Can Moving Assets help in Qualifying for Medicaid Long Term Care Coverage?

Moving Assets to help in Qualifying for Medicaid Long Term Care Coverage?
Kevin Wenke

Kevin Wenke

Owner at Decision Tree Financial. CFP. CLU

Yes, it is entirely possible to remove assets from an estate to help in qualifying for Medicaid long term care coverage.   If you give your assets away today you may be able to have Medicaid pay for your long-term care services in the future.

Qualifying for Medicaid long term care this way may sound simple, but it requires some advanced planning to achieve some of your financial goals.

For example, if someone wants to make sure a surviving spouse is taken care of if they need care, a trust can be established so they receive benefits.

The downside of removing assets from your estate to qualify for Medicaid long term care coverage is that you are putting yourself in a position to be on your state’s Medicaid program.  Therefore, you will be subject to Medicaid rules if you need long-term care services.

This means you would probably be moved into a Medicaid facility and would not be able to stay home while needing care.  The whole point is you need to be broke in the eyes of the state for them to pick up the cost of your care.

I generally recommend that before you decide on this strategy, that you take the time to visit a Medicaid facility in your state so you understand the level of care you might receive from such a place.

I can tell you first-hand that the care you receive depends on which state you live in.  The level of care received can be extremely different in facilities.

Personally, I live between New York and Florida.  One is a high tax “blue state” and the other, a low tax “red state.”

I know there are a lot of people who look to escape the tax environment of New York and move to states like Florida.  But, with long-term care, this is a situation of “you get what you pay for.”

Two of my Grandparents ended up in nursing homes when they were older; both in New York State. Neither had long-term care insurance so they paid for care with their own money.

They both ended up in the same nursing home the last months of their lives.  One ran out of money and the other paid 100% of the cost out of pocket.  I can tell you that the level of care for my grandparent who was on New York State Medicaid was no different than my grandparent who was paying thousands of dollars a month!

But they were lucky because there were enough Medicaid beds available in that facility.

Again, that was in New York State.

If this had happened in Florida, a completely different situation would have occurred.

As soon as they had run out of money, the private nursing home would have forced them to move to a state-run Medicaid facility.  These facilities can be ANYWHERE in the state!  They try to keep you close to home but if there aren’t any rooms available nearby, you are moved, potentially far away from family and friends.

In addition, the level of care drastically changes.  Medicaid facilities do not have the budgets (funded with tax dollars) to provide a high level of service. They provide a BASIC level of service but nothing more.

I feel that to really understand what type of care you will get you need to visit a facility.  The experience may help you decide how you want to handle the risk of needing long-term care services in the future.

If you are OK accepting Medicaid, you can protect your assets by removing them from your estate.

If you choose this strategy, it is important to understand that you will not be able to receive any additional benefits from the money you remove from your estate.

The assets have to be 100% out of your control.  The money has to be an absolute gift to another person or entity (charity, trust, corporation).  You can receive an income from the money, but that income will be used to offset the cost of your Medicaid care.

Also, understand that this strategy takes planning.  Your assets must be removed from your estate five years before needing long-term care services.  You cannot determine you need care then later give money away before going to a nursing home.

The reason for this is that Medicaid has a “claw-back” provision that allows them to reclaim money given away to help in qualifying for Medicaid long term care.

When people try to give money away shortly before needing services, the state is legally able to take the recipients to court to recapture this money.  This process can become a burden and expense to the people or organization you wanted to have the benefit of the money.

An option that can help out by paying for long-term care and leaving asset in your estate is something called a State Partnership Plan.

There are many ways to prepare for the potential need for long term care.  Learn more about long-term care planning by downloading my free book: The Secrets to Long-term Care Planning

Share this post

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x