How to Protect Your Assets from Medicaid's Five Year Look Back Period | Repair The Roof Podcast

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Have you ever wondered why some families can protect their life savings when a loved one needs long-term care while others simply lose everything? The difference isn’t luck. It’s strategic planning. Today, I’m going to reveal how to protect your assets against Medicaid’s look-back period, a strategy that could save your family hundreds of thousands of dollars. In this video, I’ll walk you through the exact legal strategies

that elder law attorneys use to help families preserve their hard-earned assets while still qualifying for Medicaid benefits. These aren’t theoretical concepts. These are proven methods that have helped thousands of families across the country protect their legacy. By the way, I’m attorney Ted Gudorf and I’ve spent over 35 years helping families navigate the complex world of Medicaid planning.

I’ve seen firsthand how devastating it can be when families don’t understand these rules until it’s too late. But I’ve also witnessed the relief on people’s faces when they realize there are legitimate ways to protect what they’ve worked so hard for. Before we dive in, let’s understand what we’re up against. Many people are shocked to discover that Medicare doesn’t pay for long-term care. That’s right.

The program most seniors rely on for health care won’t cover extended nursing home stays or assisTed living. Instead, Medicaid is the primary payer for long-term care in America. But it’s designed as an impoverishment program with strict asset limits and income limits. The most challenging aspect of Medicaid is the look-back period, a five-year window.

any gifts or transfers of assets can result in penalties that delay your eligibility.

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This means if you give away assets within five years of applying for Medicaid, you could be denied coverage when you need it most. But here’s what most people don’t realize. There are completely legal ways to protect your assets while still qualifying for Medicaid benefits. The key is understanding how to work within the rules rather than against them. Let’s start with the most important concept in Medicaid planning, timing.

The five-year look-back period begins when you apply for Medicaid, not when you transfer assets. This means proper planning should ideally begin at least five years before you anticipate needing long-term care. But what if you don’t have five years? What if you or your loved one needs care now? This is where crisis Medicaid planning comes in. Strategies are designed to protect at least

a portion of your assets, even when care is imminent and there is a crisis. The first strategy I want to share is the Medicaid Asset Protection Trust. Unlike a revocable living trust, this irrevocable trust is specifically designed to protect assets from being counTed for Medicaid eligibility. When you place assets in this trust, you give up direct control, but you can still receive income from the trust.

and designate who will receive the assets after your passing. Here’s why this works. After five years, the assets in the trust are no longer counTed for Medicaid eligibility purposes. You can have hundreds of thousands of dollars in this trust, and it won’t affect your ability to qualify for Medicaid. But remember, this strategy requires planning ahead. The five-year clock doesn’t start.

until the assets are transferred into the trust. Now let’s talk about your home. Often the largest asset families want to protect. In many states, your primary residence is exempt from Medicaid calculation up to a certain equity value. However, after you pass away, Medicaid can place a lien on your home through Medicaid estate recovery.

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in order to recoup the benefits they paid on your behalf. To protect your home, you might consider transferring it to an adult child who has lived with you and provided care for at least two years. This caregiver child exception allows you to transfer your home without triggering a penalty period. Alternatively, you could transfer your home to a disabled child at any time.

without penalties. Or in states like Ohio, we recommend transferring your home to a Medicaid asset protection trust. Another powerful strategy involves converting countable assets into exempt assets. For example, you might use cash, which counts against your Medicaid eligibility, to pay off your mortgage. Make home improvements.

or purchase a new vehicle, all of which may be exempt depending upon your state’s rules. For married couples, the planning opportunities are even greater. When one spouse needs nursing home care, the institutionalized spouse, the other spouse, called the community spouse, can keep a certain amount of assets, called the community spouse resource allowance, without affecting

the institutional spouse’s Medicaid eligibility. In 2025, this allowance ranges from approximately $35,000 to $165,000 depending on your state. But what if you have more assets than that? This is where the Medicaid Compliant Annuity comes in.

