Medicaid is a government insurance program that covers expenses that other types of insurance (including Medicare) won’t cover. It is relied on by elderly people who need nursing home care or assisted living and by younger people with disabilities or illnesses who require ongoing care and cannot work. However, many Medicaid applicants face difficulty navigating the program’s strict, resource-based eligibility rules. One way of satisfying these rules is for the applicant to place his or her assets in an irrevocable trust.
Connecticut’s Medicaid program, HUSKY Health, looks at an applicant’s assets and income to determine eligibility. Depending on the specific type of coverage sought (HUSKY has four options), the monthly income limit can be as low as about $650 and the asset limit can be as low as $1,600 for a single person.
As a result, a person could be forced to spend down their nest egg or sell property before being eligible to qualify for Medicaid. This is obviously not a desirable result after spending a lifetime building up assets.
An irrevocable trust — also known as an asset protection trust — can help you qualify for Medicaid while preserving your assets for your own use and for the benefit of family members and other intended recipients. You can work with a qualified Connecticut estate planning lawyer to write a valid trust document. Then you transfer your property to the trust. This transfer means you no longer own the assets, so they cannot be counted in determining Medicaid eligibility.
The trust must be irrevocable, meaning you cannot change it after creation. This is the only way Medicaid will accept the fact that the assets are not under your control. During your life, you can receive income from the trust, and when you pass away the assets in the trust go to your chosen beneficiaries.
There is an important condition to consider. You must create the trust and transfer the property into it at least five years before applying for Medicaid. Federal law calls for states to scrutinize gifts and asset transfers during the five years prior to application. If a gift or transfer occurs within the five-year period, you will be deemed ineligible for several months or years, depending on the value of the transferred asset.
The estate planning attorneys at Gesmonde, Pietrosimone & Sgrignari, L.L.C. would be happy to meet with you, discuss your situation and explain how Medicaid works for someone in your specific situation. Please call 203-745-0942 or contact us online for a confidential consultation with our team in Hamden or East Haven.
Gesmonde, Pietrosimone & Sgrignari, L.L.C. is located in Hamden, CT and serves clients in and around North Haven, Hamden, Waterbury, Bethany, Milford, Wallingford, Prospect, Woodbridge, Northford, Madison, Beacon Falls, Branford, Cheshire, North Branford, East Haven, Naugatuck, Meriden, Ansonia and New Haven County.
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