Managing the costs of long-term care and healthcare as you age can be a challenge. The cost is often more than you can afford with your savings and other income. For that reason, it is smart to plan ahead so that you can qualify for Medicaid, which provides many free services for you.
To qualify for Medicaid, you must meet income limits. Since the government considers your assets as part of your income, it can make it tricky to come in under the limits. One option to help you is to create a Medicaid trust.
A Medicaid trust, according to the Times Reporter, is an irrevocable trust in which you put assets you want to keep for your heirs. Putting the assets in the trust takes ownership away from you and transfers it to the trust. When you die, the beneficiaries of the trust receive the assets.
How it works
Because an irrevocable trust takes over the ownership of assets, they no longer count as assets you own. This means you do not use any trust assets as part of your qualifying income for Medicaid. You should note that you must wait five years for protection to kick in. If you were to create a trust and immediately apply for Medicaid, you would still have to count the trust assets. This is why planning ahead of time is essential.
If you need to seek care right away and cannot wait for five years to pass, you can at least get protection from the trust. The assets are not available for creditors to seize for debts, so you at least get some protection from the trust immediately after its creation even if it cannot help you to qualify for Medicaid.