A Medicaid trust is a legal and financial relationship created to help an individual qualify for Medicaid, a United States health-care program for qualifying low-income and disabled individuals and families.
A trust gives another person the title and control of property owned by the person who is attempting to qualify for Medicaid. If created and planned carefully, it can render a person’s assets exempt from consideration when he or she seeks Medicaid.
Some people require long-term nursing home care as they grow older. This can be expensive. Medicare, a U.S. medical insurance program for retirement-aged and disabled individuals, only pays for nursing home care for a limited amount of time. It also places restrictions on what it will pay for during a person’s stay in a nursing home. This leaves many individuals to seek other ways to fund their long-term stays in nursing homes, including private long-term care insurance and personal income.
If an individual cannot afford nursing home care, he or she may apply for Medicaid, a U.S. federal- and state-administered insurance program for low-income people. If the individual in need of care has income, assets, and other resources, they are expected to use them to fund their nursing home care, so that person may not qualify for Medicaid. Instead, that individual may be faced with selling their home property in order to pay for care. Some people seek to protect their property and qualify for Medicaid by creating a Medicaid trust.
More and more LGBT couples are becoming concerned about the cost of a potential stay in a nursing home. Although most of us would rather not spend our last days in a nursing home, no matter how much our partner, friends and other family members love us, caring for a sick or elderly loved one at home can be so stressful that a stay in a nursing home often becomes necessary.
Moreover, a 2003 Kaiser Family Foundation Survey found that there is a 45% chance that a person aged 65 or older will spend at least some time in a nursing home and the average nursing home stay is 2.4 years.
Medicaid is the most common way of paying for nursing home costs, and, in order to qualify, you will need to determine the value of your assets.
Even though the Medicaid rules say that your home is an “exempt” asset which is not counted when you apply for Medicaid -- and here's the rub -- once you are on Medicaid, they may be able to put a lien on your home. A lien is like a mortgage. It will guarantee that the government will be paid back money that they pay for your nursing home costs.
After the funeral or memorial service, the government will notify your partner -- even if you own the home jointly with rights of survivorship -- (or if your partner dies before you, they will approach the beneficiaries you named in your will or trust)and offer them the choice of paying off the Medicaid lien, and, if they are unable to do so, the government will likely force a sale of your home and keep the proceeds, up to the amount that is owed to them. If there is any money left after all expenses are paid, your partner or other beneficiaries will get to keep the extra.
Because your partner is likely to lose his or her home to nursing home costs, it becomes important to protect your home from a Medicaid lien by setting up an Irrevocable Medicaid Trust.
You may purchase a stand alone Medicaid Trust here or add it to your purchase of a Last Will or Living Trust Package.