Medicaid Planning for Aging Parents: A Guide for Adult Children

Are you helping your aging parents navigate Medicaid eligibility?  This guide explains what Medicaid planning is, how a Medicaid Planner can help, and how to qualify for long-term care Medicaid benefits without losing everything your parents have worked for.

Why Medicaid Planning Matters for Families

As parents age, adult children often step in to make critical decisions about healthcare, finances, and housing. One of the biggest concerns is how to pay for long-term care without draining a lifetime of savings.

Here’s where Medicaid planning becomes essential. Long-term care can cost over $130,000 annually for a private nursing home room. Many mistakenly think Medicare will cover it—it doesn’t. Medicaid is often the only option, but strict Medicaid eligibility rules apply.

Without a Medicaid plan, your parents may have to spend almost all of their assets to qualify. But with the right planning—and help from a qualified Medicaid Planner—they can access the care they need while preserving their assets.

What Is Medicaid Planning?

Medicaid planning is the legal and strategic process of organizing income and assets to meet Medicaid eligibility requirements at the lowest allowable cost. It’s a crucial part of elder care planning and can be done proactively or in times of crisis.

Key Goals of Medicaid Planning

• Qualify for Medicaid eligibility while protecting assets
• Structure finances to comply with federal and state Medicaid rules
• Prevent or minimize estate recovery
• Ensure continued access to high-quality care

 

What Is Long-Term Care Medicaid?

Medicaid is a federal and state program that helps pay for long-term care for those who qualify. Each state has its own Medicaid rules, so eligibility and asset limits vary.

To qualify for long-term care Medicaid, applicants must meet both financial and medical criteria. Unlike Medicare, which only covers short-term rehabilitation, Medicaid provides ongoing care in a nursing facility.

 

Medicare vs. Medicaid: What’s the Difference?

• Medicare: Covers up to 100 days of nursing home care after a qualifying hospital stay. Medicare is not income-based, and it does not pay for long-term care.
• Medicaid: Designed for long-term care needs. Strict income and asset eligibility rules Medicaid eligibility varies by state and is means-tested.

 

When Should Families Start Medicaid Planning?

Crisis Planning

Most families seek out a Medicaid planner during a healthcare crisis—when a parent is hospitalized and needs long-term nursing care. Medicare covers only short-term rehab, and suddenly the family is faced with $10,000+ monthly nursing bills.

Advance Planning

Ideally, families should begin Medicaid planning at least five years in advance, due to the five-year lookback rule. A good Medicaid Planner can help use strategies like:

• “Divest and wait” — divest the assets and “wait it out” for five years
• Asset restructuring
• Creating Medicaid-compliant trusts

However, most people don’t perform advance Medicaid planning.  Many have an aversion to confronting their own mortality and the possibility of requiring nursing home care in the future.  Additionally, despite financial structures that allow donors control over given assets, many feel uneasy about parting with their wealth prematurely.  

 

Medicaid Eligibility Requirements

To qualify for Medicaid, applicants must meet:

• Medical criteria (nursing facility level of care)
• Income limits (varies by state)
• Asset limits ($2,000 in most states for individuals) 

 

Understanding the Spend Down

Medicaid distinguishes between:

• Countable assets (cash, stocks, second homes)
• Exempt assets (primary residence, one car, personal belongings, certain annuities)

Applicants must “spend down” countable assets before qualifying for Medicaid. However, the spend down doesn’t necessarily have to be used for medical and long-term care expenses.

The 5-Year Lookback Period

Medicaid reviews 5 years of financial records to check for improper transfers. A Medicaid applicant isn’t allowed to give away assets to achieve eligibility.  Violations lead to penalty periods, delaying Medicaid eligibility.

Medicaid Estate Recovery

After a Medicaid recipient passes away, the state may try to recover costs from their estate. Medicaid estate recovery rules vary by state.  Planning in advance can help limit exposure to estate recovery.

How Are Spouses Protected Under Medicaid?

The Community Spouse and Institutional Spouse

When one spouse needs long-term care (the “institutional spouse”), the other spouse (the “community spouse”) stays at home. However, Medicaid counts both spouses’ assets toward eligibility.

Preventing Spousal Impoverishment

Thanks to spousal protection laws, community spouses may keep a portion of the couple’s assets when only one spouse requires long-term care Medicaid benefits.  This is known as the Community Spouse Resource Allowance (CSRA), which is $157,920 in 2025 for most states. 

In addition, there is a minimum income threshold for community spouses, known as the Minimum Monthly Maintenance Needs Allowance (MMMNA).  If the community spouse’s income is below the MMMNA, income can be shifted from the institutional spouse.  The MMMNA is $2,555 in 2025 for most states.

A skilled Medicaid Planner ensures these protections are applied correctly.

How a Medicaid Planner Can Help

What Does a Medicaid Planner Do?

A Medicaid Planner, often a Certified Medicaid Planner (CMP™) or an elder law attorney, helps:

• Navigate complex Medicaid eligibility rules
• Avoid disqualifying mistakes (e.g., improper gifts)
• Structure spend downs legally and strategically
• Protect homes and family savings
• Handle the Medicaid application and review process

 

Benefits of Hiring a Medicaid Planner

• Qualify faster and avoid costly delays
• Avoid unnecessary spend downs
• Preserve family assets, like homes or vacation property
• Ensure access to quality care without sacrificing eligibility

 

You’re Not Alone: Support for Medicaid Planning

Navigating Medicaid eligibility and long-term care planning is overwhelming, but you don’t have to do it alone. Medicaid Planners can provide clarity, structure, and peace of mind.

Next Steps for Families

1. Start the conversation with your parents about their care preferences and finances
2. Gather documents: bank statements, deeds, tax returns, insurance policies
3. Contact a qualified Medicaid Planner
4. Make a plan—whether you’re five years ahead or already in a crisis

 

Final Thought: Medicaid Planning is About More Than Money

Helping your parents plan for Medicaid is about more than meeting eligibility requirements—it’s about protecting their dignity, health, and legacy. With help from a professional Medicaid Planner, you can ensure they receive the care they need without sacrificing everything they’ve built.

About Us

At Eldercare Resource Solutions, we provide expert Medicaid planning services led by a Certified Medicaid Planner™ (CMP)—a nationally recognized designation for professionals specializing in Medicaid eligibility and asset protection strategies. We help families navigate the complexities of long-term care planning with compassion, clarity, and diligence. Whether you’re facing an immediate care crisis or preparing for the future, we tailor every plan to protect your loved one’s care and your family’s financial stability. With a deep understanding of the Medicaid rules and regulations, we’re here to guide you through every step of the process with confidence and peace of mind.  Please call us at (800) 403-8505 for a free consultation.