smartasset.com Open in urlscan Pro
13.226.34.110  Public Scan

Form analysis
2 forms found in the DOM

POST /search

<form class="Header_search__MkDkC " action="/search" method="post"><label for="search">Search</label><input type="text" id="search" name="q"><input type="submit" value="Go"><input type="button" value="Cancel"></form>

<form>
  <aside class="ArticleComponent_feedback__hnI4a ArticleComponent_greyAside__Kgb9k"><span>Was this content helpful?</span><label><input type="radio" name="helpful" value="Yes"> Yes</label><label><input type="radio" name="helpful" value="No">
      No</label></aside>
</form>

Text Content

   
    * Mortgage
    * Taxes
    * Retirement
    * Financial Advisors
    * Banking
    * Investing
    * Credit Cards
    * Life Insurance
    * Refinance
    * Personal Loans
    * Student Loans
    * SmartReads
    * SmartAsset AMP
    * About
    * Press
    * Terms of Service
    * Privacy Policy

 * Mortgage
   Calculators
    * Mortgage Calculator
    * Closing Costs Calculator
    * Cost of Living Calculator
    * How Much House Can I Afford?
   
   Mortgage Lender Reviews
    * Rocket Mortgage Review
    * Better Mortgage Review
    * AmeriSave Mortgage Review
    * More Lender Reviews
   
   Compare Rates
    * Mortgage Rates
    * 30-Year Mortgage Rates
    * 15-Year Mortgage Rates
    * 7/1 Arm Mortgage Rates
    * 5/1 Arm Mortgage Rates
    * 3/1 Arm Mortgage Rates
   
   Helpful Guides
    * Home Buying Guide
    * Veteran Home Buying Guide
   
   Learn More
    * How Much You Should Charge for Rent
    * Avoid These Early Mortgage Payoff Mistakes
    * How to Buy Land
    * Down Payment Gifts

 * Taxes
   Calculators
    * Paycheck Calculator
    * Income Tax Calculator
    * Property Tax Calculator
    * Tax Return Calculator
    * Retirement Taxes Calculator
   
   Helpful Guides
    * Tax Guide
   
   Tax Software Reviews
    * Best Free Tax Software
    * H&R Block Review
    * Jackson Hewitt Review
    * FreeTaxUsa Review
   
   Learn More
    * Federal Income Tax Brackets
    * How to Fill Out W-4
    * State Capital Gains Taxes
    * Gift Tax Explained
    * Your Standard Deduction
    * Tax Allowances

 * Retirement
   Calculators
    * Retirement Calculator
    * 401(k) Calculator
    * Social Security Calculator
    * RMD Calculator
   
   Helpful Guides
    * Retirement Guide
    * Financial Advisor Guide
    * Estate Planning Guide
   
   Learn More
    * RMD Table
    * How to Calculate Your RMD
    * 401(k) Withdrawal
    * The Rule of 55
    * 401(k) Contribution Advice

 * Financial Advisors
   Find a Financial Advisor
    * Top Financial Advisors
    * Financial Advisors in Houston, TX
    * Financial Advisors in Charlotte, NC
    * Financial Advisors in Atlanta, GA
    * Financial Advisors in New York, NY
   
   Firm Reviews
    * Top Financial Advisory Firms
    * Fisher Investments Review
    * Merrill Lynch Review
   
   Helpful Guides
    * Working with a Financial Advisor Guide
   
   Financial Advisor Resources
    * Guide to Financial Advisor Business Plans
    * Client Acquisition Strategies
    * Client Retention Strategies
    * Cold Calling Scripts for Financial Advisors
    * Marketing Tips
    * About SmartAsset AMP
    * More Resources for Advisors
   
   Learn More
    * How to Choose a Financial Advisor
    * Are Financial Advisors Worth it?
    * What Is Conservatorship?
    * Family Trusts
    * CFA vs. CFP
    * Best Financial Planning Software
    * Wealth Managers vs. Financial Advisors
    * Financial Advisor Cost

