Frank submitted his Medicaid application without even considering the trusts he had created for his grandchildren. In his mind, the money in those trusts already belonged to someone else, so he didn’t need to include the trusts among his assets. Plus, his friend used a trust to qualify for Medicaid, so Frank believes trusts can only work in his favor.
He was shocked when his application was denied. The money in those trusts wasn’t much, but technically it did still belong to him, and it pushed him over Medicaid’s eligibility asset limit. Leaving something to his grandkids was a point of pride for Frank, and now he’s despondent because he might need to use the money from those trusts to pay for the long-term care he thought Medicaid was going to cover.
If you (or your loved one) own any kind of trusts and are expecting to apply for Medicaid, our Medicaid Trust Assessment is for you. Our team of professionals at Eldercare Resource Planning can tell you if the trust will be counted toward Medicaid’s eligibility asset limit, or if it will be exempt. If it will be counted and it’s value puts your or your loved over the asset limit, our Certified Medicaid Planners can help you design a strategy to receive care while reducing your assets to become Medicaid eligible.
There are trusts that can be used to gain eligibility, just like Frank’s friend did in our example above, and they’re called Medicaid Asset Protection Trusts (MAPTs). Any asset placed in a MAPT will not count toward the asset limit. What’s more, any asset in a MAPT is protected from your state’s Medicaid Estate Recovery Program, which is required by law to try and collect reimbursement for long-term care expenses paid by Medicaid after the death of the beneficiary. So, a MAPT could be used to keep assets (including a home) exempt from the asset limit and safe as an inheritance. But there’s one catch – MAPTs violate the Look-Back Period.
To prevent applicants from simply giving away their assets to get under the asset limit and qualify for Medicaid, states use the Look-Back Period. In most states, the Look-Back Period is five years. This means the state will look back into the applicant’s financial history for the five years before they applied to make sure they have not given away any assets or sold them at less than fair market value. If they have, their application will be denied and they will receive a penalty period of ineligibility. Because someone other than the Medicaid beneficiary will be getting the assets from a MAPT after the beneficiary’s death, creating a MAPT is considered giving away assets, which is why is it violates the Look-Back Period.
However, if you start planning far enough in advance (at least five years in most states), you can use a MAPT to protect your resources and still qualify for Medicaid. But it’s not recommended you try this on your own. MAPTs, like all trusts, are legal documents that must follow guidelines set forth by the state in order to be valid and Medicaid-compliant. Our team of professionals understand these guidelines and the rest of the complex Medicaid system, so contact us now. We can tell you if a MAPT will work for you, and how the trusts you already own might impact your Medicaid eligibility.