Medicaid And Your Estate Plan Caregiver helps seniors exercise in an assisted living facility

Something that many people fail to take into account when planning their estates is the governmental benefits surrounding Medicaid. It is important to understand that Medicaid and your estate plan may be closely linked. Not only should medical costs for long-term care be a major consideration when making future plans, but Medicaid is only available to those who have minimal assets. For support with your Florida or Minnesota estate planning with Medicaid in mind, consider contacting an estate planning attorney at Roulet Law Firm, P.A., by calling (763) 420-5087 for the Minnetonka, Minnesota office or (941) 909-4644 for the Venice, Florida office.

What Is Medicaid?

Medicaid is a public health insurance program for low-income individuals, structured as a federal–state partnership. Through Medicaid, recipients can benefit from a variety of services paid for by state and federal benefits. These include long-term care like home care, adult day care, and assisted living, either home- or community-based services (HCBS). To be eligible, an elderly, blind, or disabled person must have less than $3,000 in countable assets, according to the Minnesota Department of Human Services, and less than $2,000 in assets in Florida, according to

How Are Medicaid and Your Estate Plan Linked?

Although no one wants to think about suffering an injury or illness that requires expensive round-the-clock care, this is unfortunately a common occurrence. Since individuals can only receive Medicaid if they have a low income, many people believe that they must wait until their assets have fallen below the cutoff point to receive benefits. This potentially means spending down thousands of dollars on care to reach the asset limit. The problem with this is that the recipient’s family members will be left with nothing to inherit.

A better solution may be to proceed with estate planning with Medicaid in mind long before it becomes a necessity. This can allow recipients to keep as much of their assets as possible for their family members. An estate planning attorney at Roulet Law Firm, P.A., may be able to explain the intersection between Medicaid and your estate plan.

Understanding the Look-Back Rule

Both Minnesota and Florida have a five-year look-back rule regarding income and assets to determine whether an individual qualifies for Medicaid. This means that the state will look for asset transfers and sales at fair market value five years prior to the date the individual applied for benefits. This rule, therefore, emphasizes the importance of starting estate planning as soon as possible. Being just a few years away from needing benefits may already be too late, and the need may arise at any time.

The Medicaid Estate Recovery

Another factor to bear in mind is Medicaid estate recovery. This refers to circumstances when the state can take some assets after the recipient dies as repayment for Medicaid services. However, individuals who qualify for help paying for premiums through any of the Medicare Savings Programs (MSPs) are exempt. The MSPs are:

  • Qualified Working Disabled Individual (QWDI)
  • Qualified Medicare Beneficiary (QMB)
  • Qualifying Individual (QI)
  • Specified Low-Income Beneficiary (SLMB)

If a Medicaid recipient has a spouse and has an estate that includes a home, savings, or a retirement account, some of these assets are protected. A spousal impoverishment provision ensures that the spouse has enough to live on independently. If a Medicaid recipient is single, however, these assets could go toward Medicaid estate recovery. Additionally, the state can file a lien on the person’s home to recover some debt, but only if the following family members do not live in the house:

  • A spouse
  • Any children under the age of 21
  • Disabled children of the recipient of any age
  • A sibling who has equity interest in the property, provided that the sibling lived at the property for more than one year prior to the recipient’s need to move into an assisted living facility

Alternatives to an Asset Spend-Down

Medicaid estate planning involves exempting assets that would normally contribute toward Medicaid ineligibility. There are a few options to achieve exemption, including trusts, life estates, and annuities.


One important way to receive Medicaid benefits while protecting assets is to use an irrevocable trust. Assets within the trust no longer belong to the previous owner, who is called the grantor, although income is still payable to the individual for living expenses. Upon the death of the grantor, the state has no right to the funds in the trust, which instead go to the heirs. The assets are distributed by the person or entity the grantor named as trustee. A condition of this strategy is that neither the grantor nor the grantor’s spouse may receive funds from the trust.

Life Estates

An irrevocable trust can protect a variety of assets, including the beneficiary’s home, vehicles, savings accounts, and investments. However, another way to protect real property is with a life estate. Life estates set up joint property ownership. Under these conditions, the Medicaid recipient is able to continue living in the home for the remainder of his or her life. Upon that person’s death, the other person named in the life estate receives full ownership of the property.

Trusts and life estates have different tax implications and may or may not work in each state. An attorney who is knowledgeable about Medicaid estate planning may be able to help determine which is the better option for your situation.


A Medicaid recipient who is married can use an annuity. The simplest is an immediate annuity, which involves paying an insurance company a one-time lump sum, after which the insurer will pay the policyholder each month until the policyholder’s death. Since annuities are investments and not transfers, the amount the individual uses to purchase the annuity is non-countable income. However, the policyholder needs to be the spouse who is not in the assisted living facility to protect this asset from Medicaid. For this reason, an annuity is unlikely to be a suitable strategy for unmarried individuals who are seeking to protect assets, although it can be an option for funding healthcare without using Medicaid.

Contact an Estate Planning Attorney for Help Today

To ensure that a person qualifies when the time comes to need Medicaid, it is important to carry out estate planning carefully. This may mean working with an attorney who specializes in estate planning and elder care. For help with Medicaid and your estate plan in Minnesota or Florida, consider contacting an experienced estate planning attorney at Roulet Law Firm, P.A., by calling (763) 420-5087 for the Minnetonka, MN office or (941) 909-4644 for the Venice, FL office to schedule a consultation today.

And if you would like to learn more about how you can get the medical benefits you need while protecting your home and life savings from nursing home and long-term care costs, Click Here to Download our FREE Guide: Save Our Home: How To Protect Your Home and Life Savings from Long Term Care and Nursing Home Costs.

Chuck Roulet
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Nationally Recognized Estate Planning Attorney, Author, and Speaker
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