Why Plan Early
Long-term care costs can exceed $10,000/month. Without planning, you risk depleting your life savings and losing your home. Medicaid planning (if timed correctly) and asset protection trusts are essential strategies to qualify for Medicaid coverage while preserving your legacy.
Key Benefits:
Medicaid Eligibility: By implementing a properly structured “spend-down” or Irrevocable Trust strategy, you comply with Texas’s 60-month Medicaid look-back rule—avoiding penalty periods and gaining coverage for nursing home costs.
Asset Protection Trusts: Transfer assets into a trust (Irrevocable Medicaid Asset Protection Trust) so they are not counted as “countable resources,” safeguarding your home and bank accounts.
Long-Term Care Insurance Analysis: We assess whether you qualify for a long-term care policy, compare premium costs, elimination periods, and benefit payouts—so you can decide if insurance or Medicaid planning (or both) is the right path.
Caregiver Agreements: If a family member plans to provide in-home care, we draft a formal written care agreement—properly compensating the caregiver and preventing Medicaid deeming liabilities.
Our Medicaid Planning Process:
Initial Financial Assessment: We review your income, countable assets, and anticipated care needs to determine eligibility windows.
Trust Structuring: If appropriate, we create an Irrevocable Trust (Medicaid Asset Protection Trust) and a companion “Life Estate” deed structure for your home, preserving residency while removing it from countable assets.
“Spend-Down” Guidance: If your assets slightly exceed Medicaid limits, we advise on acceptable “spend-down” expenditures (medical bills, home modifications, prepaying funeral expenses) to legally qualify.
Filing Assistance: We coordinate with Medicaid caseworkers—submitting required documents, medical certifications, and responding to follow-up requests.
Ongoing Monitoring: If your financial situation changes, we adjust your plan (trust amendments, supplemental policies) to maintain eligibility.
Case Study :
“How the Harris Family Saved Their Home”
– Mr. Harris needed nursing home care last year. They transferred his primary residence into an Irrevocable Medicaid Trust 61 months before his application. He qualified for Medicaid on day one, and his home remained protected for his children—keeping an $800,000 asset out of probate.
Frequently Asked Questions (FAQs)
1. What is Medicaid “spend-down” planning?
Medicaid uses a 60-month “look-back” period in Texas. If you transfer or give away assets below fair market value during that timeframe, you incur a penalty (a delay before you qualify). “Spend-down” planning means strategically using excess assets—paying legitimate expenses such as medical bills, home modifications, or prepaid funeral costs—so your countable resources fall below Medicaid’s threshold by the appropriate date. Proper spend-down ensures you qualify for long-term care benefits without penalty.
2. How does an Irrevocable Medicaid Asset Protection Trust work?
An Irrevocable Medicaid Asset Protection Trust (MAPT) removes certain assets from your ownership so they’re not counted as “resources” when determining Medicaid eligibility. You transfer assets (like a home or investment account) into the trust at least 61 months before applying. Once funded, those assets no longer count toward the Medicaid limit, yet you can still live in the home (often by reserving a life estate) or receive income from certain trust assets. Because it’s irrevocable, you give up direct control over those assets, but you protect them for your heirs while qualifying for Medicaid.
3. If I already have long-term care insurance, do I still need Medicaid planning?
Possibly. Long-Term Care Insurance (LTCI) helps cover nursing home or in-home care costs, but:
Premiums can become unaffordable if you’re older or have health issues when buying the policy.
Policies often have daily or lifetime caps on benefits—once you exceed them, you’re on the hook for remaining costs.
LTCI does not cover every expense (e.g., home modifications, certain medical supplies).
A combined strategy—maintaining LTCI for predictable costs and using Medicaid planning to protect assets in case care needs exceed policy limits—provides the broadest protection.
4. When should I start Medicaid planning?
As soon as possible, ideally 5–7 years before you anticipate needing nursing home care. Because of Texas’s 60-month look-back rule, any transfers into a MAPT less than five years prior result in a penalty period. Starting early gives you:
Time to properly shift assets into an Irrevocable trust.
Flexibility to spend down in acceptable ways.
Options to purchase or adjust a long-term care policy while you’re still healthy.
Procrastinating even a year can trigger penalties that delay benefits for months, costing tens of thousands out of pocket.
5. What assets count toward Medicaid eligibility in Texas?
Texas classifies “countable resources” differently from “exempt” resources. Countable assets include:
Cash, checking and savings accounts
Stocks, bonds, mutual funds, CDs
Investment and brokerage accounts
Additional real estate (beyond your primary residence)
Valuable collectibles, secondary vehicles
Exempt assets include:
Your primary residence (if equity ≤ $688,000 in 2025 and you intend to return home).
One vehicle for transportation (regardless of value).
Personal belongings, wedding rings, household goods.
Irrevocable prepaid funeral plans (up to certain limits).
By moving countable assets into exempt categories—like properly funding a Medicaid Asset Protection Trust—you reduce your countable resources below Medicaid’s $2,000 single-person limit.
6. Can my spouse keep our home and still qualify me for Medicaid?
Yes. Texas law protects the community spouse’s “minimum monthly needs allowance” (MNA) and the “community spouse resource allowance” (CSRA). In practice:
Your primary home’s equity (up to $688,000 statewide cap) is exempt for Medicaid.
Your spouse can retain a certain amount of countable resources—if your combined countable assets exceed the CSRA limit (around $148,620 in 2025), the excess can be shielded via a trust or spend-down.
Your spouse also receives monthly “community spouse income allowance” to cover living expenses.
By properly structuring the transfers and allowances, your spouse’s needs are met while you qualify for Medicaid long-term care.
7. How does a Caregiver Agreement help with Medicaid planning?
A Caregiver Agreement is a formal, written contract between you (the “care recipient”) and a family member or friend (the “caregiver”) to provide in-home services (bathing, dressing, meal prep). In return, you pay the caregiver a reasonable wage. This serves two key Medicaid planning purposes:
Permissible Spend-Down: Paying a caregiver counts as a legitimate expense—reducing countable assets without penalty.
Avoiding Improper Gifts: If you were to pay a family caregiver “under the table,” Medicaid might consider it a gift at below market value. A formal agreement (documented, notarized, with timesheets) proves it’s a legitimate wage, not an improper transfer.
When drafted correctly, a Caregiver Agreement accelerates spend-down, protects assets, and keeps your budget above board with Medicaid rules.
8. What costs are not covered by Medicaid, and how do I plan for them?
Medicaid covers most nursing home, assisted living, and home health services costs—but not everything. Out-of-pocket costs may include:
Personal Care Items: Co-pays for certain medications, medical supplies (incontinence supplies, braces).
Dental, Vision, Audiology: Unless deemed medically necessary, these often require separate payment or supplemental insurance.
Noncovered Services: Private-pay assisted living costs, luxury room upgrades, or certain therapies not on Medicaid’s approved list.
To address those gaps, consider:
“Medicaid Waiver” programs (like STAR+PLUS) that may cover additional services at home.
Separate Long-Term Care Insurance for amenities and private pay options.
Keep a Small “Expense Buffer” in exempt resources (like a prepaid funeral) for items Medicaid doesn’t reimburse.
By combining Medicaid benefits with targeted supplemental coverage and careful budgeting, you minimize any uncovered out-of-pocket exposure.