A Medicaid planning attorney looks at what a person who needs long-term care owns, earns and has given away, and then explains how federal law and that person's state rules treat each item. The attorney sets out the lawful options for paying for care, protecting a spouse at home and filing or appealing the Medicaid application.
The question can arise suddenly. A mother has fallen and the hospital is talking about a nursing home. A husband's dementia has reached the point where care at home is no longer safe. The family is now asking what the bill will do to the savings, whether the house is at risk and what the spouse at home will have left. Sometimes a denial letter or an estate-recovery notice has already arrived. This page explains the rules that decide those questions and what an attorney in this area does with them.
The page covers Medicaid for long-term care: nursing-home care and long-term care at home or in other community-based settings. It does not cover Medicare, private long-term-care insurance or veterans' benefits.
What Medicaid Planning Actually Involves
Medicaid planning means arranging a person's assets and income, within the law, so that the person can qualify for Medicaid coverage of long-term care without leaving a spouse at home with nothing. It is a different program from Medicare, and the two are easily confused. Medicaid is the public program that, as Medicaid.gov puts it, is "the primary payer across the nation for long-term care services."
A few terms come up constantly:
- Countable asset: something Medicaid adds up when it decides whether a person's resources are under the state's limit.
- Exempt asset: something the program does not count. Which assets are exempt starts from federal rules and can vary by state.
- Institutionalized spouse: the spouse who is in a nursing facility or another medical institution and is likely to stay there for at least 30 consecutive days. The spousal protections can also apply when the spouse who needs long-term care receives it at home or in another community-based setting.
- Community spouse: the spouse who stays at home.
- Look-back period: the window of time before an application during which the state reviews gifts and other transfers.
- Penalty period: the months in which Medicaid will not pay for long-term care because assets were given away for less than they were worth.
- Estate recovery: the state's claim, after a Medicaid recipient dies, to be repaid for certain care it paid for.
Federal law sets the framework. The transfer, look-back, trust and recovery rules are in 42 U.S.C. § 1396p, and the protections for a married couple are in 42 U.S.C. § 1396r-5. Each state runs its own program inside that framework, so asset limits, income rules, the exact spousal allowance figures and the scope of estate recovery can differ by state. According to CMS's eligibility policy page, eligibility for people 65 and older or who are blind or disabled is "generally determined using the income methodologies of the SSI program," and some states, called 209(b) states, use certain more restrictive criteria. For that reason this page gives no state asset or income limit. The figure that matters is the current one for the state where the application is filed.
The Look-Back Period and Why Transfers Matter
Under 42 U.S.C. § 1396p(c)(1), a state must deny Medicaid long-term care coverage for a period of time if the applicant or the applicant's spouse gave away assets for less than fair market value on or after the "look-back date." For an applicant in a nursing facility, the clock is measured back from the first date on which the person is both institutionalized and has applied. For transfers made on or after February 8, 2006, the federal look-back is 60 months. Earlier transfers had a 36-month window, except for certain trust payments. That 2006 date is when the Deficit Reduction Act of 2005 was enacted; CMS explained its implementation to the states in State Medicaid Director Letter #06-018. Put simply, under the federal rule the state looks back five years from the application and asks what was given away.
States apply the look-back through their own procedures, and a state's own look-back period can differ from the federal 60 months. California's Medi-Cal, for example, applies its own look-back rules.
How the penalty is worked out
The total uncompensated value of everything transferred during the look-back period is divided by the average monthly cost to a private patient of nursing-facility care in the state (or, at the state's option, in the community where the person is institutionalized) at the time of application. The result is the number of months of ineligibility, and the state may not round fractions of a month down. In everyday terms, the more that was given away, the more months of care the family pays for itself.
For transfers on or after February 8, 2006, the penalty starts on the later of two dates, and not during any other penalty period:
- the first day of a month during or after which the assets were transferred, or
- the date the person is eligible for Medicaid and would otherwise be receiving institutional-level care under an approved application, but for the penalty.
Because of this later start date, the penalty clock usually does not start running until the person is already in care and has otherwise qualified, whether a gift inside the look-back period was made several years ago or last month. What sets an older gift apart is whether it was made before the look-back date, because only transfers on or after that date are counted.
