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Medicaid Planning FAQs

Are any assets exempt from Medicaid?

Certain IRAs, 401(k)s, 403(b)s, and other qualified retirement accounts are exempt under New York State law. They are not counted as assets by Medicaid. Medicaid also exempts a small amount of assets which a Medicaid applicant may return.

What is a Medicaid Asset Protection Trust (MAPT)?

A MAPT is a special type of trust designed to allow the trust creator to maintain use of a residence and/or income from assets while protecting the home/principal from creditors and/or Medicaid.

What is the Medicaid Asset Protection Trust (MAPT) allowed to spend money on?

The MAPT can spend on property taxes and structural repairs and maintenance to the residence, but not items related to the Grantor’s tenancy of that house. For example, trust money could be used to pay for a rotting wood floor or broken window, but not a sofa or air conditioner.

What’s the difference between an Executor and a Trustee?

The role is similar, but Executors are responsible for Wills and probate, whereas Trustees are the managers of Trusts.

Is there any way to get principal out of the MAPT?

The MAPT is income-only, which means that interest, dividends, and other income flow out to the Grantor, while principal stays locked in the trust. However, the Trustee may direct that principal may be paid out to the beneficiaries at any time. In other words, principal can be distributed to your spouse, children, grandchildren, etc.

What happens to my income if I am receiving Medicaid Benefits?

For nursing home care, your income goes almost entirely to the nursing home to be applied toward your care. For Community Medicaid (care in the home), there are strategies that can often be used to protect most or all of a clients’ income.

What if I am healthy but my spouse requires Medicaid for long-term care?

Medicaid makes some exemptions for healthy spouses: (1) the primary residence (subject to value limits) and (2) about $125K in other assets. Furthermore, the standard exemptions (qualified retirement accounts and MAPT’s) still apply. The healthy spouse is also allowed to keep about $3,000 in monthly income. (If the healthy spouse makes less than this, he or she may dip into the ill spouse’s income in order to reach that amount). If the healthy spouse is over the levels of resources for income or assets, he or she should consult an attorney because action often can be taken to protect more.

The Nursing Home has offered to apply for Medicaid on behalf of my family member for free. Should I allow them to do this?

If your family member does not own a home or have any savings, then the answer is yes. But otherwise an elder law attorney should be consulted immediately. Nursing homes usually do not look to protect clients’ assets. They will spend down resources on care before Medicaid coverage kicks in, when in many cases, portions of these resources can be protected.