What is a Medicaid qualifying trust?

A Medicaid Qualifying Trust is a type of irrevocable trust for assets in excess of the limit for Medicaid, according to Nolo. Many people believed that they could create these trusts, name themselves the beneficiaries and still qualify for Medicaid. In fact, these trusts disqualified them for the program.

An irrevocable trust protects assets from counting toward the limit only if the trustee lacks discretion in distributing the assets, states Nolo. However, Medicaid may subject these assets to a transfer penalty that disqualifies the beneficiary for a period of time. Special-purpose trusts that distribute funds according to specific federal statutes are exempt from these rules.