Annuities, loans and life estates
The statute also says what counts as a transfer. Buying an annuity is generally treated as a transfer for less than fair market value unless the state is named as a remainder beneficiary as the statute requires. For the transfer rules, an annuity is also generally treated as an asset unless it either comes from certain retirement accounts or is irrevocable, nonassignable, actuarially sound and pays in equal amounts with no deferral and no balloon payment. In plain words, an annuity generally passes only if it works like a fixed, steady income stream that cannot be cashed in or reshaped, and the state stands in line to be repaid from anything left over.
Money used for a promissory note, loan or mortgage is counted as a transfer unless the note meets three conditions:
- its repayment term is actuarially sound,
- it pays in equal amounts with no deferral or balloon payment, and
- it does not allow the balance to be cancelled when the lender dies.
Put another way, a loan to a family member has to look like a genuine loan, repaid on a realistic schedule, rather than a gift that disappears at death.
Buying a life estate in someone else's home is counted as a transfer unless the buyer lives in the home for at least a year after the purchase. So if a parent pays for the right to live in a child's home and does not actually live there for at least that year, the payment is counted as a transfer.
Transfers that are not penalized
Not every transfer is penalized. 42 U.S.C. § 1396p(c)(2) lists situations in which a transfer does not cause ineligibility. They include the transfer of a home where title went to the applicant's spouse. Other exceptions exist, each with its own conditions, and whether a particular transfer falls within one depends on the facts and on the state's rules. For a family that has been helping a parent with gifts or changing the names on accounts, this section matters most: those transfers need to be listed accurately, with dates, so that they can be reported correctly.
Spousal Protections Under Federal Law
42 U.S.C. § 1396r-5 exists so that the spouse at home is not left without money when the other spouse needs long-term care. CMS describes the 1988 provisions as protecting a share of the couple's combined resources for the community spouse and, depending on that spouse's own income, allowing some of the institutionalized spouse's income to be set aside for the community spouse.
Savings and other resources
The state adds up everything either spouse owns, using countable resources as of the start of the first continuous period of institutionalization, and computes a "spousal share" equal to half. At the application, the couple's resources are generally treated as available to the institutionalized spouse. The exception is the amount protected for the community spouse, called the community spouse resource allowance (CSRA): the share of the couple's countable assets the spouse at home may keep. The statute sets that protected amount as the greatest of a federal minimum (or a higher amount the state chooses, up to the federal maximum), the spousal share up to the federal maximum, an amount set at a fair hearing, or an amount transferred under a court order; the federal minimum and maximum are adjusted each year. A transfer of the CSRA to the community spouse is allowed without a transfer penalty. Either spouse may ask the state to assess and document the couple's total resources at the start of institutionalization, and that notice must tell them about the right to a fair hearing. Once eligibility is established, the community spouse's resources are no longer deemed available to the institutionalized spouse. In short, the couple's savings are pooled for the first look, a protected portion stays with the spouse at home, and after approval the two are treated separately.
Income
The general rule is that during any month the institutionalized spouse is in the institution, none of the community spouse's income is deemed available to the institutionalized spouse. Income paid solely in one spouse's name is generally treated as that spouse's income. The minimum monthly maintenance needs allowance (MMMNA) is the monthly income level that the community spouse's income can be brought up to, not a limit on what that spouse keeps. Where that spouse's own income falls short, the institutionalized spouse's income can be used to make up the difference.
When the figures change
According to the CMCS Informational Bulletin of April 27, 2026, the minimum and maximum resource allowances and the maximum income allowance are adjusted each January, while the MMMNA and the related housing allowance are adjusted each July 1. Within those federal bounds, states set their own figures. The amounts that apply are the current ones for the couple's state on the relevant date, which is why this page does not quote them.
Points that depend on the state
The first is "spousal refusal," in which the community spouse declines to contribute resources. The federal statute addresses cases where support rights are assigned to the state, where the institutionalized spouse cannot make that assignment because of a physical or mental impairment but the state can still bring a support proceeding, or where denial would cause undue hardship, but whether a state allows spousal refusal depends on that state's rules. The second is the family home. During life, one federal rule applies in every state: under 42 U.S.C. § 1396p(f), a person whose equity interest in the home exceeds a limit adjusted each year is not eligible for nursing-facility or other long-term care coverage, unless a spouse, a child under 21 or a blind or disabled child lawfully lives there, and federal law provides for a waiver in the case of a demonstrated hardship. A state may choose a higher limit, up to a federal ceiling, and the home's other treatment during life depends on state rules. What happens to it after death is an estate-recovery question, covered below.