, in order to qualify for Medicaid, an individual is allowed to have a monthly income of no more than $767.00 per month, and if that individual is married, the allowable monthly income is $1,117.00. In the event that an individual applying for Medicaid has monthly income that exceeds these meager limits, the individual will be required to pay the difference, referred to as the “monthly overage” to the Medicaid agency each month in order to qualify for benefits. However, many people find it difficult to pay their monthly expenses with only the income allowance that Medicaid provides.

The purpose of the Community II Trust is to allow these individuals to transfer their monthly income overage to the Trust, rather than to pay it to the Medicaid agency and yet remain fully eligible for Medicaid benefits. Once the monthly overage is paid to the trust, the monies are deposited into the individual’s “sub-account” and will remain available to the individual for his or her use for approved non-medical expenses. These distributions assist in meeting those needs not met, or not intended to be met, by community based home care Medicaid benefits, such as food, clothing, rent, household utility bills in the name of the individual, televisions, computers and music. In addition, certain disbursements, such as charges for tobacco and alcohol and cash advances on credit cards may be disallowed due to the legal requirements of the Trust.

Upon the death of the individual, final disbursements may be made for pre-death expenses, however no disbursements will be allowed for expenses incurred after death, such as charges for a funeral or burial. The remaining balance in the individual’s account is not distributed to the family but is rather paid to NYSARC’s “Remainder Sub-Account” and it may then be used to provide assistance to other individuals with disabilities who are enrolled in the Trust. These remaining funds in an individual’s sub-trust account at death are not required to be repaid to the State as reimbursement for the benefits that were paid by the State for the benefit of the individual, as long as these funds remain with the not-for-profit corporation to assist other individuals with disabilities.

This Memorandum is based on current law and is for informational purposes only. It is important that you discuss all legal options and consequences with a qualified elder law attorney prior to any action. Should you wish to discuss your situation with us, please call (631) 424-2800 for a consultation. For additional Memoranda, please call or visit our website at www.elderlaw.pro.