What is a Medicaid Asset Protection Trust?
Protect your home and assets from Medicaid Estate Recovery
Many people want to make sure their entire estate is not consumed by the high cost of long-term care. Medicaid Asset Protection Trusts (MAPTs) enable someone who would otherwise be ineligible for Medicaid to become eligible and receive the long-term care they need. These trusts protect a Medicaid applicant’s assets from being counted for eligibility purposes, because assets put into this type of irrevocable trust are no longer considered owned by the applicant.
Why are Medicaid Asset Protection Trusts an important tool?
Low Medicaid Asset Limits: Generally, the asset limit for an elderly person applying for long-term care Medicaid is $2,000.
Spend Down Requirements: While some high value assets such as a primary residence and vehicle are not counted, many people who need long-term care are over the asset limit but cannot afford the cost of care until they deplete other assets.
Medicaid Estate Recovery: When a Medicaid recipient passes away, the state attempts to be reimbursed for the costs Medicaid paid for long term care. This can happen via a lien on the house, a Medicaid claim on the probate estate, or in other ways. MAPTs protect the assets in the trust for the beneficiaries identified by the grantor (creator) of the trust.What type of assets can go in a MAPT?
What type of assets can go in a MAPT?
Your Home: The grantor (creator) of an MAPT can put their primary residence in an asset protection trust and continue to live in it.
Checking and Savings Accounts
Stocks and Bonds
Mutual Funds & CDs
Other Real Estate
What is the Medicaid look back and penalty period?
A Medicaid penalty period is a set time frame during which an applicant is ineligible for long-term care benefits. The length of the penalty is based on the value of the assets gifted or transferred for below market value within the 60-month (5-year) look-back period. When a Medicaid applicant is subject to this penalty, they have to pay for their long-term care during the period of ineligibility. A lawyer who understands Medicaid rules can help you to protect some of your assets while planning for how to manage any penalty period.
Revocable Living Trusts and other trusts: what’s the difference?
There are many different types of trusts and not all of them are Medicaid compliant. For example, Revocable Living Trusts (RLTs), are different from MAPTs. Generally, RLTs are not adequate in protecting assets from Medicaid because the trust can be cancelled or altered. Therefore, assets in an RLT would have to be “spent down” to meet Medicaid’s asset limit.
You may also have heard of a Qualified Income Trust (QIT) or Miller Trust. While MAPTs protect assets in order to meet the asset limit, QITs allow someone who is over the income limit to become income-eligible for Medicaid purposes.
Do I need a lawyer to set up a Medicaid Asset Protection Trust?
It’s very important that a Medicaid Asset Protection Trust be set up correctly with the help of a qualified attorney. Proper legal advice helps ensure that assets transferred into the trust are exempt from Medicaid asset limits, and that the applicant is prepared for and understands any penalty period that may result from the creation of the trust. Medicaid rules are state specific and change frequently. An incorrectly created MAPT defeats the purpose of creating one.
Are there other ways to lower countable assets?
In addition to MAPTs, there are other strategies to lower countable income and assets that can be used in combination with, or instead of, an MAPT. These can include:
Spending countable assets on personal needs such as medical expenses, home improvements, prepaid funeral costs, and legal fees;
Purchasing Medicaid-compliant annuities;
Establishing a trust for an individual with special needs; and
Making other asset transfers that are exempt from Medicaid penalties under Ohio law.
Medicaid Asset Protection Planning strategies will always be specific to your personal circumstances and are best discussed with a lawyer who is familiar with Medicaid rules.