What is the effect of trusts on Medicaid eligibility?

Medicaid will not count the assets in a special needs trust or pooled trust if it meets the described criteria. Income directly diverted to one of these types of trusts or received and then placed into the trust is not counted as income. Verification that the income was placed into the trust is required.

Do trusts count against Medicaid?

Transferring your assets into a trust can make them non-countable for Medicaid eligibility, although they could be subject to the Medicaid look-back period if the trust is set up within five years of your Medicaid application.

Does a trust count as an asset?

Almost all trust funds are counted in the financial aid process, often as an asset of the child. As a general rule, voluntary restrictions on a trust, such as restricted access to the trust, do not prevent it from being counted during the financial aid process.

Is Social Security considered income for Medicaid?

Most Social Security disability and retirement income does count as income for purposes of Medicaid eligibility. The income figure used to decide whether you are eligible for Medicaid is known as modified adjusted gross income, or MAGI.

Does Medicaid look at your bank account?

Does Medicaid Check Bank Accounts? This one has an easy answer – yes. You will need to provide a variety of documents to verify the information you provide on your Medicaid application, and that is sure to include checking and savings accounts.

What qualifies as disability for Medicaid?

People under age 65 who qualify for Medicaid on the basis of a disability include adults and children with disabilities that they have had since birth and others who have disabling conditions acquired through illness, injury, or trauma.

What happens when you sell a house in an irrevocable trust?

Capital gains are not income to irrevocable trusts. They’re contributions to corpus – the initial assets that funded the trust. Therefore, if your simple irrevocable trust sells a home you transferred into it, the capital gains would not be distributed and the trust would have to pay taxes on the profit.

Can a trust be counted as a resource for Medicaid?

Where the trustee lacks discretion to distribute assets, those assets will not be counted as resources for Medicaid purposes. Unfortunately, however, the assets not counted as resources will be subject to a transfer penalty that will disqualify the beneficiary from Medicaid for a period of time.

Who is the trustee of a Medicaid asset protection trust?

If you have assets that you don’t want to count towards your Medicaid eligibility, you would make a Medicaid Asset Protection Trust (MAPT). If you are an older adult, you will probably choose your adult child to be the trustee of the Medicaid Asset Protection Trust.

Can a trust be a disqualifying transfer for Medicaid?

So while irrevocable trusts can protect assets from being counted by Medicaid (depending on whether the trustee has discretion to spend the assets), Medicaid will still count the transfer of the assets to the trust as a disqualifying transfer. Here’s how it works.

How does a testamentary trust work for Medicaid?

Testamentary trusts. The Medicaid rules provide a special “safe harbor” for testamentary trusts created by a deceased spouse for the benefit of a surviving spouse. The assets of these trusts are treated as available to the Medicaid applicant only to the extent that the trustee has an obligation to pay for the applicant’s support.