The Women's Journal

Protecting Money From Medicaid

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By Frank Demarinis  


Most don’t want to think about the day we can no longer care for ourselves, or when loved ones can’t live on their own. The hard truth is 70% will need some form of long-term care. Genworth Cost of Care Survey 2019, indicates mean cost semi-private nursing can cost $9,513 per month. Unlike Medicare (which doesn’t cover long-term care), Medicaid is a “means-tested” program; applicants have limited assets and low income to qualify. If a senior attempts to give away money and assets to qualify, Medicaid finds the transfer through a “look-back” process and levies a penalty period forcing them to pay for care out of pocket.

Ways to Protect Monies through the Medicaid “Look Back” Period

#1: Asset Protection Trusts 

Applicants can only have a certain amount of money or property in their name. There are risks in transferring assets to friends and family (aside from the Medicaid penalty). In addition to issues of trustworthiness, recipients can incur debt liability by creditors. Individuals can get divorced or pass away, which is why licensed trustee agencies are beneficial. 

#2: Income Trusts 

Income limits are enforced by Medicaid. Excess income must be handled appropriately to obtain and maintain eligibility. An approved trustee or licensed agent is needed to manage disbursement of funds for allowable expenses. Setup prior to nursing home placement is an easily missed step in the process.

#3: Compliant Annuities and Promissory Notes 

Getting rid of assets within the Medicaid look-back period triggers a penalty. A properly worded and structured annuity or promissory note may create cash flow from the applicant’s assets to pay for nursing care during a shortened penalty period.

#4: Caregiver Agreements 

Personal care agreements may help seniors acquire extra services that would not be covered by Medicaid. A family member or friend (who may have quit their job or taken time off from work) can render services and receive income. Seniors can benefit being cared for by those they know in their own homes. Services can be paid for in advance, and can legally reduce a Medicaid applicant’s countable resources even if a child or friend is providing them. Done correctly the monetary transfers will not be viewed as a gift exchange.

#5: Spousal Transfers 

Medicaid law permits transfers between spouses. Basic Medicaid-planning strategy is to transfer assets from a spouse who needs care to a well spouse. (In cases where the ill spouse is in an institution like a nursing home and the well spouse is in their home in the community, the well spouse is referred to as the “community spouse”).

Seek legal advice with specialized elder law attorneys familiar with state Medicaid programs to produce favorable outcomes. Every case has unique facts & strategies. 

Misbeliefs and myths including “Medicare covering 100 days” (30 or less is more accurate), “Nursing Homes take care of the process,” or “take the house or car” have led to many unfortunate placements, lack of approval for desirable care, or State assignment of Guardianship. If you or a friend are admitted to a nursing home, the first 30 days are critical even if planning to go home.      

Our non-profit grant program has free consultation and grant slots for 85+ who are at risk, have had a recent nursing home stay, or who would benefit from an Assigned Power of Attorney (Health or Financial), or who are at risk of frequent re-hospitalization.


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