Many people do planning to preserve assets from Medicaid in a variety of ways including Medicaid Asset Protection Trusts (MAPT), Special Needs Trusts (SNT's), hold onto their house or buy LTC policies.
Medicaid Payback or Medicaid Estate Recovery
Unfortunately, Medicaid has a requirement that it be repaid from any assets which remain at death. This is often referred to as "Medicaid Payback" or "Medicaid Estate Recovery". It is mandatory in all states. However, it can be different from state to state so it makes a difference if you live in North Salem or Wilton.
If you lose the asset to Medicaid Recovery, you haven't preserved it. All you've done is gotten an interest free loan from the government.
The general rule is that any Medicaid paid after age 55 is subject to payback.
In some instances, keeping your house can preserve the money. The general rule is that Mom's home will not be required to be sold to pay the state government while Mom or Dad is alive, but may be required to be sold to repay the state, upon Mom's death, for Medicaid Payback.
A Medicaid recipient's house is normally exempt during lifetime (for an unmarried person, up to between $500,000 and $750,000 of equity value), it's only at the recipient's death that there's a problem. If you are married and your spouse continues to live in the home, then the home is exempt regardless of its value, until the death of the second spouse. There can be an exclusion if a sibling or child lives in the house. You have to intend to return to your house for these techniques to work.
LTC Partnership Policy and Medicaid Estate Recovery
In CT and NY, a LTC policy issued under the Partnership program will protect against Medicaid Payback or Medicaid Estate Recovery to the extent of the amounts paid under the policy.
Trusts, ABLE Accounts and Medicaid Payback
Different assets and how they are held can effect whether the assets have to be paid to Medicaid.
With an Able account, any Medicaid paid after the creation of the account is subject to Medicaid Payback.
With self settled SNT trusts, all Medicaid paid for the beneficiaries lifetime is subject to Medicaid Estate Recovery.
With third party SNT trusts, there is no Medicaid Payback, making this a superior vehicle.
With third party MAPT's, there is no Medicaid Payback, making this a superior vehicle
In some states, how the assets is titled can effect Medicaid Payback (joint accounts).
Connecticut and New York have different laws which require special planning.