A Medicaid compliant annuity allows the community spouse to convert excess assets into an income stream that doesn’t count against the institutional spouse’s Medicaid eligibility. For example, if a couple has $350,000 in assets and the community spouse can keep $165,000, they could convert the remaining

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$185,000 into a Medicaid compliant annuity. This Medicaid compliant annuity provides income to the community spouse while allowing the institutional spouse to qualify for Medicaid immediately. But be careful. These annuities must meet specific requirements to be Medicaid compliant. They must be irrevocable, non-transferable.

and have a term that doesn’t exceed the community spouse’s life expectancy. The state must also be named as the remainder beneficiary up to the amount of Medicaid benefits paid. Now, what about single individuals who need immediate care? One strategy is called the Half a Loaf program. While you can’t simply give away all your assets and immediately qualify for Medicaid,

you can give away a portion and use the remainder to pay through the resulting penalty period. Here’s how it works. Let’s say you have $120,000 in assets, and your state’s penalty divisor, which is the average monthly cost of nursing home care, is $12,000. So if you gave away $60,000 to a family member,

you’d incur a five-month penalty period. You could then use the remaining $60,000 to pay for care during those five months, after which you’ll qualify for Medicaid and have protecTed half of your assets. Some states allow for an even more sophisticaTed version of this strategy, using a Medicaid compliant annuity to pay through that penalty period. And that potentially

might be able to protect even more assets. For those with disabled children or grandchildren, a special needs trust can be an excellent planning tool. This type of trust allows you to provide for a disabled level without jeopardizing their eligibility for government benefits like Medicaid or SSI. Another option worth considering is long-term care insurance. While not strictly a Medicaid planning strategy, having this insurance

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can provide the funds needed for care without having to spend down your assets or rely on Medicaid. Some states even have partnership programs where you can protect assets equal to the amount your long-term care insurance pays out. Now, I want to address a common misconception. Many people believe they can simply give away their assets to family members to qualify for Medicaid.

This is a dangerous strategy that can lead to severe penalties. Remember, any gifts or transfers made during the five-year look-back period will be scrutinized and, if discovered, will result in a penalty period during which Medicaid won’t pay for your care. Instead, work with an experienced elder law attorney who understands the nuances of Medicaid planning in your state. The strategies I’ve outlined today vary by state.

And what works in one jurisdiction might not work in another. It’s also important to note that Medicaid planning isn’t just about protecting assets. It’s also about ensuring you have access to quality care when you need it. By planning properly, you can maintain some control over where and how you receive care, rather than being limiTed by financial constraints. Let me share a quick case study to illustrate these concepts.

I recently worked with a couple, John and Mary, who had about $450,000 in savings and a home worth $350,000. John needed nursing home care, which cost about $15,000 per month in their area. Without planning, they would have had to spend down to about $165,000, Mary’s community spouse resource allowance, before John could qualify for Medicaid.

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That would mean losing over $285,000 of their hard-earned savings. Instead, we implemenTed the plan that allowed Mary to keep her resource allowance, converTed the excess assets into a Medicaid compliant annuity for Mary, and protecTed their home from a state recovery. John qualified for Medicaid much sooner, and they preserved almost all of their assets.

for Mary’s needs and their children’s inheritance. This type of planning isn’t about gaming the system. It’s about using legal strategies to protect what you work for while ensuring you get the care you need. The Medicaid rules are complex by design, but with proper guidance you can navigate them successfully. Before we wrap up, I want to emphasize that Medicaid planning

should be part of a comprehensive elder law plan that includes, one, a durable power of attorney with specific provisions for Medicaid planning, two, a health care power of attorney and living will, three, a properly structured will or trust, four, a plan for income management during incapacity, and five, strategies to protect assets from long-term care costs.

These legal documents all work together to ensure your wishes are honored and your assets are protecTed, regardless of what the future holds. If you found this information valuable, I’ve creaTed a free guide that goes even deeper into Medicaid planning strategies. You can download it using the link in the description below. And if you’re facing a situation where you or a loved one may need long-term care soon, I encourage you to schedule a consultation

with an elder law attorney in your area as soon as possible. Remember, the best time to plan is always before you need care. But even if you’re in a crisis situation, there are still options available to protect at least some of your assets. So act soon.