Will My College Savings Be Counted as an Asset for Medicaid?
The short answer is, unfortunately, it depends.
The factors are the type of account where you keep the savings, how you funded the account, when you funded the account, and if you can still get to the money for uses other than funding a college education.
A lot of it boils down to whether you can liquidate the account and take your money out of the account. If you can take that money out and use it, then Medicaid will act as though you will and count it as an asset.
Medicaid also counts gifts against you, and most contributions to a college savings account qualify as gifts. However, if the contributions were more than 60 months (five years) before your application for Medicaid benefits, then Medicaid will ignore them and not penalize you for those contributions.
There’s another way around Medicaid’s scrutiny of college funds: 529 college savings plans. A 529 plan puts the money outside of your immediate control for taxation and estate purposes, and it, therefore, puts it outside Medicaid’s sight as far as counting assets.
Grandparents need to be careful when setting up 529 plans for grandchildren. If the funds are invested in trust for the grandchild, they will be included for Medicaid purposes. A better choice is to set up a 529 plan with the “participant” in the plan listed as the parent or guardian of the grandchild, separating it from the donor.
If you or someone you know is considering an application for Medicaid, you should be prepared for complicated rules and stringent time periods for counting and defining assets. Here at Van Dyck Law Group, we have experience with Medicaid through our thriving elder law practice. Call our office to set up a consultation. Our number is 609-580-1044.
Reference: nj.com (September 19, 2018) “Will my college savings be counted for Medicaid?”