Due to the rising healthcare costs for older adults, Medicaid planning is crucial when it comes to having access to long-term care. However, because of the stringent requirements and legal implications associated with meeting the eligibility criteria to qualify for Medicaid benefits, planning must be done carefully and strategically. While there are a number of strategies that can be used to qualify while preserving your assets, it’s important to have a skillful attorney by your side to advise you — and guide you through the Medicaid planning process.

What is Medicaid Planning?

Medicaid planning can allow you to qualify for Medicaid while preserving your assets for your loved ones. It helps individuals ensure they will be eligible to access these government benefits when they need them by utilizing planned transfers and other proactive financial strategies. Critically, if an individual requires care in a nursing home and has more assets than Medicaid allows, they would have to pay out of pocket — and effectively deplete their estate until it falls at or below the applicable Medicaid limits. Specifically, an Ohio nursing home applicant in 2025 must have income less than $2,901 a month and assets totaling less than $2,000 in order to qualify for Medicaid.

What Assets Are Counted for Medicaid Eligibility Purposes?

Not all assets are counted for the purposes of Medicaid eligibility. It’s essential to understand what assets are classified as exempt and non-exempt. Countable assets are liquid assets that can be easily converted to cash, such as checking accounts, money market accounts, stocks, bonds, mutual funds, real estate other than a primary residence, and certificates of deposit. A 401(k) is also a countable asset, unless it is in payout status.

Non-countable assets that are exempt from Medicaid’s asset limit can include prepaid funeral expenses, an individual’s primary residence, a vehicle, certain life insurance policies, household furnishings, and personal belongings. Assets that are held in certain irrevocable trusts are also not counted toward the eligibility limit — as long as they do not violate Medicaid’s “look back period.” Notably, the five-year “look back period” imposed by Medicaid prevents individuals from gifting or selling assets below market value in order to become eligible for Medicaid benefits. If the look back period is violated, a penalty period may be imposed resulting in delay or denial of a Medicaid application.

What Strategies Are Used in Medicaid Planning?

Medicaid planning is a highly nuanced process. Depending on your situation and specific objectives, there are a number of legal strategies that can be implemented to meet the strict Medicaid requirements without depleting your life savings. Strategies that can be used in Medicaid planning may include the following:

• Trusts — When assets are placed into a Qualified Income Trust or a Medicaid Asset Protection Trust, they are owned by the trust and cannot be counted toward Medicaid eligibility. However, when using trusts, it’s critical to ensure you comply with the Medicaid look back period. Any asset transfers within five years may still be counted.
• Annuities — A Medicaid compliant annuity can allow you to reduce your countable assets to meet Medicaid’s asset requirements.
• Family caregiver agreements — A personal care agreement is a written contract between a care recipient and a caregiver that provides reasonable compensation to the caregiver without impacting Medicaid eligibility. This can allow you to spend your assets in a way that benefits your family, rather than deplete them.
• Asset conversion — Converting assets into exempt assets can help you qualify for Medicaid benefits while preserving your estate. Examples of asset conversion can include making necessary home improvements or purchasing a new car.
• Spend-down strategies — Spend-down strategies to qualify for Medicaid eligibility can include paying off debt, purchasing burial plots, or prepaying funeral expenses.

Using the above Medicaid planning strategies can help you safeguard your assets, preserve your wealth for your loved ones, and have peace of mind that you will maintain control over your finances while still qualifying for Medicaid. But it’s important to plan as early as possible to avoid running afoul of the five-year look back period. An experienced estate planning attorney can assist you with structuring your assets and plan correctly to ensure eligibility.

Contact an Experienced Ohio Estate Planning Attorney

The Medicaid planning rules are complicated and it’s vital to have a knowledgeable estate planning attorney who can help you navigate the process. At Middleton Law Offices, we offer personalized time and attention and work closely with each client to meet their long-term care planning goals.

Located in Bowling Green, Middleton Law Offices has been serving clients in Ohio regarding their estate and long-term care planning matters for more than a century. Contact Middleton Law Offices today at 419.548.0196 for a consultation to learn how we can help.

Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from a licensed attorney.