Medicaid Estate Planning vs Traditional Estate Planning

Some people delay doing Medicaid Estate Planning because they don’t believe they will ever require the services provided by a long-term care skilled nursing facility like a nursing home. Unfortunately, most of the time an injury or illness that requires long-term care often comes out of nowhere. In fact, the US Department of Health and Human Services estimates that 7 out of 10 people turning 65 today will need some form of long-term care in the future.

medicaid estate planning

As a result, doing Medicaid Estate Planning prior to checking-in to a skilled nursing facility is really important because long-term care is very expensive in Michigan. The average cost of a long-term care facility in Michigan is about $108,000 per year, or $8,000-$9,000 per month. Paying these costs out of pocket can rapidly deplete a family’s funds and may force them to sell some of their largest assets, like the family home, just to pay for the cost of care for a loved one.
Imagine if your dad needs to go to a nursing home, but your mom does not:

  • Will mom have the money she needs to survive and pay the bills while having to burden the cost of $8,000-$9,000 per month to pay for dad’s care?
  • Will you need to sell the family home just to cover the costs?
  • When mom and dad pass away, will there be anything left to leave behind for the kids after paying nursing home care out of pocket.

These are real concerns for many families with aging parents or family members who need the assistance of a skilled nursing facility. 

Unfortunately, there are limited options when it comes to paying for long-term care and it is essentially limited to paying out of pocket, using long-term care insurance, VA benefits if you are a veteran and qualify, or Medicaid.

What Is Medicaid?

Medicaid is a joint federal and state benefits program that pays for long-term care for senior citizens. It is actually the largest source of payment for long-term care in the United States and is a benefit you and your family should take advantage of. 

But to qualify for Medicaid in Michigan your income and assets need to under about $2,000. Don’t worry if you if don’t currently qualify. Medicaid Estate Planning is a tool you can use to make sure that you qualify for Medicaid long-term care benefits while preserving as much of your assets as possible. 

Continue reading to learn more about Medicaid Estate Planning.

Medicaid Estate Planning vs Traditional Estate Planning

Estate Planning and Medicaid Estate Planning are similar in many ways. However, unlike traditional Estate Planning, Medicaid Estate Planning requires some unique strategies that are utilized by a Medicaid Planning Attorney in order to help you qualify for Medicaid benefits for long-term care while protecting money Medicaid in the process. Let’s first get an understanding of traditional Estate Planning since some of the same legal documents can usually found in a Medicaid Estate Plan.

Estate Planning

Estate Planning is primarily concerned with preserving the value of your assets upon your death and making sure they are efficiently transferred to your beneficiaries. Typically, an Estate Plan is a collection of legal documents outlining your wishes regarding the running and distribution of your estate after you pass away. When we say “estate”, we mean all of the money, assets, and debt you own at the time of your death.

Estate Planning involves engaging an Estate Planning Attorney who helps you prepare all the necessary legal documents. The following list is not an exhaustive list of every single Estate Planning document that could be created, but it does cover the most common core elements of an Estate Plan: 

  • Last Will and Testament – a legal document that outlines how individuals would like their assets and property distributed after death. It names an executor to carry out these responsibilities.
  • Revocable Living Trust – a Living Trust is similar to a Last Will and Testament in that it dictates how your assets should be distributed after your death. However, a unlike a Will, a Living Trust avoids probate court which means your financial affairs remain private, your family can receive your assets much faster, and they do not have to pay additional court costs and attorney fees just to get access to the assets you left behind for them.
  • Financial Power of Attorney – this is a legal document appointing someone to make financial and legal decisions for you if you are no longer able to do so yourself. This is typically used for incapacity planning. It is very common for people to become incapacitated prior to passing away. Having a Financial Power of Attorney in place ensures that you are able to manage the incapacitated persons money and pay their bills on their behalf.
  • Medical Power of Attorney – similar to a Financial Power of Attorney, a Medical Power of Attorney is also used for incapacity planning. It is a legal document appointing someone to make healthcare and medical decisions on your behalf if you can no longer do so on your own.
  • Living Will – A Living Will outlines your end-of-life wishes to the person acting as your Medical Power of Attorney in case you are incapacitated and unable to communicate them yourself. The combination of a Medical Power of Attorney and Living Will is sometimes referred to as an Advance Directive.

