Senate Passes Legislation Supporting Special Needs Trusts for Disabled Seniors

Bill prevents MassHealth from penalizing seniors for using pooled trusts to pay for essential goods and services 

(BOSTON – 07/26/2022) The Massachusetts State Senate on Tuesday passed legislation to promote the wellbeing of senior citizens with disabilities by clarifying their right to create and access pooled trusts while also receiving MassHealth benefits. Pooled trusts can provide funding to help seniors with disabilities to pay for items and services which are not covered by MassHealth, such as home care services, uncovered medical, dental and pharmacy costs, transportation, clothing, and household items.  

“MassHealth serves some of the Commonwealth’s most vulnerable residents,” said Senate President Karen E. Spilka (D-Ashland). “Senior citizens and people with disabilities deserve to be able to save and make smart financial decisions for their living expenses without having to worry about their eligibility for MassHealth. I want to thank Senator Jehlen for pushing for this legislation and Senator Rodrigues for his committee’s review.” 

“The passage of this legislation today strengthens our support for our older disabled population by improving their quality of life and makes aging in Massachusetts a more caring experience for this population in need,” said Senator Michael J. Rodrigues (D-Westport), Chair of the Senate Committee on Ways and Means. “I would like to thank the Senate President for her continued support, along with Senator Jehlen and others for their advocacy, ensuring we help to preserve funds for this vulnerable population, while protecting their eligibility for public benefits.” 

"For decades, disabled people have been able to use special needs trusts to pay for important services not covered by MassHealth," said Senator Patricia D. Jehlen (D-Somerville), lead sponsor of the bill. "The trusts allow them to qualify for MassHealth while preserving enough assets to pay for items not allowed by Medicaid rules, such as home care, transportation, dental care, clothing, and personal care items.  When the beneficiary of a special needs trust dies, any remaining assets are returned to the Commonwealth.  Millions of dollars are recovered from these trusts each year." 

Pooled trusts, which are managed by nonprofit organizations, combine the resources of many beneficiaries for the purposes of administrative cost-effectiveness and investment optimization. In Massachusetts, they have been used to give people with disabilities a way to access health care benefits, such as those offered by MassHealth, while depositing additional funds into the trust to pay for items and services not covered by those benefits.  

Historically, disabled individuals of any age have been permitted to join pooled trusts without interfering with their MassHealth eligibility. In 2019 however, a federal court decision held that a Medicaid penalty may be imposed on a senior who creates a pooled trust account which is not regarded as a ‘fair-market value’. This makes it possible for MassHealth to penalize disabled individuals aged 65 and over who set up a pooled trust. This legislation would prevent this by requiring MassHealth to regard all pooled trusts as ‘fair-market value’.  

Having passed the Senate this legislation now goes on to the House of Representatives for enactment.