How to Protect Your Money From Medicaid in an Irrevocable Trust

Medicaid is a health insurance program that is funded partially by federal funds and partially by state funds and is operated by the state government. Medicaid eligibility requires that income guidelines be met, including having less than $1,500 in total assets, including savings accounts, IRAs, life insurance plans, any vehicles or homes other than one vehicle and one home and other assets. However, funds in an irrevocable trust is not counted as an asset. The contributor to the trust cannot access the funds, but a family member may be the beneficiary of an irrevocable trust after the contributor dies.

Instructions

• 1

  Contact your local or state Medicaid office to discuss what types of trusts are permitted. State Medicaid policies may vary regarding if certain types of irrevocable trusts may be counted as an asset.

• 2

  Contact a local bank or life insurance company to set up an approved irrevocable trust fund. If the insurance company or bank does not offer this service, most will be able to refer you to someone that is able to assist you with setting up an irrevocable trust fund.

• 3

  Meet with the life insurance agent or other licensed individual to set up the terms of the trust. A typical form of an irrevocable trust used is a funeral trust, which is awarded to a family member or friend after the death of the individual in order to help finance funeral costs.

• 4

  Make the initial deposit into the trust fund. If you have sufficient funds to cover the entire amount of the trust fund, you can deposit the full amount when the terms of the trust are completed.