7 Things to Know About Nursing Home Trust Funds


Nursing homes sometimes offer residents the option of setting up a trust fund—a financial account into which money can be deposited to pay for everything from care expenses, to incidentals, such as haircuts or items from an in-house gift shop.

But a recent investigation by USA TODAY reveals that these accounts may not provide the safest option for residents to store their cash. In the span of just three years, over 1,500 citations have been handed out to nursing homes for improper use of trust fund finances. The grievances range in severity from poor management and oversight, to outright theft of tens of thousands of dollars.

For concerned family members, entrusting even a small sum of a loved one’s money to a nursing home can be a difficult decision to make, particularly in light of these recent discoveries. But there are concrete steps you can take to prevent a your elderly loved one from becoming a scam victim.

To help ensure your family member's finances are safe and well-managed, some important things to keep in mind about nursing home trust funds are listed below.

  1. A Resident Doesn't Have to Have One
    It is against the law for a nursing home to require a resident to set up a trust fund account. This is true, regardless of whether your loved one is on Medicaid, Medicare, receives monthly Social Security checks, or utilizes a combination of financial resources to pay for care. The list of nursing home resident rights put forth by the Centers for Medicare and Medicaid (CMS) explicitly states that individuals are free to manage their money however they wish. Thus, your loved one can opt to set up a trust fund, but they can’t be forced to.
  2. Accounts Can Earn Interest
    The typical nursing home trust fund account shares many similarities with a regular bank account. Depending on the requirements of a given facility, your loved one may be eligible to earn interest on the money they deposit. Nursing homes are also required by law to regularly update residents on the status and activity of their accounts.
  3. It’s Still Your Loved One’s Money
    Setting up a trust fund with a nursing home is not equivalent to turning control of your loved one’s money over to the facility itself. The money in the account remains in the possession of the account holder and residents’ finances must be kept separate from the facility’s operating funds. The resident (or someone they designate to act financially on their behalf) is the one who decides what to do with the money in the account.
  4. You Have a Right to Be Kept in the Loop
    Because the money placed in a nursing home trust fund still belongs to your loved one, they have the right to know how the facility keeps track of it. Effective monitoring by the nursing home itself can cut down on the chances that funds in the accounts will be misused or stolen by unscrupulous employees. When considering depositing money with a nursing home, ask how often they perform internal audits on trust fund accounts. This will give you a better sense for how safe your loved one’s money will be.
  5. Facilities Must Take Steps to Safeguard Residents’ Money
    In order to provide financial protection to residents who set up trust fund accounts, many states require nursing homes and assisted living facilities to purchase Patient Trust Surety Bonds. These documents act as a type of insurance, containing language that dictates how the facility must go about managing the funds deposited by its residents. In order to receive a surety bond, the facility must submit to a vetting process that includes a credit check. If a nursing home reneges on the obligations outlined in the bond document, residents can file a claim and may be eligible to be reimbursed for any money lost.
  6. Do Your Homework Before Making a Decision
    Medicare and Medicaid-certified nursing homes are subject to regular investigation by both state and federal organizations. Each facility’s results are posted on Medicare’s Nursing Home Compare website. While a solid ranking offers no guarantees, researching a facility’s reputation is a critical first step towards finding the right nursing home for your loved one and it may make coping with a nursing home decision a bit easier.
  7. What Happens When a Loved One Passes
    If your loved one dies while in a nursing home and they still have money remaining in their trust fund account, the facility must surrender those funds to the individual managing the deceased’s estate within 30 days.
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Nice article! One thing I have found surprising is that often family do NOT even realize that their parent or elder in the NH has each month a "personal needs allowance" of $ 35 - $ 90 and it is placed in a trust account @ the NH. They hear that all of mom's $ is their co-pay required by Medicaid and have the NH get their SS check &/or their retirement sent directly to the NH. SInce they never deal with the money, they are often unaware that each month the trust is building by their personal needs allowance. My mom's PNA is $ 60 a month and so that is a good bit ($ 720.00 annually) to just be overlooked.

In looking @ NH for my mom, almost all of them said something like …"we find it is simpler, easier, more efficient for family to have the elder's monthly income sent directly to the NH". One NH told me that if I were to write the check for my mom's SOC rather than have mom SS & retirement sent to them, that I would need to have 1 month's average stay paid in advance. Total b.s.

I do think there is a bit of planned scheming going on with the PNA & the trust fund. Like the NH's in which all rooms are charged a "cable fee" or " in room phone fee" which runs 50% or so of the PNA. And there is no easy opt-out on the fees as the room is wired for cable or has a phone mounted on the wall in the room.

One good test on a NH is to ask how family can access the trust account and then ask to see the ledger for this. If it can really only be done easily during the weekday by going to the business office, then that is not very user friendly for family.
Very good, but I have a question, My mom is in a home & I was informed in November she had $6200.00 in her account & they would not give it to me, I am the one who set up the account 7-8 years ago & I was angry that the .... would not give it to me. I immediately stated a case & became her payee. Now when I call to have the money released it's only $1400. They said they had to spend it down so medicare would not kick her out, 1st is that even legal & 2nd since I had started the procedure to become payee, should that not have been my decision?
Medicare is NOT the issue. But based on what your posted, Medicaid is, I'll bet. Medicaid allows for a set amount for them to have as an asset. Most states have this at 2K, so if you let their PNA build up each month and it goes over the 2K maximum, it is a problem and will cause mom to be canceled by Medicaid as she is over the allowed asset amount. So for my mom @ $ 60 a month, then if I did nothing - took no funds out - then after 34 months mom would be over her asset limit and kicked off Medicaid. She would need to reapply…….not good.

So I'm guessing mom is on Medicaid and her state's max is $ 1,400? You need to find out the exact amount of her monthly allowance and asset limit, so that this doesn't happen again. ALso the NH should have send whomever is mom's contact a statement as to the PNA. My mom;s NH does this every 90 days and it comes right about the same time as mom's every 90 days care plan meeting.

NH should provide an accounting of where the $ went to. You know some places have the ladies on a once a week hairdresser @ $ 15 a set, so that takes care of the $ 60 a month.If they went and spent all the fund to be able to have mom stay on Medicaid, actually that is good. Really you do not want to have to have mom removed as eligible for Medicaid and you have to go and put in a new application and with all that documentation for her. Realize that if she goes off Medicaid, the NH will have to have someone (you) private pay for her care till she is approved for Medicaid again. Medicaid - at least for my mom - took 5 1/2 months to be processed. It could be a lot of $$ that you have to front if you had to.

My gut feeling is that there is no skullduggery by the facility, just they had to do something and like NOW to keep her on Medicaid.

Geez I hope she wasn't suspended for Medicaid….you know at NH running 5K a month, that could be where the funds went.

Go to the business office to see exactly what's what. Good luck.