Healthcare costs for those with long-term care needs can be expensive, which is why Medicaid is a valuable resource. However, Medicaid has strict eligibility restrictions based on a household’s income and wealth that can limit your ability to receive benefits. Several options are available in this situation that a Phoenix Medicaid trusts lawyer can use to protect your assets and maintain eligibility. Learn more about how our local trusts attorneys can help you receive healthcare benefits under the Arizona Health Care Cost Containment System (AHCCCS), which is the state’s Medicaid agency.
What Is a Medicaid Trust?
A Medicaid trust is an estate planning tool for individuals who would benefit from Medicaid/AHCCCS but would not qualify because of their income or assets. These income and asset limits will vary depending on the nature of the person seeking benefits and their household monthly income. However, the limits are generally a percentage of the federal poverty line.
The Medicaid applicant transfers their assets and future income into the trust, which a trustee will manage on their behalf. The benefit of a Medicaid trust is that it allows the applicant to access income from the resources transferred into the trust for certain personal needs without subjecting those assets to the wealth limitations for participation in Medicaid. However, income transferred into a Medicaid trust will still count toward the Arizona Long-Term Care System (ALTCS) Share of Cost for the applicant. This is the amount the trust must pay for the applicant’s share of costs for medical assistance received through Medicaid.
There is a lot involved with this type of trust, so we recommend calling one of our attorneys for assistance.
Creating a Medicaid Trust with the Help of a Lawyer
Creating a Medicaid trust is a complex process because of the strict requirements you must meet for it to work. A Medicaid trusts lawyer in our Phoenix office can review your situation to determine what terms the trust must contain to maintain your eligibility for Medicaid. For example, A.R.S. 36-2934.01 explicitly states the types of distributions that a trustee can make from the Medicaid Trust. The AHCCCS also applies a five-year lookback period of an applicant’s financial transactions to determine eligibility for Medicaid. Applicants in Phoenix must consider this lookback period before establishing their Medicaid trust.
Medicaid trusts must also be irrevocable, which means the person creating the trust cannot undo the transaction or make any changes to the terms of the trust document. Rather, the trustee retains full control and authority over the trust’s assets and is responsible for complying with its terms. The trustee must be an independent party, meaning it cannot be the person applying for Medicaid or their spouse. In many cases, the trustee is an adult child, close friend, or a professional trustee. The trustee is responsible for managing the assets, making necessary payments or distributions, and communicating with AHCCCS about any changes to the trust or its assets.
Remainder Beneficiary
Another important aspect of Medicaid trusts is that the AHCCCS must be a remainder beneficiary of the trust. When the Medicaid participant dies or the trust terminates, the AHCCCS will receive money left in the trust account that reimburses the actual costs provided for medical assistance under the estate recovery program in A.R.S. 36-2935.
Meet with a Phoenix Medicaid Trusts Attorney at the Dayes Law Firm
Long-term care planning is a foundational element of your estate planning, especially for those with additional medical needs. Access to covered healthcare can be a challenge for those whose resources are not enough to cover their medical costs but that still place them outside the eligibility requirements for participation in Medicaid.
A Phoenix Medicaid trusts lawyer can help you or your loved one establish the financial and legal documents necessary to bridge that gap and maintain eligibility for healthcare with AHCCCS. Schedule a free initial consultation with our office today.
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