 * Banking
   Calculators
    * Savings Calculator
    * CD Calculator
   
   Compare Bank Accounts
    * Compare Savings Accounts
    * Compare Checking Accounts
    * Compare CD Rates
    * Compare Money Market Accounts
   
   Helpful Guides
    * Checking & Savings Guide
   
   Banking Products
    * Best Savings Accounts
    * Best Money Market Accounts
    * Best CD Rates
    * Best Checking Accounts
   
   Bank Reviews
    * Ally Bank Review
    * Capital One Review
    * USAA Review
    * Bask Bank Review
   
   Personal Finance Resources
    * What Is the Best Credit Card for You?
    * Personal Loan Calculator
    * Student Loan Calculator
    * Budget Calculator
   
   Learn More
    * Withdrawal Limits
    * How to Get a Bank Statement
    * FDIC Insurance

 * Investing
   Calculators
    * Investment Calculator
    * Capital Gains Tax Calculator
    * Inflation Calculator
    * Asset Allocation Calculator
   
   Helpful Guides
    * Investing Guide
   
   Compare Accounts
    * Brokerage Accounts
   
   Learn More
    * What is a Fiduciary?
    * How to Invest $100k
    * What's a Good P/E Ratio?
    * Types of Investments
    * Tax Free Investments

 * Credit Cards
   Best Credit Cards
    * Best Credit Cards
   
   Helpful Guides
    * Credit Cards Guide
   
   Compare Cards
    * What is the Best Credit Card for You?

 * Life Insurance
   Calculators
    * How Much Life Insurance Do I Need?
   
   Compare Quotes
    * Life Insurance Quotes
   
   Helpful Guides
    * Life Insurance Guide

 * Refinance
   Calculators
    * Refinance Calculator
   
   Compare Rates
    * Compare Refinance Rates
   
   Helpful Guides
    * Refinance Guide

 * Personal Loans
   Calculators
    * Personal Loan Calculator
   
   Compare Rates
    * Personal Loan Rates
   
   Helpful Guides
    * Personal Loan Guide

 * Student Loans
   Calculators
    * Student Loan Calculator
   
   Compare Rates
    * Student Loan Refinance Rates
   
   Helpful Guides
    * Student Loan Guide

 * SmartReads
 * SmartAsset AMP
 * About
 * Press
 * Terms of Service
 * Privacy Policy
 * More
   Best Credit Cards
    * Best Credit Cards
   
   Helpful Guides
    * Credit Cards Guide
   
   Compare Cards
    * What is the Best Credit Card for You?
   
   Calculators
    * How Much Life Insurance Do I Need?
   
   Compare Quotes
    * Life Insurance Quotes
   
   Helpful Guides
    * Life Insurance Guide
   
   Calculators
    * Refinance Calculator
   
   Compare Rates
    * Compare Refinance Rates
   
   Helpful Guides
    * Refinance Guide
   
   Calculators
    * Personal Loan Calculator
   
   Compare Rates
    * Personal Loan Rates
   
   Helpful Guides
    * Personal Loans Guide
   
   Calculators
    * Student Loan Calculator
   
   Compare Rates
    * Student Loan Refinance Rates
   
   Helpful Guides
    * Student Loans Guide

 * 

I'm an AdvisorFind an Advisor
Search
Email FacebookTwitterMenu burgerClose thin


3 WAYS TO PROTECT ASSETS FROM MEDICAID

Updated on February 16, 2023
Written by Mark Henricks

Share

Medicaid can pay for long-term care if you meet its means-testing restrictions.
The federal-state program is designed to help only people of limited financial
means. However, people with more substantial assets can use three different
strategies to shield those assets from Medicaid and ensure their eligibility for
long-term care benefits. To get assistance with your planning for long-term
care, consider talking to a financial advisor.  




WHAT IS LONG-TERM CARE?

First off, what is long-term care? The term encompasses a range of services
necessary for people who can’t perform everyday tasks due to debilitating health
conditions or disabilities. Long-term care is distinct from traditional
healthcare like doctor’s visits and medicine, so it isn’t covered by health
insurance.

