Excerpt from: AARP (click for full article)
You could have a problem if you own a 529 plan and need to apply for Medicaid. Because 529 account owners can withdraw a plan’s funds at any time, Medicaid counts the plan as the owner’s financial resource in most states. Consequently, states’ Medicaid regulations will count the plan against the asset limits you’re allowed to keep before receiving Medicaid benefits. If your assets are above the allowed limit, you’ll be forced to spend down your financial accounts—including the 529 plan—to qualify for benefits.
Each state manages its own Medicaid program and the qualifying rules are complex, so you should speak with an attorney or financial advisor before making any decisions. But there are two general strategies worth considering as you weigh your options:
Change the account’s ownership.
Have a trust control the account.
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