How Do Trusts Effect My Medicaid Eligibility?
Frequently Asked Questions:
First Some General Principles.
It is important to remember that Medicaid can only look at transfers occuring within the previous five years before an application for benefits is filed. However, Trusts present some special rules that can enable Medicaid to count trust property against an applicant for eligibility purposes, even if the transfer was made more than five years prior to the application date. Now, with the passage of OBRA 93 if a trust was established or contributed to by the applicant and the trustee has the discretion to distribute trust property to the Medicaid applicant, the entire trust corpus will be counted against the applicant for eligibility purposes. Therefore, there are now only a select few "trusts" which will still allow for eligibility.
Can I transfer my propert to a trust in order to Qualify for Medicaid?
Generally, No; but the answer is it depends. If the trust you are considering transfering property to is irrevicable and does not allow for an income interest to the settlor (you), then you could try to transfer funds to the irrevocable trust and wait out the 5 year look-back period. If, however, you needed to file an application for benefits within the five years after making the transfer to the trust, you would be assessed a penalty for the amount of the transfer. What's worse, since the trust is irrevocable, you would not be able to transfer the trust funds back to yourself in order to do further planning. For this and other reasons, this is generally not an advisable solution to Medicaid eligibility. For instance, most are not comfortable transfering their money to a trust without having an income or beneficiary interest.
There are certain types of trusts that are excluded for Medicaid purposes under certain specific circumstances. Those include: Under 65 Supplemental Needs Trusts, Miller Trusts, Pooled Special Needs Trusts, and Trusts for the "sole benefit" of a person with a disability.
If my income it too high, can I assign it to a Trust?
Yes! This type of trust is a Qualified Income Trust or more commonly, a Miller Trust. A Miller Trust allows an applicant making more than the allowed Medicaid cap, currently $2,049 per month, to assing their monthly income to the Miller Trust. The applicant would then be allowed to retain their monthly needs allowance, pay unreimbursed medical expenses, insurance premiums, etc. The remaining funds in the trust would then go to the nursing facility as a Medicaid co-payment. If done correctly, there should be no money remaining in the trust at the end of each monthly income cycle. This method allows an applicant with an income, for example, of $3500 per month, to qualify for benefits.
Can I leave money to my children in Trust without preventing their future Mediciad eligibility?
Yes! Trusts that were not established by the applicant, but rather by some third party, inluding parents or other relatives, by will of the community spouse, or by will(s) of the recipients of gifts during the planning process are excluded as resources for Medicaid eligibility purposes. In order to be excluded the trust must have been funded by someone other than the applicant. Even more beneficial is that the Texas Long-Term Care Medicaid program will not count the assets of a third-party-settled trust as a resource against the applicant even if given broad discretion to distribute funds for the applicants health and maintenance. What is important is that the trustee's discretion be either absolute or limited to distributions that supplement, but do not supplant or replace state benefits. Most if not all forms for " supplemental needs trusts" include this language. Still, you should consult an elder law attorney before creating such a trust.
The Council Law Firm, PLLC is ready to assist you with your long-term care funding issues. Whether your family is in a Medicaid Crisis situation or are in need of some advanced plannning for future care, we have the ability to guide you through this process and develop the most efficient method of obtaining long-term care.
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