Seniors Consider Medicaid Trust for Future

 Posted on July 02, 2014 in Estate Planning

Senior citizens who own property and assets often have difficulties qualifying for certain government programs. Healthcare, especially long-term healthcare, for seniors is critical. However, many private insurance companies are too expensive.

In order for a person to be eligible for Medicaid nursing home benefits, he or she cannot have more than $14,400 in countable resources. There are some resources a senior may own that are exempt under certain circumstances, including retirement funds and his or her home.

When applying for Medicaid nursing home benefits, the agency looks back at the prior five years to see if there was any movement of financial resources, including gifts, which could be construed as an attempt to hide assets in order to qualify for Medicaid. These gifts will disqualify the individual from nursing home benefits for an amount of time which is determined by the amount of the gift.

For example, if a senior makes a gift to his or her child in the form of a revocable trust within the five years prior to applying for benefits, this would be considered a disqualification.

However, a person may set up an irrevocable Medicaid trust. Irrevocable means the person setting up the trust cannot change it. Although Medicaid still applies the five year penalty to this trust as well, a Medicaid trust could offer protection of the individual's other property should they need nursing home care.

In a Medicaid trust, an appointed trustee holds control of the assets of the trust. Any income that is generated from the trust is given to the individual who set it up. If the individual is placed in a nursing home, the income from the trust then goes towards nursing home costs and leaves all the individual's other property protected. Upon the individual's death, the amount of the trust is then given to the beneficiaries.