Medicaid: The Basic Planning Techniques

Last week, we discussed the two financial requirements to qualify for Medicaid – a person’s income level and a person’s asset level.  This week, we’re going to conclude our overview by considering a few basic planning techniques for applicants who seek Medicaid coverage but might not quite meet all coverage requirements. 

This is not formal legal advice and should not be construed as such. If you are considering long-term care, specifically Medicaid, for yourself or a loved one, consider reaching out to an attorney well-versed in the practice area.   

READ MORE: What is Long-Term Care Planning?

This is certainly not an exhaustive list, and every individual or married couple’s circumstances are different, but the following are some common approaches for applicants: 

1. Qualified Income Trust (QIT or Miller Trust): A QIT can be executed to reduce a person’s monthly income to the eligible level.  All or a portion of the individual’s income may be placed in the account for the QIT.  All or a portion of the individual’s income may be placed in the QIT and the principal of the QIT is not counted as a resource. 
   Note: there are several requirements a QIT trust must establish and maintain. 

2. Medicaid Asset Protection Trusts (Irrevocable Trusts): These trusts are specifically designed for asset protection for Medicaid purposes. Transfers of an individual’s/married couple’s assets into these trusts will be considered improper transfers and Medicaid will issue a penalty for these transfers, unless they fall outside of the 60-month look-back period.  

READ MORE: Medicaid Eligibility Part One – Medical Need

3. Life Estates: Depending on when the life estate is executed (inside the 60-month look-back window or outside), it can sometimes minimize your countable assets. 

4. Prepaid Burial Contracts: Irrevocable prepaid burial contracts that cannot be liquidated are considered unavailable resources. 

5. Life Insurance: The total value of all life insurance policies is exempt if their face value is equal to (or less than) $1,500. 

READ MORE: Medicaid Eligibility Part Two – Financial Need

6. Principal Residence: A person’s home residence (subject to equity limitations) is a non-countable resource to Medicaid.

Medicaid is a beast of its own.  Considering medical eligibility requirements, financial requirements, figuring out a game plan, then making sure the plan complies with Medicaid’s often-changing standards can be a tall order.