Understanding Medicaid for Long Term Care
As seen in the April 17, 2025 edition of In the Know Magazine, a publication of the Sullivan County Partnership.
Medicaid planning can be a critical tool in addressing astronomical long-term care costs. Every American over the age of 65 is eligible for Medicare, but Medicare only covers up to 100 days of long-term care. After that, absent long-term care insurance, most people are forced to consider paying out of pocket. This is why there are so many stories about people losing their homes and savings to the cost of care. But it doesn’t have to be this way. With the right planning, you can position yourself to qualify for Medicaid and protect assets for your family.
The Medicaid Asset Protection Trust (MAPT) is an essential facet of elder law planning. It is a type of irrevocable trust. The trust’s Grantor (creator) should not also manage the trust as its trustee. This role is usually delegated to an adult child or another responsible party. The trust’s Grantor can reside at the trust’s real property and enjoy income from the trust, but he/she cannot cash out and spend the trust principal. While this is unsettling for some, the benefits usually outweigh initial concerns, and there is far more flexibility than the term “irrevocable trust” suggests. The Grantor can change beneficiaries and trustees, claim STAR and other property tax exemptions, sell real property (with the trustee), and continue to live normally. Moreover, under New York State law, there is a path to revoking an irrevocable trust, should life circumstances significantly change.
When someone divests their assets or makes a trust for the purpose of Medicaid planning, there is a waiting period (known as a “look back”) of five years before he or she qualifies to receive Medicaid to cover nursing home care. For example, someone who made and funded a trust on January 31, 2025 will be eligible for Medicaid coverage on February 1, 2030. When a nursing home patient applies for Medicaid, he or she is required to produce bank statements and other financial records going back 60 months. If these records show transfers to trusts or other entities, this will likely impair Medicaid eligibility.
Medicaid is not just for skilled nursing facility care. Community Medicaid (care in the home or in some assisted living facilities) is another option. It does not have the same five-year look back period required for skilled nursing care. It will not necessarily provide facility level care at home, but it can be just enough for what some people need to stay home and age in place amongst family, rather than live in a health care facility.
There are also numerous emergency Medicaid planning strategies for people in immediate need. Sometimes a loved one is imminently entering a skilled nursing facility, and he or she has not completed advance planning. If there is a healthy spouse living at home, corralling the assets in the spouse’s name and executing a “spousal refusal” can often protect almost everything. For a single person, a strategy of gifting and loaning certain assets, pursuant to a mathematical formula, can protect approximately half of someone’s net worth.
It is important to consult with an attorney who focuses on elder law to discuss Medicaid planning and strategies. There are many rules, exceptions to the rules, nuances, and exemptions to evaluate and consider.
This is not intended to be legal advice. You should contact an attorney for advice regarding your specific situation.
Michael Wagner is a Partner with the firm and practices Estate Planning, Wills & Trusts, Elder Law and Medicaid Divestitures. He can be reached by phone at 845-764-9656 and by email.