Medicaid

• An elderly person qualifies for Medicaid only if he has limited assets and a low income. To become eligible, a person with more assets must sell them or give them away.
  
  

Living Trust

• A living trust can be revoked so that an individual never completely surrenders control of his assets. A Medicaid trust is a better option to transfer assets, in order to qualify for Medicaid more quickly. A Medicaid trust is irrevocable and allows a person to give away his assets by giving up complete control and legal claim.
  
  

Period of Ineligibility

• There is a period of ineligibility when a person applies for Medicaid benefits. If any assets were sold or given away, a person is not eligible for Medicaid coverage until 36 months and one day after the most recent transfer. If that transfer was made into a living trust, the period of ineligibility increases to 60 months and one day.
  
  

Penalties

• A person attempting to circumvent the period of ineligibility through fraudulent conveyance of property may be subject to criminal penalties under the Health Insurance Portability and Accountability Act, passed in 1997. When the offense is a felony, the sentence is a maximum prison term of five years and up to a $25,000 fine. If the offense is a misdemeanor, the sentence is limited to one year in prison and a $10,000 fine.