Medicaid Planning Basics for Long-Term Care

Why This Matters Before You Need Care

The single most important fact about Medicaid planning is timing. The five-year look-back period means that anything you do today affects eligibility five years from now. Families who plan in their 60s or early 70s — while healthy — have the full range of lawful options. Families who start planning after a hospital discharge often discover that the most useful tools are already off the table.

What Counts Toward Eligibility

Medicaid divides assets into countable and non-countable. Countable assets generally include bank accounts, investments, and second properties. Non-countable assets typically include the primary home (up to state equity limits), one vehicle, personal belongings, and certain burial arrangements. Income limits also apply and vary by state. The exact numbers change regularly, so treat any figures you see online as a starting point to verify, not as current law.

Common Strategies (and Their Limits)

Legitimate Medicaid planning works within the rules, not around them. Common approaches include converting countable assets into exempt ones (for example, paying down a mortgage or buying a compliant annuity), spending down on legitimate needs (home repairs, medical equipment, prepaid funeral arrangements), and using specialized trusts where state law permits. Each of these has technical requirements — a trust that works in one state may not work in another — which is why this area of law is so state-specific.

Costly Mistakes to Avoid

• Last-minute gifting. Transferring assets to children shortly before applying is the classic trigger for penalty periods.
• DIY transfers. Adding a child’s name to a deed or account can create tax problems, expose the asset to the child’s creditors, and still count as a transfer for Medicaid purposes.
• Hiding assets. Failing to disclose assets on a Medicaid application is fraud, with criminal penalties.
• Assuming the rules are national. Income limits, home equity limits, and estate recovery practices all vary by state.

Getting Professional Help

Because the financial stakes are high and the rules are technical, most families benefit from consulting an elder-law attorney who practices Medicaid planning in their state. Free starting points include the local Area Agency on Aging and, for general questions, the state Medicaid agency itself.