A pooled trust is a nonprofit-managed account that holds money for a person with a disability so those funds don’t count against the resource limits for Supplemental Security Income (SSI) or Medicaid. SSI cuts off eligibility once countable resources pass $2,000 for an individual or $3,000 for a couple.1Social Security Administration. Spotlight on Resources An inheritance, a lawsuit settlement, or even ordinary savings can push someone past that line in a single deposit. A pooled trust gives the beneficiary a legal place to keep those assets, spend them on real needs, and keep benefits intact.
How the Structure Works
The trust itself is created and run by a nonprofit organization. Federal law, at 42 U.S.C. ยง 1396p(d)(4)(C), sets four requirements for the Medicaid asset-counting exception: the trust must be established and managed by a nonprofit association, each beneficiary must have a separate account within the trust, the trust must pool those accounts for investment and management purposes, and accounts can only be set up for the benefit of individuals with disabilities.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
In practice, your money goes into a sub-account with your name on it, and the nonprofit invests it alongside every other sub-account. That pooling lets smaller accounts reach professional investment management and diversified portfolios that would be impractical individually. The nonprofit handles investments, tax reporting, benefit-rule compliance, and disbursements. You do not manage the money directly, and that is part of what makes the exception work: the funds sit outside your control, which is what SSI and Medicaid require before they will disregard the balance.3Social Security Administration. SSA POMS SI 01120.203 – Exceptions to Counting Trusts Established on or After January 1, 2000
Who Qualifies
The beneficiary must have a disability under Section 1614(a)(3) of the Social Security Act, the same standard used for SSI and Social Security Disability Insurance.3Social Security Administration. SSA POMS SI 01120.203 – Exceptions to Counting Trusts Established on or After January 1, 2000 Receiving SSI or SSDI generally satisfies the requirement, and some nonprofits will also accept a physician’s disability determination.
Federal law limits who can open the sub-account: the individual with the disability, a parent, grandparent, legal guardian, or a court.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Siblings, friends, and case managers are not on that list, though a court order can sometimes fill the gap.
First-Party and Third-Party Accounts
The single most important distinction is whose money funds the account. It changes what happens at the beneficiary’s death and whether age matters.
First-Party Pooled Trusts
A first-party account holds the beneficiary’s own money: a personal injury settlement, an inheritance received directly, back payments from a benefit program, or personal savings. Because the money originally belonged to the person with the disability, federal law requires a Medicaid payback provision. When the beneficiary dies, any funds the nonprofit does not retain must first reimburse the state for Medicaid paid during the beneficiary’s lifetime.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
Age is a wrinkle. The pooled trust statute itself has no age cap, unlike individual special needs trusts, which must be set up before the beneficiary turns 65. But SSA policy notes that moving resources into a pooled trust after age 65 may trigger a Medicaid transfer-of-assets penalty, and whether it actually applies depends on state law.3Social Security Administration. SSA POMS SI 01120.203 – Exceptions to Counting Trusts Established on or After January 1, 2000 Anyone over 65 funding a first-party account should get state-specific advice before moving money.
Third-Party Pooled Trusts
A third-party account is funded by someone other than the beneficiary, usually a parent, grandparent, or other relative. Because the funds never belonged to the person with the disability, no Medicaid payback is required at death. The balance passes to whichever successor beneficiaries the trust document names. There is also no age restriction, which makes third-party accounts a practical option for beneficiaries over 65 whose family wants to set aside supplemental funds.
