Does Putting Assets in a Trust Remove Them From Consideration by Medicaid in Terms of Eligibility for Long-Term Care Coverage?

A fellow caregiver asked...

Does putting assets in a trust remove them from consideration by Medicaid in terms of eligibility for long-term care coverage?

Expert Answer

Some people try to qualify for Medicaid long-term care coverage by creating a trust and placing their assets in it. This tactic can only work, however, if the trust totally and permanently ends the person's access to and direct benefits from those assets.

Medicaid can cover almost the entire cost of long-term care costs, particularly nursing home care, for people with very low income and few assets. Creating a trust and placing assets in it can remove those assets from Medicaid consideration as "available resources" only if all of the following apply:

  • The trust is created more than 60 months before applying for Medicaid coverage.
  • The trust is irrevocable, meaning that once the assets are placed in it they cannot be removed, and the trust cannot be ended.
  • The Medicaid applicant is not a designated trust beneficiary, which means that no trust assets could, at any future time, be distributed to the Medicaid applicant under the trust's terms.

Also, any income generated by the trust that goes to the Medicaid applicant is considered in determining the Medicaid applicant's income for eligibility purposes.

You can review some of these Medicaid trust rules by going to the Treatment of Trusts page on the Centers for Medicare & Medicaid Services (CMS) website.

If you are considering a trust for Medicaid eligibility purposes, you need to consult with an attorney who is not only experienced in creating trust but also is familiar with Medicaid eligibility rules.