Some people believe that only poor and low-income seniors qualify for Medicaid. However, with proper and thoughtful estate planning and the help of an attorney who specializes in Medicaid planning, all but the very wealthiest people can often qualify for program benefits.
The Medicaid program covers long-term nursing home care costs and many home health care costs, which are not covered by Medicare. Let’s look at how to restructure your assets to qualify for Medicaid.
What Is Medicaid?
Unlike Medicare, Medicaid isn’t a federally run program. Each state determines its own Medicaid eligibility criteria, eligible coverage groups, services covered, administrative and operating procedures and payment levels within broad federal guidelines.
Two Trusts To Consider
If your income exceeds your state’s Medicaid eligibility threshold, there are two commonly used trusts that can be used to divert excess income to maintain your program eligibility. These income trusts are designed to create a legal pathway to Medicaid eligibility for those with too much income to qualify for assistance, but not enough wealth to pay for the rising cost of much-needed care.
Qualified Income Trusts (QITs)
Also known as a “Miller trust,” this is an irrevocable trust into which your income is placed and then controlled by a trustee.
The restrictions are tight on what the income placed in the trust can be used for (e.g., both a personal and if applicable a spousal “needs allowance,” as well as any medical care costs, including the cost of private health insurance premiums). However, due to the fact that the funds are legally owned by the trust (not you individually), they no longer count against your Medicaid income eligibility.
Pooled Income Trusts
Like a QIT, these are irrevocable trusts into which your “surplus income” can be placed to maintain Medicaid eligibility. To take advantage of this type of trust, you must qualify as disabled.
Your income is pooled together with the income of others and managed by a non-profit charitable organization that acts as trustee and makes monthly disbursements to pay expenses on behalf of the individuals for whom the trust was made. Any funds remaining in the trust at your death are used to help other disabled individuals in the trust.
About Medicaid Asset Tests
Like income limitations, the Medicaid “asset test” is complicated and varies from state to state. Generally, your home’s value (up to a maximum amount) is exempt, provided you still live there or intend to return. Otherwise, most states require you to spend down other assets to around $2,000/person ($4,000/married couple) to qualify.
Senior health by <a href=”http://www.nyphotographic.com/”>Nick Youngson</a> <a rel=”license” href=”https://creativecommons.org/licenses/by-sa/3.0/”>CC BY-SA 3.0</a> <a href=”http://pix4free.org/”>Pix4free</a>