How does Medicaid Asset Protection Trust work?

How Does a Medicaid Asset Protection Trust Work in Buffalo

Relocating to a nursing facility can cost a bomb. You could spend around $5,000 to $10,000 a month or more in expenses. If you reside in Massachusetts, you could spend as much as $15,000 due to the expensive nature of its nursing homes.

An expense as huge as that can make you broke or in a huge debt. Medicaid will help you settle the bill if your income and assets are low enough for you to qualify for the benefits of this government-funded program.

The issue, however, is that you may have to be nearly penniless before you can qualify for this benefit. If you are wise, and you decide to place your assets in a Medicaid Asset Protection Trust, you might be able to qualify for Medicaid, even if your assets surpasses the limit. Here is what you need to know about Medicaid Asset Protection Trust including how it works.

What is Medicaid?

A lot of people are familiar with the term Medicaid but they don’t really know what it means. Medicaid refers to a public health insurance program that offer health care coverage to low-income families and persons in the US. Medicaid is jointly funded by the federal government and respective states. It is operated at the state level, which denotes that coverage and administration differs from state to state.

Medicaid is available to only people and families who meet certain income-based requirements. Recipients are U.S. citizens, permanent residents, or legal immigrants. Around 70.6 million individuals were enjoyed the benefits of Medicaid as of September 2020. 

Medicaid income and Asset Limits

Before you are considered as a worthy Medicaid applicant, you need to be eligible. Eligibility for this government-funded benefit varies by state. Generally, you must have a meagre or zero income and some countable assets to be deemed eligible for this benefit. Each state also has non-economic requirements, like age, disability, including household size, depending on your situation.

Worthy of note is, Medicaid doesn’t consider all your assets when calculating the asset limit. For instance, if your spouse live in your main house, Medicaid wouldn’t consider the property; in other words, Medicaid will exempt it. The value of the property doesn’t count towards your state’s asset limit. There are thresholds on the amount of equity that isn’t considered. The threshold differs from state to state.

Extra examples of assets that can be exempt, include a vehicle, term life insurance, household furnishings, clothing, wedding and engagement rings, including other personal belongings. Medicaid doesn’t consider prepaid funeral and burial preparations or life insurance policies with small cash value in determining one’s eligibility for the government-funded medical care aid.

Medicaid doesn’t count these items towards the asset limit:

  • Bank accounts
  • Cash
  • Investments
  • Vacation homes
  • Retirement accounts that aren’t yet in payout status (only in a few states). In some states all retirement accounts regardless of it’s in payout status or not are countable.

How does Medicaid Asset protection Trust works?

When you place your assets into a Medicaid Asset Protection Trust (MAPT), Medicaid doesn’t count the items placed in it towards the asset limit after a specific period. You aren’t the owner of the items placed in the trust, all that is in the trust is owned by the trust. Medicaid doesn’t count assets that you don’t own. The trust can protect the assets and allow it to be distributed to your beneficiaries when the time comes.

Worthy to note is that, Medicaid Asset Protection Trust can also be regarded as Medicaid planning trust, home protection trust, or Medicaid Trust. Ensure that the trust you choose is Medicaid-compliant. Most revocable living trusts, family trusts, irrevocable funeral trusts, including qualifying income trust (QITs, also regarded as Miller trusts) aren’t Medicaid compliant. This means that, these trust wouldn’t project your assets if you want to be eligible for Medicaid to pay for a nursing home.

Need an Elder Law Attorney?

Do you intend to apply for Medicaid but don’t know how to go about it? Or do you wish to set up a Medicaid Asset Protection Trust? If yes, don’t hesitate to call our office. We boast of the best Medicaid attorneys who are experienced in matters regarding Medicaid.


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