Medicaid, Medicaid Income Trust, & Special needs trust
Medicaid provides medical services for persons with little to no assets and low income. There are two types of trusts that can be used to make an individual eligible for Medicaid.
Medicaid Income Trust
A Medicaid Income Trust is used when a person’s income is above the allowable level. Once the trust is made, the person’s income is direct deposited into the trust, and then the allowable level of income is withdrawn on a monthly schedule. The excess money stays in the trust and is ultimately used to repay the state of Alaska for medical services received.
Special Needs Trust
The second type is a special needs trust. This type of trust is used when an individual has too much property or too many assets. The property is put into the trust and used only for special needs of the individual. These special needs are for items or services that Medicaid will not provide.
Two Kinds of Special Needs Trust
- First Party Trust – The individual’s own property is put into the special needs trust.
- Third Party Trust – When someone else is making a gift to the individual.
For example if grandpa leaves a large inheritance to the individual on Medicaid, this might cause him/her to have too many assets. This is not good, because it makes the individual ineligible for Medicaid services. A legal way around this is to put the gift or inheritance into a third party special needs trust for the benefit of the individual.
It is extremely important that the special needs trust only provide those things that Medicaid would not provide. Contact The Law Office of Constance Aschenbrenner to talk to an experienced estate planning expert, or to schedule a free consultation.