A Medicaid Asset Protection Trust is a framework of documents to keep your estate intact while you receive Medicaid Benefits for long term care and after you die. If you are over the age of 55 when you receive Medicaid for long-term care or other community services, NC will try to recover the costs of your care when you pass away. This is done during probate when other creditors are also making claims against your estate. Read about how this process works and how to keep any assets you have safe from the Medicaid Estate Recovery Program.

Medicaid Estate Recovery Program (MERP)

According to NC Law passed in 2018, Medicaid can recover their expenditure on you for long term care from your estate including all of the real and personal property considered assets of the estate. Whatever real property is in your name or shared with someone who does not have “right of survivorship” is subject to recovery by Medicaid Estate Recovery Program (MERP). 

MERP Expanded Terms

Some states are using the expanded version of Medicaid Estate Recovery which includes recovery from other types of property, including trusts. NC has not applied the expansion of MERP except in the case of Long Term Care Partnership policies.

Long-Term Care Partnership Policy

Here’s where things have changed quite a bit for NC seniors. The state of NC is using the expanded definition for Medicaid Estate Recovery only for seniors who have received benefits under a qualified long-term care partnership policy. 

If you have been under such a policy, the word “estate” also includes:

  • any other real and personal property 
  • other assets including assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy or tenancy in common without right of survivorship
  • assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy or tenancy in common with right of survivorship
  • life estates
  • living trusts
  • other arrangements

Qualifying for Medicaid

If your shared property has “right of survivorship”, then it is not subject to probate or Medicaid Recovery (except in a Long-Term Care Partnership). However, if you choose to share property with “right of survivorship” and pass to heirs only after death, you may not qualify for Medicaid help now.

You may not qualify because in NC, if you are 65 or older, blind, or disabled, you must have income below $1,064/month for a household of one or $1,437/month for a household of two. You also must not have assets in real property more than $2000 for 1 person or $3000 for 2 people in your household. 

There are other situations where you may qualify for help. If you have medical bills you cannot pay, there is a six-month period for you to meet your Medicaid deductible to qualify for aid.

Who Needs Long Term Care Anyway?

According to LongTermCare.gov, “Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years. 

  • Women need care longer (3.7 years) than men (2.2 years) 
  • One-third of today’s 65 year-olds may never need long-term care support
  • 20 percent of today’s 65 year-olds will need long-term care for longer than 5 years

Ways to Avoid MERP

  • If your spouse is still alive, your estate is exempt from recovery until your spouse dies
  • If your heirs will be damaged by estate recovery, they can claim a hardship waiver
  • Life estates and real property owned as joint tenants with right of survivorship are exempt from MERP

Medicaid Planning

An important part of keeping assets AND qualifying for Medicaid is to plan for your need for long-term care at least 5 years before you need it. Medicaid will look back for the 5 years before you qualified to see if you gave away or sold any assets below value in the past 5 years. You could be disqualified for receiving Medicaid benefits in this case.

It is possible to qualify for Medicaid and still preserve assets to have resources for yourself and your heirs as you need them. It is also possible to qualify for Medicaid and still have assets to pass on as an inheritance. To do this, you must understand and use the laws in NC to your advantage. 

Trust Planning

Start planning early and reap the most benefits. If you create an irrevocable trust in which you are not the trustee, you can put all of your real property and other assets into this legal framework. The trustee you choose is responsible for paying out funds as needed according to the terms of the trust. This type of arrangement avoids probate and avoids MERP. 

With an irrevocable trust, you can also qualify for Medicaid because you do not own the assets in the trust or have any claim on them once you pass away. When you die, the trust is dispensed to the beneficiaries in the amounts and times that you specify.

Learn More 

A Medicaid Asset Protection Trust can be an alternative to spending down assets in order to qualify for Medicaid. If it will be 5 years before you need long-term care, you have many options for saving money. Even if you need long-term care now, an attorney can help you make the best decisions about your assets and how to use them to care for yourself and the ones you love.

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