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Can trusts help me qualify for Medicaid?

On Behalf of | Oct 7, 2022 | Estate Planning

As we age and the prospect of increasing healthcare needs becomes more and more a reality or, at least, a soon-to-be possibility, you may begin to think about your legacy, your heirs and how to continue living without affecting those two concerns.

With nursing home costs now routinely exceeding $100,000 per year, the fear is that your entire estate could be depleted by those healthcare costs. This could leave you destitute and with nothing to pass on to your heirs.

What about Medicare?

Once you become eligible for Medicare, you discover the usefulness of the program. However, what many do not know is that Medicare does not cover nursing home care. Medicaid does. Therefore, many people look for ways to qualify for Medicaid before they entirely deplete their assets.

Medicaid has income and asset restrictions

Unfortunately, Medicaid has strict income and asset restrictions, which changes state-to-state. Many high-net-worth New Yorkers find qualifying for Medicaid exceedingly complicated, if not impossible without a drastic loss in resources.

If you have not reached 60, you may still qualify for affordable long-term care insurance, which can cover your assisted-living costs.

Medicaid trusts

If affordable long-term care insurance is not an option, then a Medicaid trust is the next best option. A Medicaid trust, also known as a home protection trust, Medicaid asset protection trust or Medicaid qualifying trust, allows you to qualify for Medicaid by transferring your assets to the trust.

What kind of trust?

Medicaid trusts are a type of irrevocable trust. This means that your assets and income are transferred from you into the Medicaid trust, where you no longer have access to them. In addition, since it is irrevocable, you lose your ability to modify the trust.

Essentially, this is the same style of trust as a special needs trust that allows disabled people to qualify for benefits as well. If you need assistance discussing or creating a Medicaid trust, a different irrevocable trust, or a revocable trust, an attorney comfortable with estate law can help you customize a plan for your estate.