top of page

Three Strategies To Protect Your Assets From Medicaid

dHere are three strategies to consider if you are concerned with protecting your assets from Medicaid.

1. Long Term Care Insurance

Long term care insurance is a policy that will pay for some or all costs associated with in home or nursing home expenses. This is a proactive strategy assuming you are “insurable” and can afford the premium payments without sacrificing your lifestyle. In recent years the cost of long term care insurance has sky rocketed and many insurance companies have gotten out of the business altogether. So it is becoming increasingly difficult to obtain long term care insurance but it is still worth looking into as some coverage is better than none. I typically create a budget for the client based on their objectives and then shop the carriers and different programs to design a solution that fits the budget and financial plan.

2. Irrevocable Trust

If designed correctly, a trust may accomplish a few things. It will most likely skip probate, it will most likely define what is to happen with the assets placed in the trust and it can remove assets from your estate (meaning they no longer belong to you but you can still enjoy some of the benefits). For instance, you can place your home into a trust and still live in the home. With proper design, assets placed into an irrevocable trust are deemed non-countable assets by Medicaid, but they are deemed a gift and subject to the 5 year look-back period. It would work as follows: the trustee has discretion to distribute income to the trust beneficiary (usually a child) and the trust beneficiary can then use the distribution to pay for the parent’s care (Medicaid applicant).

A couple things to consider:

  • The trust beneficiary “could” take the money and run and not pay for the parent’s care as agreed. There is an element of trust involved.

  • The grantor (Parent/Medicaid applicant) loses control over the assets placed in the trust. It is irrevocable, meaning it is final.

  • Cannot predict when the Medicaid applicant will need the Medicaid. It could occur before the five year look-back period has lapsed.

The idea here is to proactively plan and hopefully the 5 year lookback period will pass before Medicaid is needed. I am not an estate attorney, but I will help you organize your financial plan and then work with an estate attorney to create the trust on your behalf.

3. Immediate Annuity

I consider this a “last minute” strategy. In this case, the Medicaid applicant would transfer a portion of their assets to their son or daughter. The transferred assets would be subject to the five year look-back and result in a Medicaid penalty of XYZ months. The remaining assets are then used to purchase an immediate annuity which can be used in conjunction with Social Security to pay for the care during the penalty period. Once the penalty period passes, Medicaid kicks in and the son and daughter keep the money that was transferred to them. Again, this is a reactive strategy and may not work in certain situations but can sometimes produce a better outcome then just spending down all the assets.

If you would like help with your financial planning, I offer a free proposal and risk tolerance questionnaire to get you started or you can email me at to discuss your particular situation.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state's insurance department for more information.


bottom of page