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Irrevocable trusts can help seniors to qualify for Medicaid

On Behalf of | Jul 19, 2021 | Estate Planning

Happy Senior Couple Relaxing Sitting On Sofa At Home

The average cost of a private room in a nursing home is more than $8,000 per month, which can be a difficult burden to meet for senior citizens in Ohio and around the country who receive an average of about $1,500 each month in Social Security benefits. Many older Americans turn to state Medicaid programs to help them meet the costs of nursing home care, but they are only eligible to receive these benefits when they meet strict asset and income requirements. This means that they only qualify for help after their savings and other resources have been depleted.

Countable assets

Seniors who apply for Medicaid benefits in 2021 to help them cover the costs of long-term care in a nursing home are rejected if they earn $2,382 or more per month or if they have countable assets worth more than $2,000. Program rules vary from state to state, but bank accounts, life insurance policies, stocks, and vehicles are usually considered countable assets. To prevent seniors from gifting their assets to friends or to relatives to meet the requirements, Medicaid programs have what is known as a look-back period. When assets have been given away or sold for less than their fair market values during this period, Medicaid benefits are delayed. In most states, the look-back period is five years.

Irrevocable trusts

Irrevocable trusts are estate planning tools that seniors can use to help them qualify for Medicaid benefits. Assets placed into an irrevocable trust are no longer seen as countable, but they are considered gifts if the trust was set up during the look-back period. This means seniors who wish to qualify for Medicaid benefits and avoid delays should plan well in advance.

Help with estate planning

If you are worried about the costs of health care in your golden years, an attorney with estate planning experience could help you to set up an irrevocable trust and choose a trustee who will discharge his or her duties in a responsible manner. An attorney could also explain that placing non-countable assets like your primary residence into an irrevocable trust could prevent the state from acquiring them to recover benefits paid on your behalf. These assets will be protected because they will no longer be part of your estate.


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