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Dispelling Medicaid Myths – Medicaid and Young People – Part 3

Written by: Jeremy Pryor

Posted on: June 28, 2024

Medicaid and Young People

We hope you are enjoying your summer so far. Though vacation plans prevented us from delivering the first of our regular bimonthly installments of this newsletter, we are glad to offer this second installment the Friday following Juneteenth, and to begin by sharing a brief story related to that holiday—it has a happy ending we trust you will enjoy.

Next, we return to our summer theme of Medicaid myths. You may recall our previous discussions about the myths of “Medicaid requires impoverishment” and “Medicaid is only for nursing homes.” Today, we wish to dispel the myth that “Medicaid is not for young people.” In fact, while Medicaid is most commonly accessed by persons over 65, it is in many respects easier to qualify for individuals under that age. A few unique rules make this possible.

First, if a Medicaid applicant seeking long term care coverage is under the age of 65 and not receiving Medicare, that person may become eligible for Medicaid simply by demonstrating that he has an income of less than 138% of the federal poverty limit for his household size ($20,783 for single household applicant in 2024). It won’t matter how much money he has in the bank if the household income is low enough. But even if the household income exceeds that threshold, a second rule may allow him to qualify quickly and easily. To explain how, we need to offer some background on one of the “normal” Medicaid qualification rules.

You may be familiar with, or at least heard of, the Medicaid “look-back” rule. This rule requires that when someone applies for the long-term care benefit offered by Medicaid, that person must disclose any gifts or transfers made by him (and if married, his spouse) within the five years before applying. If any gifts have been made, the applicant may be found eligible for Medicaid (if he then has less than $2,000 in countable resources), but he will not actually receive the long-term care benefit of the program for some period of time (called a penalty period) based on the monetary value of what he transferred within the past five years. But for those under 65, this “normal” look-back rule and corresponding penalty period do not apply when the transfer is made to a special kind of trust that is set up for the sole benefit of the applicant. Called a first-party special needs trust, this legal document can be prepared quickly by us for anyone under 65 who needs to become eligible for Medicaid.

Because this rule is so powerful, the reality is that it is often easier for a young person to qualify for Medicaid than for the people we more commonly assume will be the beneficiaries of the program. To reduce the value of his resources to an amount less than $2,000, the under-65 applicant need only “give” his money to the trust one day and can then apply for Medicaid on the second. Simple, easy, efficient. If it were this easy for persons over 65, they probably wouldn’t need us. And for those under 65, we always evaluate the potential to use this legal tool as solution to become eligible for the program.

This content is provided from The Senex, our bi-monthly e-newsletter for senior providers, written by Jeremy L. Pryor, Esq. 

Related articles:
Dispelling Medicaid Myths – Part 1
Dispelling Medicaid Myths – Part 2
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