Medicaid Planning: What You Should Consider Before Starting


Planning for long-term care cost is a harsh reality for those planning for retirement.  As Americans live to be older, using of the long-term care system is inevitable. When seniors are forced to use the long-term care system is determined by variable such as health and the availability of family support.

The way many seniors and their families choose to plan for this unknown aspect of aging is through Medicaid Planning.  It is the process of using legal or financial tools to make themselves Medicaid eligible before they would have been otherwise.

Here are a few things you should consider before beginning the Medicaid Planning process.

Medicaid In A Nutshell

Medicaid is funded through the state with eligibility based solely on financial criteria.  It is different than Medicare which is automatically granted to US Citizens at the age of 65. A senior must apply for Medicaid and meet criteria before receiving coverage.

Medicaid has become the default payor for nursing home care. It covers the cost of nursing home care which is averages about $81,000 a year. That considered, it is easy to see why seniors are looking for ways to get Medicaid to pick up the nursing home bill.

Becoming Medicaid Eligible

Most seniors spend down their assets to the eligibility level, typically around $2,000 in assets, in order to qualify for Medicaid coverage.  Others use legal mechanisms like irrevocable trusts in order to protect their money from long-term care cost and preserve assets for the next generation.  This often involves transferring ownership of assets to a trust making them unavailable to the senior.  It is a strategy almost exclusively used by the rich but has recently been used by middle class seniors in order to become Medicaid eligible.

However it happens, for a senior to become eligible they must have less than $2000 in total assets. Check with your local department of human services in order to find out the exact state requirements.

The Look-Back Period

Any Medicaid Planning strategy usually involves navigating around the five-year look-back period. Each Medicaid application asks whether or not the applicant has transferred assets to someone else in the last five years.  If the answer is yes, the government will likely want the applicant to contribute a portion of the amount transferred to long-term care expenses before becoming eligible.

Assets transferred over five years ago will not counted as assets.

Avoid Giving Cash Gifts

Seniors often try to transfer assets to their family for friends through gifting.  Seniors will give the maximum amount allowable by the IRS, pay college tuition, buy cars, anything to control the distribution of assets.

A cash gift can be anything but if given within the look-back period.  The state can require that assets be returned and applied toward long-term care expense. They can even go after the person or organization who received the assets.

Considering gifting a portion of your assets to someone in your family? Make sure to consult your local Medicaid guidelines before making the gift.

Consult the Correct Expert

The population of those age 65 years of age and older is the fastest growing demographic in America.  As a result, everyone has a product designed the serve the senior population. There any number of professionals that offer Medicaid planning services but not all have the ability to actually do it. Even for those with a modest assets, Medicaid Planning involves complex legal and estate planning tools best accomplished by an Elder Law Attorney.

Going to an “expert” without the proper skills or authority to engage in Medicaid Planning could result in lost money and additional regulatory entanglements.

Stay In Control

If you can avoid it, it is always best to avoid government subsidies when paying for long-term care. Spending your own assets allows you to choose the care you receive and the place you receive it in. Using government subsidies restricts choice to the care funded by that subsidy.

Senior Care Plan

SeniorCareSherpa.com offers plans to help seniors and their families plan for long-term care. Senior care plan’s are elder-centered. The plan addresses the unique healthcare, financial and environmental needs of the senior. Whether it be brief or ongoing, we help seniors and their families navigate the senior care system.

Next Post: Four Reasons To Get A Senior Care Plan

Editor’s Note: The author, Tony Fischer, is not an attorney. The content in this post is intended to provide general information and not intended as legal advice. Contact an Elder Law Attorney before making any decisions on Medicaid Planning or any other Elder Law matters.



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Tony Fischer

As an advocate for elders and their families, Tony has experience in the entire healthcare continuum. He has worked in hospitals, nursing homes, home care, hospice, and non-profits.

His vast and unique experience led him to become a consultant that helps clients navigate the senior healthcare system. Tony also works hand and hand with healthcare providers to improve and streamline customer service.

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