Rather, this type of care often covers custodial services like helping people
with bathing, using the bathroom, eating and more. Long-term care may refer to
any of the following facilities and services:

 * Skilled nursing facilities
 * Nursing homes
 * Assisted living
 * Adult daycare
 * Homemaker services
 * Home health aides


HOW TO PAY FOR LONG-TERM CARE



Paying for long-term care can potentially be a significant financial
challenge. For example, the median annual bill for a semi-private room in a
skilled nursing home was $94,900, according to the Genworth 2021 Cost of Care
Survey.

There are four ways to pay for long-term care:

 1. Paying for it with your own assets
 2. Purchasing long-term care insurance
 3. Medicare (in some instances)
 4. Medicaid

Paying for skilled nursing home care with your own personal assets can deplete
even a sizable estate quickly, so many planners look for other ways. If
purchased in advance and the premiums are regularly paid, long-term care
insurance can cover some or all long-term care costs. Medicare, the federal
old-age health insurance program, can pay for up to 100 days of nursing home or
rehabilitative care, but basic Medicare is not set up to cover long-term care.

That leaves Medicaid, a federal-state program designed to help older or disabled
people of limited financial means pay for healthcare and other services,
including long-term care. In many states, Medicaid may cover the cost of living
in a skilled nursing facility indefinitely.



To get benefits, however, you have to meet Medicaid’s means-testing
requirements. These vary from state to state but generally require recipients to
have no more than $2,000 in assets and income amounting to no more than twice
the federal poverty level. Anyone with more substantial assets may not qualify
for benefits or may be subject to fines and other penalties if they violate any
of the rules governing qualification.

But one way people with more resources can qualify for Medicaid assistance is to
“spend down” their assets – pay for care with their own money until their assets
and income have declined enough to satisfy the program’s requirements.

Another tactic is to gift assets to someone else, such as a family member, so
the long-term care patient can pass the means test. However, Medicaid has a
five-year look-back provision that says any asset transfers must be completed at
least five years before applying for Medicaid assistance.

For more recent transfers, Medicaid applies a penalty. This is calculated by
dividing the size of the asset transfer by the local monthly cost of nursing
home care. Transferring $200,000 in an area with $10,000 monthly costs would
require the patient to pay out of pocket for their care for 20 months.


HOW TO PROTECT ASSETS FROM MEDICAID



There are other ways to protect assets from Medicaid while still receiving
long-term care benefits. These can involve costs of their own and all have some
limitations to consider, but they may be preferable to a spending down strategy:

 1. Medicaid asset protection trust. By setting up an irrevocable trust and
    transferring into it any assets in excess of the Medicaid financial limits,
    you can effectively shield those assets from the program’s fines and other
    penalties. One issue here is that assets cannot be transferred back out of
    the trust, so you have lost control of them forever. Also, the look-back
    period applies. And trusts can be expensive to set up, so they are less
    useful for smaller estates.
 2. Life estate. A life estate allows you to own real estate jointly with
    someone else, like your spouse, and have it pass it on to them upon your
    death. This can exclude the value of the family home from Medicaid’s means
    test. Life estates are, like Medicaid trusts, irrevocable, so you can’t
    change your mind and regain control of the real estate. Medicaid’s five-year
    look-back rules also apply, so it’s necessary to plan ahead.
 3. Medicaid annuity. An annuity designed to comply with local Medicaid rules
    can be excluded from your assets for means testing. Someone who needs
    long-term care unexpectedly can transfer part of their assets to a relative,
    which will likely trigger the look-back period. They can then use the
    remainder of their assets to purchase a Medicaid annuity that generates
    enough monthly income to cover their long-term care costs until the penalty
    period expires. Annuities are expensive, however, and some states limit
    their use for this purpose.


THE BOTTOM LINE

It’s possible to get long-term care through Medicaid, but you’ll need to use
some special strategies to shield your assets in order to pass the program’s
means testing. Medicaid asset protection trusts, life estates and
Medicaid-compliant annuities are three ways people who otherwise may not qualify
for Medicaid can receive benefits for long-term care.


