A Medicaid Trust is an Irrevocable Trust that provides a way for Medicaid applicants who have assets over Medicaid’s limit to become eligible for Medicaid long term care. Simply stated, these trusts protect a Medicaid applicant’s assets from being counted for eligibility purposes. This type of trust enables someone who would otherwise be ineligible for Medicaid to become Medicaid eligible and receive the care they require be at home or in a nursing home. Assets in this type of trust are no longer considered owned by the Medicaid applicant. Medicaid Trusts also protect assets for one’s children and other relatives.
Planning well in advance of needing long-term care Medicaid is the best course of action when considering a Medicaid Trust. This type of trust is not suitable for persons who need Medicaid immediately or within a short period of time. This is because a Medicaid Trust are 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 the assets are also protected for the beneficiaries listed by the trustee. Additionally, the assets 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. However, if one’s assets are in a Medicaid Trust, the state cannot come after those assets.