Elder Law Answers
Does Medicaid Count a Spouse's 401(k) When Determining Eligibility?
Is the community spouse's 401(k) considered an asset when the state determines an applicant's eligibility for Medi...
Read moreDoes Medicaid Count a 529 Plan As an Available Asset?
- May 11th, 2015
Q
My mother established a qualified 529 College Savings program for her two grandchildren. She has terminal brain cancer but lives in assisted living for now. The expectation is that she will eventually require nursing home care. The account owner is my mother, the beneficiaries are her grandchildren, and I, her son, am the successor owner upon her death. If I leave everything the way things are, would Medicaid consider these funds to be countable assets that would put my mother over the $2,000 asset limit? My financial adviser believes I should transfer ownership to me, leaving my kids the beneficiaries. Is the 529 plan a protected asset and exempt from the spend-down and or the look-back period?
A
If your mother applies for Medicaid, the 529 plan could be considered an available asset. This means money in the 529 account must be exhausted before Medicaid will pay nursing home bills. In addition, spending the money in the 529 account for medical bills instead of for college will trigger deferred taxes, plus penalties of 10 percent (or up to 20 percent in some states) that apply if the money is used for something other than education. In order to prevent this, your mother could transfer the plan to you. However, this may trigger a Medicaid penalty period because it could be considered a transfer of assets. To find out the best solution for your family, contact an elder law attorney in your state. Here is a directory of attorneys: https://www.elderlawanswers.com/elder-law-attorneys.
For more information about 529 plans, click here.
For more about Medicaid’s asset transfer rules, click here.
For more about Medicaid’s asset rules, click here.
Last Modified: 05/11/2015