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What is a Medicaid Trust, and How Can it Help Me?

If you are getting older, chances are that you have considered how you will pay for your long-term care needs should you need care in your home or in a facility. Long-term care is very expensive and it becomes more difficult to pay for if you will be relying on your savings or other assets.  Medicaid may be a viable solution, but first, you may need to consider placing assets into a Medicaid trust to protect your assets and qualify for Medicaid.

What is a Medicaid Trust?

            A Medicaid trust, more properly known as a Medicaid Asset Protection Trust, is a type of trust used in Medicaid planning. Like all trusts, a Medicaid trust involves someone (known as a grantor or trustor) giving their property over to someone else (known as a trustee), who is responsible for managing the grantor’s property. The property in the trust becomes an asset of the trust and the trustee oversees and manages the trust assets.

What makes it special is how it is used. While there are many types of trusts that serve many different purposes, a Medicaid trust is used specifically to remove the assets out of a person’s name to assist him or her in qualifying for Medicaid to pay for long-term care.   This type of trust can be useful for people who may want to obtain Medicaid benefits but would normally not qualify due to excess assets.

Why Would I Need a Medicaid Trust?

            Medicaid can provide healthcare benefits for people who need long-term care, either in the form of community Medicaid (e.g. home care services) or in residential nursing facilities (e.g. nursing homes). However, to qualify for Medicaid, you must be below a certain income threshold, and the value of your assets cannot exceed a certain amount. In other words, if you have too much in monthly income or have too many assets, you cannot obtain Medicaid benefits without proper planning.

There are certain exceptions that will exclude your assets from being counted by Medicaid when determining your eligibility.  One such exception is the creation of a Medicaid trust, if it is properly drafted and if is created 5 years before you need Medicaid’s assistance.

If you place your property in a properly drafted Medicaid trust, that property is exempted from being counted so long as you create it 5 years before applying for Medicaid. Therefore, you may be able to qualify for Medicaid benefits even if you normally would have too many assets, if you place those assets in a Medicaid trust.

When Should I Transfer Out My Property?

If you think you may need long-term or would like to apply for Medicaid at some point in the future, you should consider placing your assets in a properly drafted Medicaid trust as soon as possible. A recently enacted law has established a thirty (30) month “look-back” period for anyone seeking community Medicaid benefits to pay for home care services.  This “look-back” period allows Medicaid to review all your finances over the last 30 months prior to the date you apply for their assistance.  A five year look back period is already in place for Medicaid nursing home benefits.

If you transferred property into a Medicaid trust to qualify for Medicaid benefits during the relevant look-back periods, you may be ineligible for Medicaid for a certain period of time. This would result in you having to pay for your care privately out of your own funds.  This can be avoided if you plan properly and consider a Medicaid Asset Protection Trust.  Thus, the sooner you begin planning for Medicaid, the better.

Whether for yourself or for a loved one, planning for Medicaid and elder law matters can be overwhelming and emotionally taxing. The legal professionals at Hobson-Williams P.C. will advise you on the options available to you, and help you establish a plan that best suits your needs. Call (718) 210-4744 or visit our contact page to speak to one of our attorneys and learn how Hobson-Williams P.C. can help you gain the peace of mind that comes from being prepared for the future.

Written by Tanya Hobson-Williams

Appointed to the bench by the Board of Trustees in 2008, and elected in 2009, Tanya Hobson-Williams was the first African-American Female Justice in the Incorporated Village of Hempstead. Tanya Hobson–Williams obtained her B.A. in Government and Politics from St. John’s University and her law degree from Benjamin N. Cardozo School of Law.

Tanya Hobson-Williams has an active elder law practice assisting senior citizens in obtaining Medicaid for Home Care and Nursing Home Care. She routinely lectures at senior citizen centers, assisted living facilities, law schools and counsels families on a variety of topics of concerns to families caring for the elderly.

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Author: Tanya Hobson-Williams

Appointed to the bench by the Board of Trustees in 2008, and elected in 2009, Tanya Hobson-Williams was the first African-American Female Justice in the Incorporated Village of Hempstead. Tanya Hobson–Williams obtained her B.A. in Government and Politics from St. John's University and her law degree from Benjamin N. Cardozo School of Law. Tanya Hobson-Williams has an active elder law practice assisting senior citizens in obtaining Medicaid for Home Care and Nursing Home Care. She routinely lectures at senior citizen centers, assisted living facilities, law schools and counsels families on a variety of topics of concerns to families caring for the elderly.

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