Clients who seek advice about estate planning are often
also concerned about how to avoid the depletion of their
assets if one spouse (or a parent) has to go into a nursing
home. Familiarity with the Medicaid eligibility requirements
is therefore essential for the estate planner.
Medicaid is a joint federal-state program that provides
medical assistance for individuals whose income and resources
don't exceed certain levels. Although some of the Medicaid
eligibility requirements are set by federal law, other requirements
are within the discretion of the states. Not only do the
eligibility requirements vary from state to state, but,
as a practical matter, the way in which the rules are enforced
may vary from county to county within a given state. Very
generally, an individual has to have no or very few assets
of his own to be eligible for Medicaid.
Medicaid should not be confused with Medicare, which covers
all individuals age 65 or older who are eligible to receive
Social Security benefits. Medicare alone, however, does
not provide adequate coverage for long-term nursing home
care. So if an individual who is not eligible for Medicaid
has to go into a nursing home, the bulk of his assets may
be used up by the nursing home bills before he becomes eligible,
leaving little or nothing in his estate to care for his
non- institutionalized spouse or to pass to his children.
To avoid this situation, some estate planners advise their
clients to transfer assets to an irrevocable trust known
as a “Medicaid trust” or “Medicaid qualifying
trust.” The purpose of a Medicaid trust is to make
the transferor eligible for Medicaid while preserving his
assets for the benefit of his children or other heirs.
Because the Medicaid eligibility rules vary from state to
state this website does not cover those aspects of Medicaid
trusts that specifically relate to planning for Medicaid