If you or a loved one is looking to qualify for public benefits that can pay for long-term medical care and supports, a Medicaid trust may be needed to reduce the amount of resources and income you have that can be counted towards eligibility. In addition, a different type of Medicaid asset protection trust can remove your home and other assets from your ownership to protect them from estate recovery, provided that the transfer of property occurs before the start of the state’s sixty-month (5-year) lookback period.
All types of Medicaid trusts have to be irrevocable, so forming one is not a decision that should be taken lightly. Reach out to an Albuquerque Medicaid trust lawyer to understand more about the types of trusts available and how to make the best use of them to accomplish your goals.
Get a professional analysis of your legal and financial situation during a consultation at New Mexico Financial Law. Schedule a consultation appointment for Medicaid planning with no further obligation today when you call our Albuquerque offices at 505-503-1637 or contact us online.
Medicaid long-term services and supports (LTSS) can pay for nursing home care and in-community services for individuals who are disabled or 65 and older, provided they can meet the standard of need and the limited resource requirements. The resource requirements are quite strict, however, meaning that you cannot qualify for the benefits if you earn more than 150% of the Federal Poverty Level (FPL) each month.
Forming a Medicaid trust in Albuquerque can potentially enable you to meet income requirements. A separate asset protection trust could also be formed pre-emptively to prevent your most valuable assets, such as your home, from having a lien placed on them after your death.
However, these strategies come with a major caveat: there is no guarantee that these trusts will allow you to qualify for Medicaid long-term care programs. Further, both types of Medicaid trusts must be irrevocable.
The last thing you would want is to go through the trouble of forming one or more trusts, funding them with your life’s hard-earned assets, only to still be unable to qualify for the desired program. At that point, it can be difficult (if not nearly impossible) to fully recover everything from these trusts.
Because of this risk, it is critical to seek experienced legal guidance before making any decisions that can have long-term ramifications for your care eligibility, not to mention the legacy you leave behind to your loved ones.
An Albuquerque Medicaid trust attorney can work with you to perform a full analysis of your financial situation. We can go over the goals for which programs you (or a loved one) intend to qualify for.
We can then help you begin planning to form the appropriate trust or trusts to maximize your chances of succeeding in your goals.
With the right planning, you (or someone close to you) can receive the care they need without jeopardizing most of the estate you worked hard to build your entire life. In many cases, qualifying for these benefits can be a matter of life or death, especially as a dire medical condition progresses.
Take the steps you need to plan ahead and work towards an outcome that can leave everyone feeling more positive about what the future could hold.
There are two main criteria for determining if someone qualifies for long-term Medicaid benefits: they have to require extensive care, and they have to lack the financial means to be able to pay for that care on their own.
To qualify for Medicaid benefits for long-term services and supports in New Mexico, the care recipient first has to have enough care needs that they would require a nursing-facility-level of care (NFLOC) to function normally.
To be considered for NFLOC, the applicant must have difficulty with the regular activities of daily living (ADLs). For example, the person may be unable to bathe, dress themself, use the toilet, get in and out of their home, or eat without someone else there to assist them.
They may also struggle with so-called “instrumental activities of daily living” (IADLs), which refer to activities that are necessary for survival but that don’t necessarily occur every day. Examples of IADLs include procuring food (e.g., grocery shopping), preparing meals, doing laundry, managing medications, or handling personal finances.
An individual may also meet NFLOC if they have medical needs that require professional or skilled assistance, such as administering injections, handling a catheter, or administering IV medications.
The individual may also have a severe cognitive impairment, mobility impairment, or behavior issue, requiring skilled assistance to allow them to function and remain relatively healthy on a day-to-day basis.
Someone who meets the criteria for NFLOC must also have limited income and resources. Income refers to money they receive from Social Security, pensions, employment, retirement plans, and other sources.
Resources can be thought of as assets, which could otherwise be sold or utilized to generate short-term income to pay for medical care.
In New Mexico in 2025, an individual seeking Medicaid LTSS benefits cannot earn more than $2,901 a month. They also cannot have more than $2,000 in countable assets.
If the applicant has a spouse, their spouse can technically make unlimited income, but the amount of income they make will usually affect the household’s countable resources. If the spouse holds more than $157,920 in countable assets, then this would cause the applicant to be disqualified.