Medicaid Estate Planning

As mentioned earlier, Estate Planning and Medicaid Estate Planning go hand in hand. However, they have different goals. While Estate Planning is focused on passing your assets to your loved ones after you die in the most efficient way possible, Medicaid Estate Planning is focused on structuring your assets in a way that allows you to qualify for Medicaid long-term care benefits while simultaneously preserving assets like your home for your children to inherit. To make it simpler, Medicaid Estate Planning helps you qualify for Medicaid without having to lose your home and your life savings in the process.

Medicaid Estate Planning requires advanced planning strategies and some of the legal documents differ. However, it is very common to do traditional Estate Planning at the same time you are doing Medicaid Estate Planning. 


Because people entering a long-term skilled nursing facility are usually very elderly and still need to plan for who they want to inherit their assets after they pass away. Additionally, it is very important to plan for incapacity for a loved one who is in a nursing home so that you can make financial and medical decisions on their behalf if they become unresponsive. 

When it comes to Medicaid Estate Planning you will need to work with a Medicaid Planning Attorney. A Medicaid Planning Attorney is an Estate Planning Attorney who has advanced expertise in structuring income and assets to help clients qualify for Medicaid while preserving as much of their wealth as possible. Additionally, they help their clients with the application process. The Medicaid application is very complicated and the law changes frequently. A mistake on the application or having assets structured improperly can result in a denial which could cause you to wait weeks, months, even years for benefits.

Medicaid Estate Planning Ahead Of Time

Most older adults wish to preserve their assets to pass on to their children and loved ones. However, Medicaid limits the amount of income and assets an applicant can have to qualify. But, individuals can still protect their assets by planning in advance with the help of a Medicaid Estate Planning Attorney.
It is essential to understand some Medicaid-related terms to better understand why families should do Medicaid Estate Planning before the need for long-term care arises.

Medicaid Asset Limit

Generally, to qualify for Medicaid in Michigan, your income and assets need to be under about $2,000 in countable assets. This includes cash, savings, investments, or other financial resources that can be turned into cash. Assets that aren’t counted include your home, personal possessions, household goods, one vehicle, prepaid funeral plans, and some life insurance.

If you don’t currently qualify based on these criteria, don’t worry…

Proper Medicaid Planning with the help of a Medicaid Planning Attorney can help you legally structure your assets to qualify for Medicaid so that the government benefit pays for long-term care instead of you paying it out of your own pocket

Asset Spend Down

The law limits the amount of income and assets you can have to be eligible for Medicaid long-term care. However, you can still become eligible by “spending down” your “excess” assets up to the required limits. Asset spend down may include activities such as out-of-pocket payment for long-term care or paying off debt. But this can deplete your life savings leaving very little for your family to inherit after you pass. Additionally, you must follow the spend down rules to meet the Medicaid asset limit legally. A violation of spend down rules can make an applicant ineligible for Medicaid, potentially for years. The complexity of the spend down rules is another major reason why it is best to work with a Medicaid Planning Attorney.

Look Back Rule

Because Medicaid is a means-based program, if you are applying for Medicaid, your income and assets must not be more than the state’s Medicaid asset limit to qualify for benefits. The look-back rule sets a timeframe (look-back period) before an individual’s application date where Medicaid reviews any asset transfers for gifting or sales under fair market value. In Michigan, this period is 5 years. If you have transferred assets within the past 5 years and you are planning on applying for Medicaid, consult with a Medicaid Planning Attorney to see if there are steps you can take to prevent a penalty.

Medicaid Estate Recovery Program (MERP)

The Medicaid Estate Recovery Program (MERP) is a program in which the state’s Medicaid agency seeks to recover the money it paid for a Medicaid beneficiary’s long-term care after their death. Mostly, Medicaid attempts repayment by forcing the sale of one’s remaining estate, usually the home. Even though homes are generally exempt from the Medicaid asset limit, they are not exempt from MERP. However, an individual can protect their home from the Medicaid estate recovery program by implementing Medicaid Estate Planning strategies with the help of a Medicaid Planning Attorney.

