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Medicare/Medicaid Estate Planning

Estate Planning

When planning for an elderly loved one’s care and estate, one of the most important aspects to consider is a holistic financial perspective. Especially when long-term care is involved, the use of creative and effective strategies to finance expenses is not uncommon. Most people, however, do not wish to give up their assets to pay for nursing homes, assisted living facilities, or home care. Moreover, there are rules in place to prevent people from transferring assets to others with a goal of qualifying for Medicaid while still maintaining their assets. As a result, Medicare/Medicaid estate planning becomes exceedingly important. 

Through a full understanding of federal and state law, one can successfully leverage their loved one’s assets and Medicare/Medicaid in order to form an estate planning strategy that uniquely works for them. While research is a fantastic place to begin, it is important to consider seeking legal assistance to create a comprehensive and effective estate plan. An experienced estate planning attorney at Baxter Legal Services can help you learn more about your options and make well-informed legal decisions regarding your loved one’s estate. Call us today at 425-686-0574 to get started.

What Is Medicare/Medicaid Estate Planning?

Since long-term care comes at a significant financial price, many individuals wish to qualify for Medicaid or Medicare benefits as quickly as possible. Without the protection of Medicaid or Medicare, people may be left to pay for nursing home or other costs out of pocket, until they are able to qualify for benefits.

Medicaid is geared toward long-term such as nursing homes or institutional care, making it an attractive option for many people. Exceeding income or asset limits, however, can swiftly disqualify an applicant. Legally speaking, there are some tools available to people who wish to prepare an estate plan to prepare for Medicaid or Medicare coverage. It should be noted that many strategies used in Medicaid/Medicare estate planning must be implemented years in advance, which makes careful planning key.


Medicaid eligibility is based on income, meaning the program will count your assets to determine whether you qualify for Medicaid. Washington Medicaid looks at the number of individuals in the home, income, and countable assets to determine eligibility. Income can come from any source, be it employment wages, alimony payments, pension payments, or social security income. Assets, on the other hand, include cash, stocks, bonds, investments, savings, and real estate that one maintains but does not reside in or rent out. In Washington State, the Medicaid income limit for a single individual looking for nursing home care is $2,382 per month and the asset limit is $2,000.

Look-Back Rule

When creating a Medicaid estate plan, it is important to consider the look-back period, which refers to the process of checking to ensure that no assets have been transferred, sold, or given away. If one is found to be in violation of this look-back rule, they will be considered ineligible for Medicaid coverage. In Washington State, the Medicaid look-back period is five (5) years.

Medicaid/Medicare Estate Planning Vs. Traditional Estate Planning

First, it is necessary to understand the exact definition of an estate. “Estate” refers to all money, assets, property, and debt that is owned by a person at the time of their death. Having a plan for how to handle and distribute estate following death is critical, even more so when Medicaid or Medicare is involved. This is where estate planning becomes extremely important.

Estate planning refers to the handling of assets upon death, ensuring they are efficiently transferred to any beneficiaries or inheritors. This is typically conducted using legal documents that specify how you would like to have your estate distributed after you pass away. An estate plan can include some or all of the following documents:

  • Last will and testament
  • Living trust
  • Financial or medical power of attorney
  • Living will

Many times, estate planning and Medicaid/Medicare estate planning work in tandem, but it should be noted that the two have very distinct goals. General estate planning focuses on distributing assets, while Medicaid/Medicare estate planning is concerned with structuring assets so that one can qualify for long-term care benefits. Essentially, Medicaid/Medicare estate planning helps a person qualify for Medicaid or Medicare without losing any assets or sums of money in the process. The ideal way to accomplish this is by turning countable assets into non-countable assets.

Medicare/Medicaid Estate Planning Toolbox

When creating a Medicare/Medicaid estate plan, one must weigh the look-back rule and the value of their assets to implement strategies well in advance. This can be accomplished by using a few tools, namely:

  • Irrevocable Trusts: Medicaid sees revocable trusts as countable assets, but views irrevocable trusts as non-countable, meaning they do not impact Medicaid qualification. These trusts are subject to the look-back rule, however, so it is important to put an irrevocable trust in place at least five years before applying for Medicaid coverage.
  • Annuities: For married couples, annuities can be a valuable option to prepare for Medicaid coverage. An annuity is a contract with an insurance company that allows the policyholder to send money to the insurer and the insurer to send a monthly check in exchange. Annuities must be spent to benefit the spouse within a time-frame dependent on the spouse’s life expectancy. Thus, the annuity should deplete by the time the spouse dies.

There are several options available to individuals wishing to transfer their assets in light of Medicaid eligibility. Strategies should be tailored to a person’s unique circumstances, however, which is where an estate attorney becomes valuable.



How Can an Estate Attorney Help?

When creating a comprehensive and effective estate plan, legal assistance can be highly valuable. Estate lawyers experienced in Medicare/Medicaid estate planning are well-equipped to help you navigate the complexities of healthcare coverage.

Above all, it is crucial to protect your assets and estate while seeking Medicare or Medicaid coverage. Our team of attorneys at Baxter Legal Services work with you to create an estate plan that works for you. Call us at 425-686-0574 to discuss your options today.