A Medicaid Trust protects a Medicaid applicant’s assets from being counted for eligibility purposes, as well as protecting the assets for one’s children and other relatives. This type of trust enables someone who would otherwise be ineligible for Medicaid to become Medicaid eligible and receive the care they require, be it at home or in a nursing home. Assets in this type of trust are no longer considered owned by the Medicaid applicant. This type of trust is not suitable for persons who need Medicaid immediately or within a short period of time because a Medicaid Trust is a violation of Medicaid’s look back period if not set up prior to five (5) years before one applies for Medicaid.
The assets in a Medicaid Trust not only allow one to meet Medicaid’s asset limit without “spending down” assets, but are also protected for the beneficiaries listed by the trustee and are safe from Medicaid estate recovery. When a Medicaid recipient passes away, the state in which the individual lived and received Medicaid benefits attempts to collect reimbursement for which it paid for long-term care. If one’s assets are in a Medicaid Trust, however, the state cannot come after those assets.