You are here: Home Government ... Medicaid: How To ... Create A Medicaid Trust
Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
Information about all aspects of health care from choosing a doctor and treatment, staying safe in a hospital, to end of life care. Includes how to obtain, choose and maximize health insurance policies.
Answers to your practical questions such as how to travel safely despite your health condition, how to avoid getting infected by a pet, and what to say or not say to an insurance company.

Medicaid: How To Plan Ahead For Long Term Care Coverage

Create A Medicaid Trust

Next » « Previous


Many people are concerned that nursing home costs could impoverish them before qualifying for Medicaid, leaving them with nothing to pass on to the next generation.

There is an instrument called a "Medicaid Trust" or sometimes called a "Special Needs Trust" that people use with the goal of protecting assets for heirs while still qualifying for Medicaid to pay nursing home bills.

If your estate is of such a size that this is a real concern for you, consult a reputable attorney about these trusts. Investigate your options thoroughly. There have been some bad apples who have created trusts for people that don't work as Medicaid Trusts.

Consider the following points when exploring these trusts:

  • Medicaid trusts have been ruled ineffective at protecting assets from Medicaid by the courts in some jurisdictions.
  • To be effective, the principal (the assets you put into the trust) must be permanently separated from the grantor (you, the person putting the money into the trust.) There is no real transfer for Medicaid purposes if ownership can be reestablished.
  • While the person who sets up the trust has use of the income from the trust, Medicaid has the right to require that the income be used to satisfy medical bills before Medicaid pays for remaining bills, which effectively erases all income from all but the largest trusts.
  • The look-back period for the transfer of assets into a trust is five years (60 months). See Medicaid and Long Term Care.

Certain trusts are not counted as being available to the individual. They are:

  • Trusts established by a parent, grandparent, guardian, or court for the benefit of an individual who is disabled and under the age of 65, using the individual's own funds.
  • Trusts established by a disabled individual, parent, grandparent, guardian, or court for the disabled individual, using the individual's own funds, where the trust is made up of pooled funds and managed by a non-profit organization for the sole benefit of each individual included in the trust.
  • Trusts composed only of pension, Social Security, and other income of the individual, in States which make individuals eligible for institutional care under a special income level, but do not cover institutional care for the medically needy.
  • In all of the above instances, the trust must provide that the State receives any funds, up to the amount of Medicaid benefits paid on behalf of the individual, remaining in the trust when the individual dies.
  • A trust will not be counted as available to the individual where the State determines that counting the trust would work an undue hardship.

Please share how this information is useful to you. 0 Comments


Post a Comment Have something to add to this topic? Contact Us.

Characters remaining:

  • Allowed markup: <a> <i> <b> <em> <u> <s> <strong> <code> <pre> <p>
    All other tags will be stripped.