What the Trust Can Pay For
A pooled trust is meant to supplement government benefits, not replace them. It pays for goods and services that Medicaid and SSI don’t cover, or that improve quality of life beyond what those programs provide. Typical approved expenses include:
- Housing costs: rent, mortgage payments, property taxes, homeowner’s insurance, and home repairs
- Utilities: electricity, gas, water, phone, internet, and cable
- Transportation: car payments, insurance, gas, maintenance, and ride services
- Medical costs Medicaid does not cover, including dental, vision, therapy, and durable medical equipment
- Daily living: groceries, clothing, personal care items, and household goods
- Education and recreation: classes, adaptive equipment, vacations, hobbies, and entertainment
- Professional services: attorneys, accountants, and Medicaid planning consultants
- Prepaid funeral and burial expenses
Cash distributions straight to the beneficiary are almost universally prohibited. The nonprofit pays vendors and providers directly, or reimburses a caregiver against documentation. Gift cards, cash gifts to third parties, alcohol, tobacco, and life insurance premiums are commonly disallowed.
The 2024 Food Rule Change
Before September 30, 2024, paying for a beneficiary’s groceries with trust funds could reduce their SSI check because food counted as “in-kind support and maintenance.” A final rule removed food from ISM calculations entirely, so only shelter-related expenses still count.4Federal Register. Omitting Food From In-Kind Support and Maintenance Calculations Pooled trusts can now buy groceries without an SSI penalty, which had been a steady source of trouble for beneficiaries and trustees before the change.
What Happens at the Beneficiary’s Death
For first-party accounts, the statute gives the nonprofit two choices for whatever is left: retain it for the trust’s charitable purposes, or use it to reimburse the state for Medicaid paid during the beneficiary’s lifetime. Any funds the trust does not retain must go to Medicaid before any other creditor, administrative expense, or named successor beneficiary.3Social Security Administration. SSA POMS SI 01120.203 – Exceptions to Counting Trusts Established on or After January 1, 2000
Nonprofits vary widely in how they apply that choice. Some retain the whole remaining balance, so nothing goes to the state or to family. Others tie the retention percentage to how long the account existed or how large it was. Some retain everything when Medicaid’s claim would exceed the balance, but step aside if money would remain after payback so successors can receive it. Ask about the remainder policy before signing a joinder agreement, because it directly affects whether family sees anything at the end.
For third-party accounts there is no Medicaid payback. The balance passes to named successor beneficiaries or stays with the nonprofit, depending on the trust’s terms.
Opening a Sub-Account
Start by finding a nonprofit that runs a pooled trust in your state. Some serve multiple states, others only one. The document that connects your sub-account to the organization’s master trust is called a joinder agreement. You are not creating a new trust; you are joining one that already exists.
You will typically need the beneficiary’s identifying information, proof of disability (an SSI or SSDI award letter usually works), details about the funding source, and any relevant court orders or guardianship paperwork. Once the joinder is signed and accepted, you fund the account by depositing assets, usually a check made payable to the trust.
Fees vary. One-time joinder fees are common, along with monthly or annual charges that cover administration, investment management, and compliance. Some nonprofits use a flat monthly rate, others a percentage of assets under management. Compare both the upfront and ongoing costs, and treat the remainder policy as part of the price, because it is a cost you will not see until the account closes.
Pooled Trust or ABLE Account
ABLE accounts are a separate benefit-protection tool, and many people use both. The main differences:
- Control: an ABLE account is owned and controlled by the beneficiary; a pooled trust is administered by the nonprofit, which makes spending decisions.
- Contributions: ABLE accounts cap total annual contributions at $20,000 in 2026; pooled trusts have no contribution limit.5ABLE National Resource Center. ABLE Account Contribution Limits for the Calendar Year
- SSI treatment: up to $100,000 in an ABLE account is disregarded for SSI; pooled trust sub-accounts have no balance cap.5ABLE National Resource Center. ABLE Account Contribution Limits for the Calendar Year
- Age of onset: ABLE eligibility requires the disability to have begun before age 26; pooled trusts have no onset-age requirement.
For someone who qualifies for both, the two work together well. A pooled trust can deposit funds into an ABLE account, giving the beneficiary day-to-day autonomy while the pooled trust handles larger or less frequent expenses. For anyone whose disability began after age 26, or who needs to shelter a large lump sum, a pooled trust is often the only realistic option.