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What Is a Medicaid Qualifying Trust?

Medicaid is a state operated health insurance program that is partially federally and partially state funded. It is designed for certain low-income populations, including the elderly, the disabled, pregnant women and children. Irrevocable trusts are not counted towards the resource limit for Medicaid eligibility.

  1. States

    • Resource limit requirements for Medicaid vary between states. Consult your state Medicaid office in order to discover the exact effects of a trust on your Medicaid eligibility. The National Association of State Medicaid Directors maintains an online database of contact information for all state Medicaid offices (see Resources).

    Features

    • A trust for Medicaid eligibility must be irrevocable, meaning that the individual who created the trust cannot withdraw funds from the trust. A life insurance company, a bank or another licensed individual can manage the trust.

    Beneficiary

    • The beneficiary of an irrevocable trust can be a family member or friend, or the funds can be set aside to pay for funeral costs. Typically, an irrevocable trust does not get transferred to the beneficiary until the individual who created the trust dies.

    Considerations

    • Any funds in a revocable trust--a trust from which the creator can withdraw assets--does count toward Medicaid eligibility limits. Total assets typically cannot exceed $1,500 for Medicaid eligibility purposes. This includes revocable trusts, savings and checking accounts, cash on hands, houses other than the primary residence of the individual, any vehicles beyond one exempt vehicle per applicant, and other assets.

    Expert Insight

    • Consult with a professional if you want to set up an irrevocable trust. A bank or life insurance company official may be able to help you. Some elder law attorneys provide free initial consultations.

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