Do CDs in trust count in determining Medicaid eligibility?

1 answer | Last updated: Dec 04, 2016
Maria in orlando, fl asked...

My mother's income is low enough to be eligible for Medicaid, however, she has $20,000 in a CD in trust for me. Would that money count toward her assets when determining eligilbility?


Expert Answers

The answer depends on the type of trust. If the trust is “revocable,” the CD would count toward her eligibility. It is revocable if your mother retains the right to take assets out of the trust – in this case, to cash in the CD. If she can remove the CD from the trust and use the money herself, it counts toward her Medicaid eligibility. This is true regardless of the type of Medicaid coverage she is applying for. Even if the trust is “irrevocable” -- meaning that she cannot remove the CD and use it for herself -- it still may make her ineligible for awhile for Medicaid coverage of nursing home care. That’s because of a special Medicaid rule that “looks back” at earlier asset transfers when someone applies for Medicaid nursing home coverage. Any assets given away – such as by putting it in a trust – within this look-back period make the person ineligible for Medicaid coverage of a nursing facility for some time. The period of ineligibility is calculated by dividing the amount transferred by the state’s average monthly nursing facility cost. 

The length of the look-back period depends on when the CD was put into the trust. If it was before February 8, 2006, the look-back period is 36 months from the date of your mother’s application for Medicaid for nursing facility coverage. If your mother’s ineligible because of this, the period of ineligibility would run from the date the CD was put in the trust.

The rules are much harsher for transfers made after February 8, 2006. If your mother’s CD was put into the trust after that date, the look-back period is 60 months from the date of your mother’s application for Medicaid nursing facility coverage. And if she’s ruled ineligible because of the CD, her period of ineligibility would run from the date of her Medicaid application (not from the date the CD was put in trust).