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*Updated 2021
In order for an Irrevocable Medicaid Trust to be considered 鈥渆xempt鈥� for Medicaid purposes, it must provide that no principal distributions can be made to the grantor. This requirement ensures that the recipient did need Medicaid to cover the cost of her long term care, whether at home or in a nursing home facility. If the terms permitted distributions to the grantor or the trust was revocable, Medicaid would consider all assets in the trust as 鈥渁vailable.鈥� So using any money in the Trust for an assisted living facility is forbidden.
Why is protecting assets for Medicaid so important?
The reason is that Medicaid is the primary source of payment for long term care in the state of New York. Nursing home stays average $15,000.00 鈥� $20,000.00 per month. For many, this ongoing cost will result in the rapid depletion of their resources. However, Medicaid will pay for the cost of nursing home care so long as the applicant is financially eligible. To be financially eligible in 2021, an applicant can have no more than $15,900.00 in resources. This resource allowance does not include retirement accounts which are considered exempt -as long as the applicant is taking equal monthly distributions according to the life expectancy chart used by the Department of Social Services in their county. Assets must be transferred to the trust and out of the applicant鈥檚 name for five years or more in order for the assets to be considered 鈥渦navailable鈥� for Medicaid to cover nursing home care. The rules are different for聽Community Medicaid.
Medicaid Trusts are often called 鈥淚ncome Only鈥� trusts because such trusts may provide that income 鈥揳ny interest earned on assets in the trust鈥揵e distributed to the grantor. If the money inside the trust is absolutely needed for a person鈥檚 care 鈥� there are ways that the trust can terminated or amended 鈥� even if it is irrevocable. Consult with an聽attorney experienced in Medicaid law聽in your area to review your options.