Countable assets include cash, securities (stocks, bonds, etc.), bank accounts, real estate (other than a personal residence), and certain other investments that are not for personal use. Non-countable assets include most personal belongings, including clothing, personal effects of minimal value, a personal residence, and up to one road vehicle.
The applicant can also have up to $1,500 set aside for burial.
While the applicant can exclude their personal home from their countable resources, the home will have a lien placed on it after they die. The lien placement may be delayed for the duration of the life of a surviving spouse, a minor, or a disabled individual still living in the home after the applicant dies.
Once a lien is placed, any proceeds from the sale of the home must go to the state, up to the dollar amount paid for any medical care benefits received.
Anyone seeking to reduce their resources can only do so by spending on goods or services provided at fair market value.
If the applicant transfers the resource for less than fair market value — such as by gifting a second home to a relative or placing it in a trust — then the state will still consider that asset to technically be in their possession until at least sixty months (5 years) has passed. To determine if such a transfer has occurred, the state will investigate to see if any transfers occurred up to five years before they processed the application for Medicaid LTSS benefits.
If a gift transfer is spotted within the five-year lookback period, they may either require that the transfer be reversed (if possible) or institute a time penalty requiring the applicant to wait until five years after the transfer to apply again.
Because of this lookback period, anyone looking to qualify for Medicaid while also protecting their assets should be sure to transfer those assets into a trust at least five years prior to the likely date that they would need long-term care. Planning well in advance of the need for nursing home care with the help of an Albuquerque Medicaid trust lawyer is, therefore, beneficial.
There are two main types of Medicaid trusts. Both could be used to help you succeed in your goals to qualify for needs-based benefits, while also performing critical estate planning to ensure you leave behind a legacy for loved ones.
Note that both trusts must be irrevocable in order to provide the expected capabilities.
If an applicant exceeds their maximum monthly income amount, they can divert that income to a Medicaid-qualified income trust. If they are staying in a nursing facility, they are eligible to receive a monthly needs allowance from the trust of up to $91.
Any remaining funds left in the trust can be used for the qualifying medical expenses of the patient. When the person receiving benefits dies, the remaining income in the trust goes to the state, up to the total amount of benefits paid for their care.
This arrangement is referred to as a “reversionary trust.”
The trust can also pay for the monthly needs of a spouse with limited income. This payment is called a Minimum Monthly Maintenance Needs Allowance (MMMNA).
In New Mexico in 2025, if the person receiving benefits has a spouse living at home who makes less than $2,555 per month in total income, then they can provide enough income from the Medicaid qualified income trust to bring that spouse up to this level. If the spouse’s monthly housing and utility costs are more than $766.50 per month, they can receive additional income to pay for the excess cost, up to $1,393 extra, reaching a maximum MMMNA of $3,948.
A Medicaid asset protection trust can be used to remove assets from an applicant’s countable resources. However, as stated before, any transfers to this trust should take place prior to the state’s five-year lookback period.
Once assets are placed into the trust, they are irrevocably removed from the estate of the trust creator (called the grantor). This arrangement can make it so they are not counted toward the resources available to the applicant, and they also will not be subject to estate recovery.
There are many possible caveats to this arrangement, however. If the beneficiary of the trust is someone who could be committing trust distributions towards the medical care of a Medicaid LTSS applicant, then it is possible that the state may consider any distributions they receive to be a countable resource.
Common examples of a beneficiary who may be considered as a possible source of support include a spouse, a relative who lives with the grantor, or someone who otherwise has a relationship with the grantor where they regularly pay for their housing and care.
Note, too, that asset protection trusts can incur regular administrative and management costs. If the money placed in the trust could be enough to otherwise pay for long-term care — yet it is not of a high enough value to generate plenty of annual income to pay for its ongoing expenses — forming it could be a financially risky prospect, in the long run.
Refer to an Albuquerque Medicaid trust law firm for guidance and recommendations on the best path forward for your medical, financial, and legal future.
Long-term care is extremely expensive, especially for individuals who are older or who have a debilitating condition. Forming a Medicaid trust can be an option for them to qualify to receive coverage for the care they need.
If they have limited financial means, it could be the only option.
You can discuss all of your available options and opportunities with an experienced legal professional at our Albuquerque trust law firm. We are available to provide a confidential consultation, with no obligation to use our services further after this appointment.
Schedule your no-risk Medicaid planning consultation today when you call us at 505-503-1637 or contact us online.
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