A number of individuals need lasting nursing home care when they get older that can be very costly and create problems financially for them and their family. A medical insurance for retired people and those with disabilities in the US is Medicare. Medicare can compensate for nursing home care but only for certain durations. The program also has limitations on what services and benefits it will cover while an individual is at a nursing home. In order to afford continuing nursing home care, a lot of people look for other sources or ways to finance their medical needs. Some have no choice but to use up their own savings or purchase private long-standing health insurance.
Applying for Medicaid is also another option that individuals can try if they do not have enough money for nursing home care. Medicaid is a federally funded and state managed insurance program for low-income bracket individuals. A person may not qualify for Medicaid if he or she has a source of income, assets, and other capital, which they are likely to use to pay for nursing home care. If their funds are still inadequate, they may have to sell some of their assets or property in order for them to continue to afford long term nursing home care. A way for people to protect their assets from being used and for them to still qualify for Medicaid is through the establishment of a Medicaid trust.
A Medicaid trust is used by a person, wherein they legally transfer the control and ownership of certain properties and assets to another individual or parties trust, in order for them to become eligible for Medicaid benefits and assistance. The transferred assets can be shielded from future Medicaid claims for payment if the trust was carefully planned and executed.
When a Medicaid trust is formed, a person names a trustee, who will keep and control the assets of the grantor and utilize these assets to help the beneficiaries of the trust. The trustee cannot manage the assets in their own way but according to the guidelines stated and agreed upon in the Medicaid trust.
The kind of trust that can be useful for people who want to qualify for Medicaid benefits is called an irrevocable trust. A person who is the grantor of the trust is not allowed to make changes or withdraw from the agreement.
A type of irrevocable trust employed by a number of people is called irrevocable income-only Medicaid trusts. The beneficiaries acquire the assets contained in this Medicaid trust in the event that the grantor passes away. Although during the time that the grantor is still alive, a trustee controls the assets. If these assets produce or bring in any income, these are remunerated to the grantor. A grantor’s assets will not be touched or used by Medicaid if ever he or she would require nursing home care. The income from the assets in the trust will be used instead.
If an individual is planning for his or her future through the use of irrevocable trusts, they must seek legal help from people who are experts at executing these kinds of trusts, since once these irrevocable trusts are put into place, they cannot be withdrawn or revoked.