What You Should Know About Medicaid and Estate Planning


According to the U.S. Department of Health and Human Services someone turning 65 today has a 56% percent chance of developing a disability serious enough to require long-term care and services. Long-term care often comes with a hefty price tag that can potentially deplete your savings until you qualify for Medicaid.

This is why proactive planning is so important; you help to protect your estate for your loved ones. We have a few tips to help you strategize a plan for long-term care within your estate plan. But before we talk about options, below are three important Medicaid terms to know.

  • Medicaid Resource Limit: When you apply for long-term care Medicaid, you must meet the eligibility conditions – which require your assets (or resources) be lower than a specific amount, which varies by state.

  • Look-Back Period: To prevent Medicaid applicants from giving away their assets to meet the income eligibility requirement, Medicaid reviews all asset transfers during a specific timeframe. If they find you in violation, you are ineligible for coverage during a penalty period. The look-back period varies by state but is 60 months - or five years - from your application date in most states.

  • Estate Recovery: After a Medicaid recipient dies, the state works to recover payments made to the recipient from his or her estate.

A proactive approach allows you to plan for long-term care before you need it and ensure that your assets are protected. Here are three ways that you can prepare for Medicaid within your estate plan:

  • Irrevocable Trust: This type of trust cannot be changed after it has been established and is typically drafted so that income is payable to you for living, but the principal cannot be applied to benefit you or your spouse. If it’s created at least five years before applying for Medicaid, an irrevocable trust can protect your assets and the principal not count as a resource, as long as it cannot be paid to you or your spouse for your benefits.

  • Annuities: Married couples often use annuities to help pay for long-term care. An immediate annuity is an insurance contract where a lump sum premium is paid upfront, with the insurer sending payments for the rest of the policyholder’s life. In most states, annuities are considered an investment and allow you to convert countable assets into uncountable assets. If the income is in the name of the spouse not in the nursing home, it won’t count as a resource for Medicaid.

  • Life Estate: One way to protect your home from Medicaid’s estate recovery is to set up a life estate. This is essentially a joint ownership of a property for different periods of time. The person holding the life estate owns the property for the rest of his or her life. The other owner has an ownership interest, but doesn’t take possession of the house until the death of the life estate holder.



When it comes to Medicaid and long-term care planning, every circumstance is different. That’s why creating a comprehensive plan that works for your specific situation is so important. We’re here to help you develop a viable strategy for long-term care planning while preserving the future of your estate. If you are ready to start thinking proactively about your family’s future, contact us for a complimentary consultation.

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