Saving for college and planning for Medicaid take forethought.
Are you saving for college tuition for a relative?
Might you require Medicaid in the foreseeable future?
If so, your generosity may create some challenges when it comes to qualifying for Medicaid.
According to a resent nj.com article titled “Will my college savings be counted for Medicaid?” your college savings will likely be counted as an asset for Medicaid.
The first involves when you funded the account.
If the "when" occurred more that 60 months ago, then you are beyond the Medicaid "lookback" period that penalizes gifts made within 60 months of a Medicaid application.
Another exception involves the type of account used for the college savings.
Did you place the funds in a 529 plan?
If yes, while they may not part of your taxable estate, such a "gift" will trigger a penalty period when it comes to your Medicaid application.
If the funds were invested in a trust account you created for future transfer to your grandchild, then they will be includable and counted by Medicaid.
Note: Medicaid will review any accounts under the name of anapplicant.
Although a 529 plan may show your name as a participant, the assets held in such plans are considered gifts.
As gifts, they are no longer considered your assets.
You can create another layer of protection by changing the participant on the account to the guardian of your grandchild rather than yourself.
This will sever the connection between your name and the account.
What if you add the name of your grandchild to one of your savings accounts?
This would most certainly be includable because it is still considered your asset rather than a gift.
As you can see, the rules regarding Medicaid can be confusing.
Work with an experienced elder law attorney for assistance in qualifying for Medicaid.
Reference: nj.com (September 19, 2018) “Will my college savings be counted for Medicaid?”