LONG-TERM CARE PLANNING TIPS

 * A financial advisor can help you design a strategy to pay for long-term care
   that will suit your own financial objectives. SmartAsset’s free tool matches
   you with up to three financial advisors in your area, and you can interview
   your advisor matches at no cost to decide which one is right for you. If
   you’re ready to find an advisor who can help you achieve your financial
   goals, get started now.
 * A qualified income trust is specifically designed to help people whose income
   is too large to qualify for local Medicaid means tests. A qualified income
   trust creates an account to which a high-earner can divert enough of their
   monthly income to meet Medicaid income restrictions.

Photo credit: ©iStock.com/supersizer, ©iStock.com/G Trade, ©iStock.com/DGLimages

Mark HenricksMark Henricks has reported on personal finance, investing,
retirement, entrepreneurship and other topics for more than 30 years. His
freelance byline has appeared on CNBC.com and in The Wall Street Journal, The
New York Times, The Washington Post, Kiplinger’s Personal Finance and other
leading publications. Mark has written books including, “Not Just A Living: The
Complete Guide to Creating a Business That Gives You A Life.” His favorite
reporting is the kind that helps ordinary people increase their personal wealth
and life satisfaction. A graduate of the University of Texas journalism program,
he lives in Austin, Texas. In his spare time he enjoys reading, volunteering,
performing in an acoustic music duo, whitewater kayaking, wilderness backpacking
and competing in triathlons.
Was this content helpful? Yes No

Read More About Retirement
Retirement
How an ESOP to IRA Rollover Works
March 7, 2024Read More
Retirement
I’m 75 With $900,000 in an IRA. How Do I Make Sure This Mone...
March 20, 2024Read More
Retirement Planning
Rollover IRA vs. Roth IRA
May 13, 2024Read More
Healthcare & Living
What Is a Retiree Reimbursement Arrangement?
April 7, 2024Read More

Recent posts

 * 7 Mistakes You'll Make When Hiring a Financial Advisor
 * Take This Free Quiz to Get Matched With Qualified Financial Advisors
 * The Best States to Retire in 2022

More from SmartAsset

 * Compare Up to 3 Financial Advisors Near You
 * Mortgage Calculator
 * How Much Do I Need to Save for Retirement?
 * Calculate Your Capital Gains Tax
 * Should I Refinance My Mortgage?
 * Compare Mortgage Rates


Subscribe to our Newsletter
Join 200,000+ other subscribersSubscribe


Categories

 * Advisor Resources
 * Auto
 * Career
 * Checking Account
 * Credit Cards
 * Credit Score
 * Data Studies
 * Debt
 * Estate Planning
 * Financial Advisor
 * Insights
 * Insurance
 * Investing
 * Life Insurance
 * Mortgage
 * Personal Finance
 * Personal Loans
 * Refinance
 * Retirement
 * Small Business
 * Student Loans
 * Taxes


Get in touch
Contact
Careers
SmartAsset
Search
About
SmartReads
Captivate
SmartAsset AMP
Press
SmartAdvisorMatch
Get Social
FacebookLike on Facebook
TwitterLike on Twitter
Legal Stuff
Terms of Service
Privacy Policy
AdChoices
GLB Notice
Online Tracking Opt-Out Guide

SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial
Insight Technology, is registered with the U.S. Securities and Exchange
Commission as an investment adviser. SmartAsset's services are limited to
referring users to third party advisers registered or chartered as fiduciaries
("Adviser(s)") with a regulatory body in the United States that have elected to
participate in our matching platform based on information gathered from users
through our online questionnaire. SmartAsset receives compensation from Advisers
for our services. SmartAsset does not review the ongoing performance of any
Adviser, participate in the management of any user's account by an Adviser or
provide advice regarding specific investments.

We do not manage client funds or hold custody of assets, we help users connect
with relevant financial advisors.

This is not an offer to buy or sell any security or interest. All investing
involves risk, including loss of principal. Working with an adviser may come
with potential downsides such as payment of fees (which will reduce returns).
There are no guarantees that working with an adviser will yield positive
returns. The existence of a fiduciary duty does not prevent the rise of
potential conflicts of interest.

© 2024 SmartAsset, all rights reserved.