The Benefits Of Medicaid Estate Planning With An Attorney

Medicaid is a complicated law and it changes frequently. Whether you are experiencing a Medicaid Crisis that requires benefits in the immediate future, or you would like to pre-plan for Medicaid benefits, you should use the help of a Medicaid Planning Attorney.

A rule of thumb with Medicaid is that you should not apply until you have a plan in place to qualify. Applying too early can mean a longer wait for Medicaid qualification than necessary, while applying too late can mean having to pay for months of care you may not have had to pay. Additionally, an inaccurate application or not having your assets structured properly can result in a Medicaid denial. A Medicaid Planning Attorney can help you in the following ways:

Apply And Qualify For Benefits Fast, Or Appeal If You've Been Denied

  • Time is critical so you don’t lose money. Also, eligibility for Medicaid is extremely complicated. Even the smallest mistake can lead to a denial that can take months or years to fix. A Medicaid Attorney is a trained professional who can make sure the application process is followed correctly in accordance with the law so you get approved for benefits quickly. 
  • Working with a Medicaid Planning Attorney speeds up the application and review process and reduces stress because you know a professional is leading the way.
  • If you applied for benefits before and were denied, all is not lost. A Medicaid Lawyer can help you with a Medicaid appeal so you can get the benefits you need to pay for your loved ones care. 

Qualify For Benefits By Legally Structuring Your Income And Assets According To Medicaid's Rules

  • You may not be eligible for Medicaid without the help of a Medicaid Planning Attorney who can legally structure your income and assets in a way that makes you eligible for Medicaid benefits. 

Get Benefits Quickly During A Financial Medicaid Crisis

  • An Emergency Medicaid Crisis occurs if your family member is in a nursing home, or will need to be soon, but doesn’t have the financial resources to pay for care. A Medicaid Attorney can help you structure your assets and quickly apply for benefits so you can get the care you need – ASAP. 

Protect Your Family House From Being Taken By Medicaid

  • A Medicaid Planning Attorney can help you ensure that Medicaid or the nursing home won’t take your family’s house just to pay for your care. This helps preserve your assets so your family can inherit them. 

Make Sure The Healthy Spouse Has Money To Survive

  • Situations where only one spouse is applying for long-term care can be VERY complicated to plan for. A Medicaid Planning Attorney can help maximize the amount of assets the non-Medicaid applicant spouse is able to hold on to and the monthly income that can be transferred from the applicant spouse to the non-applicant spouse so they can survive and pay the bills.

Preserve Wealth And Plan For Incapacity

  • A Medicaid Planning Attorney can help you create Estate Planning documents to protect your assets and preserve your wealth so that you can pass your legacy on to your children.
  • A Medicaid Planning Attorney helps you plan for incapacity with documents like Financial Power of Attorney, Medical Power of Attorney, and Living Will so that designated family members can manage the finances and care of their loved one receiving long-term care. 

Protect Your Home And Life Savings From Nursing Home Costs While Getting The Benefits
You Need To Pay For Care

Book A Free Consultation With A Medicaid Attorney Today

Determine Your Medicaid Eligibility Risk Free

Get Help Qualifying For Medicaid Long Term Care Benefits

Call Us Now (248) 613-0007

Because every Medicaid Planning situation is different, we offer a free initial consultation with a Medicaid Planning Attorney to help you determine if Medicaid Planning is right for you.

The initial consultation gives you the opportunity to help you understand your current Medicaid eligibility. It also gives us a better understanding of how we can help you plan to protect your home and life savings from nursing home costs while getting you the benefits you need to pay for care.

To book your free consultation, call us now at (248) 613-0007 and tell our friendly receptionist that you would like to book a consultation for Medicaid Planning. She will book you for the time that works best for your schedule.

We look forward to hearing from you!

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