Proactive Medicaid Planning

Proactive Medicaid Planning

Over the years the Elderlaw and Estate Planning (i.e.Life and Legacy Planning) world has been forced to adapt to create innovative ways to help your protect your assets from nursing homes and Medicaid.  Without this planning seventy percent (70%) of people over age sixty five will be subject to the astronomical costs of Long Term Care.  Gone are the days when you can simply gift your property to your loved ones or put their names on your accounts without consequence, as your primary means of protecting your assets; enter the “five year lookback period”.  You’ve heard of that, right?  How do you keep the necessity of a nursing-home stay from impoverishing you, and the government from getting all of your estate’s assets?  Let us show you.  We’ll start by giving you the following information:  

Proactive Medicaid Planning:

One currently-effective planning technique is to transfer assets into a ‘Medicaid’ trust. In a Medicaid trust, the trust maker retains the right to all of the trust income for life while irrevocably giving up the right to receive or benefit from any of the trust principal. Once the Five Year Lookback period passes, the assets in the trust are no longer exposed as a resource to pay for the cost of the trust maker’s Long Term Care.

By using this pro-active medicaid planning method, you can preserve as many or as few assets as you choose, and if the proper assets are shielded, you will still qualify for Medicaid, after expiration of the look-back period!  

For the Proactive Medicaid Planning strategy to work, insurance, income streams, or other assets can be used to help you “wait out” the five year lookback period before applying for Medicaid.  

A Medicaid trust can also address a trust makers concerns regarding loss of control over the assets.  Our plans often allow the trustee to distribute principal during the trust maker’s lifetime for the benefit of the trust maker’s, children, or other designated beneficiaries, just not to or for the benefit of the trust maker. Additionally, many trust makers choose to maintain the right (called a Special Power of Appointment) to change the current or ultimate beneficiaries of the Medicaid trust by ‘reappointing’ the assets to different family members at a later date, thereby reserving some control over the assets, while still qualifying for Medicaid.

Making Gifts:

If a Medicaid trust is not desired, it is still possible to make ‘outright’ gifts of property, wait until the look-back period expires, and then apply for Medicaid or use other planning techniques to qualify for Medicaid at the earliest possible date.  However, this technique is risky because of the potential for the person to whom the “remainder estate” (what remains after your life estate expires) is given pre-deceases, or encounters trouble with their own creditors or predators.    

Protecting the Home:

If the home is the only asset to protect, a deed to children or others with a retained life estate for the client could protect both the property and the client’s Medicaid eligibility upon expiration of either 60 months from the date of the conveyance or the applicable ‘penalty period’. As with other advanced planning strategies, because the penalty period begins only after the applicant has applied for Medicaid and is otherwise eligible, other Long Term Care funding should be available to get past the look-back period if you choose to gamble and use this method.  

Even if the need for Long Term Care is imminent or immediate, sophisticated Medicaid planning opportunities can be employed to protect a substantial portion of your assets. Carefully working within the Medicaid transfer rules can allow individuals to provide security for themselves and a legacy to their families, while ensuring that they will remain eligible to receive LTC under Medicaid when necessary. Check out the page on “crisis planning” for more information involving this technique.  


Counseling individuals on their Long Term Care options, including the availability of Long Term Care insurance, and irrevocable trusts is an integral part of comprehensive life and legacy planning, and something your life and legacy planning attorney should be intimately familiar with, you can rest assured that we at Reisner Law Group, PLLC are well versed in this area of law.