What is Medicaid planning and how does it relate to my estate plan?

Medicaid planning is a strategy of planned transfers, gifts, use of financial products and other strategies to preserve  and protect some assets while enabling a disabled senior to qualify for financial assistance from Medicaid as quickly as possible to help offset the cost of nursing home care in a skilled nursing facility.


If one of your planning goals includes Medicaid planning, then it is very important that the Medicaid planning is properly integrated with your estate planning.  In addition, certain estate planning strategies that may be beneficial for other estate planning goals may have a significant negative impact on your Medicaid planning. 

For example, some clients may be advised by their estate planning attorney or accountant that they can gift $13,000 per year to family members without paying an gift taxes.  And while this might be a great gift and estate tax planning strategy, this can have a very negative impact on your Medicaid planning.

The Medicaid rules penalize you for such gifts.  So, while they might be permitted under the IRS gift tax rules, you may be punished for them under the Medicaid rules.

Similarly, other estate planning tools, such a revocable living trusts, will not protect your assets for Medicaid and nursing home planning purposes.