Money deposited into a special needs pooled trust for an 87-year-old Maine woman made her temporarily ineligible for Medicaid benefits to pay for her long-term care, a federal court said.

The transfer to a trust for the benefit of Yvonne Richardson didn’t quality for an exception to the Medicaid Act’s transfer provision, which generally prohibits Medicaid-eligible people from trying to hide assets by transferring them for less than market value while receiving or shortly before applying for benefits, the U.S. Court of Appeals for the First Circuit said June 20.

The court’s decision is consistent with rulings from other jurisdictions...