Through conscious Medicaid planning, New York residents may be able to preserve some of their assets for their children or other heirs while still meeting Medicaid’s income requirements. One means of achieving this is through the establishment of a trust. By placing assets into certain types of trusts an individual can eliminate their countable assets for Medicaid eligibility purposes. However, only certain trusts may be useful in qualifying for Medicaid.
There is a common misconception that the transfer of assets into a revocable trust can help an individual qualify for Medicaid. For eligibility purposes, Medicaid considers the assets that are placed in a revocable trust to belong to the individual. The reason for this is because the person, acting as the trustee, still maintains control over the management of the assets, including how money is spent, and retains the right to revoke the trust.
Assets placed into an irrevocable trust that the trustee can distribute to a beneficiary are considered to be countable resources by Medicaid and can, therefore, affect eligibility for benefits. If the irrevocable trust does not allow for the trustee to give assets to a beneficiary, it will be treated as a transfer of resources that is subject to Medicaid’s asset transfer penalty. Therefore, despite the fact that an irrevocable trust has the ability to protect assets from being counted by Medicaid, dependent upon the trustee’s ability to spend the assets, Medicaid will still count the transfer of assets into the trust as a disqualifying transfer that is subject to the five-year look back period.
Pooled Income and Special Needs Trusts
Special needs trusts and pooled income trusts, commonly referred to as special purpose trusts, are special types of irrevocable trusts that allow individuals to become financially eligible for Medicaid and other public benefits such as Supplemental Security Income (SSI). First-party special needs trusts may be established by qualified individuals under the age of 65. Pooled income trusts are administered through a nonprofit organization for the benefit of qualified individuals of any age.
Under Medicaid rules, assets placed in special needs trusts and pooled income trusts do not subject the individual to a transfer penalty and the assets are not considered to be countable resources for eligibility for New York Medicaid benefits and SSI. Special needs trusts and pooled income trusts were established under federal law to hold assets transferred by the individual Medicaid applicant or beneficiary. Due to the fact that Medicaid does not consider these assets as countable resources when determining benefit eligibility, the contents of the trust must be distributed in accordance with specific rules.
For Long Island residents with disabilities, access to New York Medicaid benefits is of the utmost importance. Special needs trusts and pooled income trusts can help New York residents meet eligibility requirements for Medicaid and SSI benefits. The Long Island, New York special income and pooled income trust professionals at P&P Medicaid Consulting, Inc. are available to assist the residents of Nassau County, Suffolk County, and Queens in preparing applications for Medicaid eligibility, while taking advantage of programs and planning options that will protect assets. For more information or to schedule a consultation, contact our Long Island Medicaid eligibility consultants at (516) 541-4770.