As 529 college savings plans grow more popular, grandparents may set them up for their grandchildren. However, assets in a 529 plan are “countable” for Medicaid purposes…if you have too many countable assets, you won’t qualify.
Therefore, it’s advisable for anyone who may be applying for Medicaid to name a third party (not a spouse) as the owner of the account. Such a move should be done as soon as possible because of the 36-month “look-back” rule.
That is, when someone applies for Medicaid, assets transferred within the prior 36 months must be reported. Such transfers can delay Medicaid eligibility.
For example, say Wendy Jones gives away $100,000 worth of assets to her children and she lives in an area where the average nursing home cost is $5,000 per month. She won’t be eligible for Medicaid for at least 20 months ($100,000 divided by $5,000) after the transfer.