A National Membership Organization

Medicaid Planning

Medicaid Planning is a complicated area of Elder Law where the rules often change.  Essentially Medicaid Planning is creating a specific, personalized and legal plan that will make individuals eligible to receive government benefits while at the same time, allow families to keep the assets they have accumulated over a lifetime of hard work.  Qualifying for benefits has always been complicated and difficult, but recent changes in elder laws have made the process even harder.  

To qualify for Medicaid, the institutionalized individual cannot own more than $2,000 in assets if you are a single person.  If you are married, the amounts change.  Each state will have some form of a spousal impoverishment program in place which is intended to prevent the community spouse from becoming impoverished when their husband or wife needs long-term care.  Usually the community spouse is allowed to keep their home (if it has less than $500,000 in equity), the families personal property, one car, the first full $50,000 in cash assets or if they have more than $50,000 in cash, 1/2 of their cash assets up to a maximum amount of just under $120,000).  The community spouse is also permitted to keep just under $2,500 of monthly income. In some cases, an increase of income is permitted if monthly household expenses reach a specific level.  If the community spouse's income is less than the maximum monthly income allowed, he or she can claim as much of the institutionalized spouse's income needed to reach the maximum amount allowed.


Although spousal impoverishment rules allow a husband and wife to keep certain assets while at the same time, qualify for long-term care benefits, this does not mean the family is permitted to keep those assets and pass them to their children after the parent's death.  States have stepped-up their recovery efforts so before the heirs can receive mom and dad's assets after their parent's deaths, the states will place liens on those assets.  The intent of the lien is to repay the state for the money that the state had paid for the parents’ long-term care.  If any portion of the estate exists after the state is repaid, the heirs then receive the remaining balance.


Thankfully, there are other ways for families to qualify for benefits rather than under spousal impoverishment rules.  But this requires the family to plan early.  Government allows families to arrange their affairs in such a way that family assets are "set aside" or are considered an "exempt resource" when an individual applies for benefits.  To make this happen there are rules to follow.  This form of planning allows individuals to shelter unlimited amounts of principal assets owned by the individual and spouse.  It is important to note however this form of planning must be in place at least 60-months in advance of applying for benefits.  


In the qualification process, the individual is required to provide government with a full and detailed account of all assets owned by the individual and spouse.  In most cases, and without proper planning, most assets will be considered a countable resource to the individual.  Government requires you to spend down your countable resources for the care you need until the total value of your remaining assets reach the point where you are eligible to apply for benefits.  These levels were previously mentioned.


Government defines a resource to the individual as: 

"Cash and any other personal property, as well as any real property, that an individual (or spouse, if any);

  1. owns;
  2. has the right, authority, or power to convert to cash (if not already cash);      and
  3. is  not legally restricted from using for his/her support and      maintenance".


In the end, this is what Heritage Estate Plans does very well.  To ensure the results of each of our estate plans.  An AV rated and nationally recognized law firm, who has a lifetime of experience helping clients qualify for benefits created our documents specifically for us.  Then, to ensure that each of our plans are specifically drafted personally for each of our members, we have arranged for preferred law firms to personally represent each member and draft each document specifically for the needs of each member.

Frequently Asked Questions...

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Is it ethical to transfer and re-title assets so an individual can qualify for Medicaid?

Yes, it is ethical and moral; in fact, it is the "right" thing to do if a family is concerned about the long-term care of a loved one.  From a moral and ethical standpoint, Medicaid planning is no different from income tax planning and estate planning.  Income tax planning involves trying to find every legal and proper deduction, credit and other tax saving process that you are entitled to, taking maximum advantage of existing laws.  In the same manner, Medicaid planning involves trying to find the best methods to transfer, shelter, and protect your assets in ways that take maximum advantage of existing laws, all in an effort to minimize what you pay and maximize the amount of money and assets that remains in your control.


If someone transfers assets, when does the Medicaid ineligibility period start?

Medicaid states you are ineligible to apply for benefits if you have gifted any asset away within 60-months of applying for benefits.  In most cases when a person completes the estate planning process which makes an asset an exempt resource, they are gifting assets out of the estate.  For the very best estate planning results, create your plan at least 5-years prior to when you believe it is likely you may need care.


If I gave assets away and created a period of ineligibility for Medicaid, can the person to whom I gave the assets return the asset to me and eliminate the period of ineligibility?

Yes, A transfer can be reversed by the return of the transferred asset.


Are there any assets that can be transferred without resulting in a period of ineligibility?

A spouse (or anyone else for the spouse's benefit

  • A blind or disabled child
  • A trust for the benefit of a blind or disabled child; or a funeral trust
  • Income property
  • Home improvements, etc.