Medicaid Trusts

Millions of Americans require long-term care each year—  and this care cost is big. How can you prevent your assets from being used to cover an extended stay in a nursing home or facility? Long-term care insurance is one option, but it can be expensive. This offers a more affordable alternative that will protect your assets.

What is a Medicaid Trust?

Essentially, a Medicaid trust allows the grantor— the person to whom the assets belong— to transfer their assets into an irrevocable trust, which will be distributed to per the grantor’s instructions after their death. The assets are available for the grantor’s use, but they don’t have control over them.
That said, you can’t transfer assets to a trust days— or even months— before you apply for Medicaid. There’s a five year look-back period; basically, Medicaid can look through your assets from as far back as five years prior to determine if you’ll be required to undergo a spend down to qualify.
If you transferred, say, your house into a Medicaid trust just four years ago, you might be forced to sell it in order to qualify for Medicaid.
This isn’t an attempt to force you to divest yourself of your assets; rather, it’s a response to the rampant, systemic fraud that was all too common within the Medicaid system.
Remember, Medicaid is intended to serve people who don’t have the money to pay for their care– not millionaires who want to give all their money to their children.

The Benefits of Medicaid Trusts

Low Cost

Unlike long-term care insurance, this kind of trust will not require a big expenditure to set up. Long-term care insurance only grows more expensive as you get older, and the prohibitive coverage restrictions mean that you can’t guarantee that you’ll be covered even if you decide to take on the cost. It will protect your assets and save you money in the long run.

Protect Assets from Spend Down

In order to qualify for Medicaid, you’re required to “spend down” your assets. An irrevocable Medicaid trust will allow you to hold on to these assets and get the assistance from Medicaid that you need. Your family members will be able to keep the precious heirlooms or valued assets after you’re gone.

Adhere to the Law

You want to protect your assets to ensure that they’re distributed according to your wishes. Unfortunately, unless you protect them with this kind of trust, failing to report these assets when it comes time to apply for Medicaid is illegal— in fact, it’s considered to be fraud. It gives you the protection you want in a legal and fiscally responsible manner.

Is This Right Fit For Me and My Loved Ones?

Close to three-quarters of Americans over the age of 65 will require some form of long-term care assistance at some point. Even though long-term care isn’t on the horizon for you right now, it’s likely that you’ll need it eventually. Why not prepare for the inevitable? Forming this specific trust will simply dissociate you from your assets, enabling you to get the assistance you need as soon as you need it— without losing the assets you hope to pass on to loved ones some day.

While long-term care insurance might sound like a safer bet, it’s a bet that will cost you a lot of money in the long run. Choosing this kind of trust will give you the protection you want without the hefty price tag that’s routinely attached to long-term care insurance.

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How Does a Medicaid Trust Work?

Transfer Assets
to Trust

The Grantor (i.e., the person or persons to whom the assets belong) transfers the assets to a Medicaid trust. There is a five-year “look-back” window, in which you’re permitted to transfer assets to the trust or “sell” assets to family or friends for below market value prior to applying for long-term care. If you don’t transfer or sell your assets within five years before you enter a long-term care or assisted living facility, transfer of these assets might not be permitted.


Apply for Medicaid

Medicaid covers long-term care costs for people who do not have the funds available to pay for their own care. However, this coverage will only begin after the Grantor has completely depleted their assets. This kind of trust legally disassociates the Grantor from their assets so Medicaid coverage can begin. 

Health Care and
Long-Term Care Facility Costs

 Medicaid will pay the costs associated with health care, ranging from doctor visits all the way to nursing home and at-home health care. This coverage will last until your death.

Distribution of Assets

After your death, your beneficiaries will be awarded all of the assets in your Medicaid trust. They will not be required to reimburse Medicaid or the long-term care facility or at-home care professionals.

What If I Need More Than a Medicaid Trust?

Obtaining the services of an experienced elder care attorney is a step in the right direction. An elder law attorney will help you navigate the challenges related to issues that arise as you and your loved ones grow older. Port Legal specializes in Life Care Planning and Elder Care Planning, ensuring that our clients are properly cared for and their loved ones are protected in the event of their death. Port Legal is a member of Elder Counsel, an organization that focuses on providing quality elder law education. When you’re ready to discuss the many challenges that accompany aging, let’s talk.


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