Medicaid Crisis Planning: Protecting Your Assets While Getting the Care You Need
Life can change in an instant. One day, everything seems fine, and the next, you or a loved one may require long-term care due to an illness, accident, or sudden decline in health. When that happens, the cost of nursing home or in-home care can be overwhelming—often exceeding $100,000 per year. If you’re facing this situation and worried about how to pay for care without losing your life savings, Medicaid crisis planning can help.
What Is Medicaid Crisis Planning?
Medicaid crisis planning is the process of quickly arranging financial and legal strategies to help an individual qualify for Medicaid (In Tennessee, this is also known as TennCare.) while preserving their assets. Unlike traditional Medicaid planning, which is done at least five (5) years in advance, crisis planning is for those who need care immediately or within a short period.
Many people assume they have too many assets to qualify for Medicaid. However, with the right strategies, it’s often possible to become eligible while legally protecting assets for a spouse or heirs. The key is acting quickly and using the proper legal tools.
Key Strategies in Medicaid Crisis Planning
There are several methods to help individuals qualify for Medicaid without depleting their life savings:
Spend Down Strategies – Medicaid has strict asset limits, so one approach is to spend excess funds on allowable expenses, such as home modifications, medical equipment, pre-paying for a funeral, or paying off debt.
Medicaid-Compliant Annuities – These special annuities convert assets into income, helping a spouse keep financial stability while the other spouse qualifies for Medicaid. These can also be used with single individuals.
Asset Transfers – While Medicaid has a five (5)-year “look-back” period for gifting assets, certain transfers—such as to a spouse or a disabled child—are allowed without penalty.
Irrevocable Medicaid Trusts – Assets placed in an irrevocable trust may be protected from Medicaid spend-down rules, but this strategy works best when done well in advance.
Legal Protections for Spouses – If one spouse needs nursing home care, the other (known as the "community spouse") is allowed to retain a portion of the couple’s assets and income under Medicaid’s spousal rules. Some assets and/or income can potentially be “shifted” from the institutionalized spouse to the community spouse.
Why Acting Fast Matters
When faced with a long-term care crisis, every day counts. Without proper planning, individuals may be forced to spend down their assets before qualifying for Medicaid, leaving little to support a spouse or heirs. However, Medicaid rules are complex, making it essential to work with an experienced elder law attorney to develop a strategy that complies with the law while maximizing asset protection.
Get the Help You Need
If you or a loved one is facing an urgent need for long-term care, don’t assume it’s too late to protect your assets. Medicaid crisis planning can help you access the care you need while preserving as much of your estate as possible. A qualified elder law attorney can help you work through your options and determine the best option for you and your family.
Planning ahead is always ideal, but even in a crisis, there are options. Don’t wait—take action today to secure your future.
