What About Medicaid

Video Transcript: What About Medicaid


What about Medicaid?

While the main purpose of this program is to describe some of the rules and techniques surrounding the Aid and Attendance Pension Benefit, it would be shortchanging you not to at least mention some of the rules surrounding the Medicaid Planning process. After all, there is no 5 year lookback period for the Aid and Attendance Pension Benefit, but there is for Medicaid, and sometimes Medicaid may be “the bigger prize” long term. The same transfers of assets into the Irrevocable Family Trust and the Irrevocable Property Trust are considered a gift for Medicaid purposes, and it starts the five year lookback period.

So here are some of the main rules surrounding the Medicaid Planning process which have been liberally stolen from another one of my books The Long Term Care Solution. Again, these are rules surrounding Medicaid Planning and not planning for the V.A.’s Aid and Attendance Pension Benefit, so the rules may be completely different. For more insight into your specific situation, please contact a professional who is well-versed in both the Pension Benefit and Medicaid Planning.

Countable, Non-Countable, and Exempt Assets

Countable Assets

Countable assets are the most common assets people want to be able to preserve apart from sentimental, personal items. These are generally the liquid assets that people own that can be converted to cash easily. Consequently, these are the types of assets in a Care Assistance Plan that need to be spent down to the appropriate limits, or converted to assets that are exempt or not counted. For example, the following are considered countable assets:

* Cash, checking, savings, money market, and CDs

* Stocks, bonds, mutual funds, brokerage accounts

* IRAs, 401ks, 403bs, SEP IRAs, Keough Plans, and other retirement plans with a balance (as opposed to monthly pension payments that come to you for life; that is considered income and not an asset)

* The cash value of life insurance and annuity balances (meaning the annuity has not been annuitized yet)

* All autos, trucks, boats, machinery, etc. beyond the first automobile

* Real estate beyond what is Exempt or Unavailable

* Any other deposits that can be accessed or refunded if not used, such as retirement community “buy-ins”, pre-paid rent, pre-paid utilities, etc.

Basically, if you can access it and easily convert it to cash (or even not so easily in the case of real estate), then it counts towards the limits you are allowed to keep, or you and a spouse are allowed to keep, and any excess must be spent, converted, or gifted appropriately in coordination with a Care Assistance Plan. (NOTE: DO NOT JUST START GIFTING ASSETS. THIS IS ONE REASON PEOPLE GET IN FINANCIAL TROUBLE WITH THE MEDICAID OFFICE).

Non-Countable/Unavailable Assets

In addition to Countable Assets, there are also assets that are Non-Countable, or better known as “Unavailable” Assets. In these instances, they may be assets that would normally be countable but for some reason are not immediately available or easily liquidated. These assets are:

* An inheritance prior to it being distributed to you

* Lawsuit proceeds before the judgment is collected and distributed to you

* Jointly-owned real estate that would cause an undue hardship to the other owner or other real estate with a legal impediment that makes it hard or impossible to sell

* Other property rights that cannot be liquidated, such as a “life estate” (a lifetime right to live on the property without actually owning the property)

The key to the unavailable assets category is that there is no way to actually get cash from the asset now. In other words, you cannot be denied Care Assistance because you are going to get a large inheritance when an estate settles. However, once the estate assets are in your possession, they end up becoming countable (or possibly Exempt) assets. Some of our Care Assistance Planning techniques involve making countable assets get tied up legally to become unavailable.

Exempt Assets

Exempt Assets are the third and most important category when it comes to a Medicaid Planning spend-down, because these are otherwise countable assets that you get to keep. The list is different for individuals versus couples, and so we’ll break this into two lists.

For Individuals

* Cash in the amount of $2,000 or less.

* The home with about $525,000 in equity (again, we’re not going to use exact numbers because these can change quickly and can vary by state). There are some major restrictions on the home that are beyond the scope of this lesson and you should discuss it with a professional.

* One Automobile (again, within certain restrictions).

* Personal Property, such as clothing, furniture, electronics, and jewelry (to an extent).

* Funeral account, burial insurance, and burial spaces (within limits, and for the burial spaces, potentially also for immediate family members).

* Life insurance with no cash value (or with the cash value counted as part of the $2,000).

* Certain other assets that are more appropriate for a conversation at our office.

For Married Couples

* Cash in the amount of $2,000 or less for the spouse needing care; cash in the amount of approximately $115,000 or less for the spouse not needing care. [AGAIN, THESE ARE EXEMPTION AMOUNTS FOR MEDICAID PLANNING AND NOT FOR THE V.A. AID AND ATTENDANCE PENSION BENEFIT. PLEASE DO NOT THINK YOU CAN STILL HAVE A VETERAN’S SPOUSE KEEP $115,000 AND STILL QUALIFY FOR THE PENSION BENEFIT.]

* The home with a $525,000 equity value. There are some major restrictions on the home that are beyond the scope of this section and program that we can address at our office.

* One Automobile (again, within certain restrictions).

* Personal Property, such as clothing, furniture, electronics, and jewelry (to an extent).

* Funeral account, burial insurance, and burial spaces (within limits, and for the burial spaces, potentially also for immediate family members).

* Life insurance with no cash value (or with the cash value counted as part of the $2,000).

* Certain other assets that are more appropriate for a conversation at our office.

The “Snapshot” Date

The snapshot date is simply the date that the person entered the nursing home, and therefore is “locked in” to how their assets were arranged at that time. This is one of the reasons why it is so critical to get a good Medicaid Plan in place before someone actually is in the nursing home and facing a giant financial burden. This is particularly true when a couple is involved because it can greatly affect how much in assets and income can be diverted to the spouse. Here’s an Example:

Rory needs nursing home care and his wife Amy is trying to rearrange his assets to help. If Rory enters the nursing home on April 1 and Amy starts looking at their assets on April 3, they look like this:

* House worth $500,000

* Rory has IRAs, stocks, and cash worth $100,000

* Rory has income of $2,000 per month

* Amy has IRAs, stocks, and cash worth $50,000

* Amy has income of $700 per month

Based on these facts, Amy gets some help with putting together their finances and eventually qualifying Rory for Medicaid. In the end with a good Care Assistance Plan, Amy gets to keep about $75,000, she gets to keep the house with some repairs and upgrades, gets all burial and funeral expenses pre-arranged and paid for, and managed to get income of $2,500 per month to Amy. The downside is that she had to spend about $20,000 on Rory’s care before Medicaid took over, and Amy does not get to have the maximum “Community Spouse Resource Allowance” of about $110,000.

Now let’s take a look at the same facts but Amy starts planning a few months before Rory actually has to go into a nursing home. By shifting assets around prior to the snapshot date and using a simple revocable living trust on a temporary basis, the full $110,000 can be kept by Amy on the Snapshot Date, still take all of the same other spend down steps, but now Amy and Rory didn’t have to spend down anything on Rory’s care and still get all of the other benefits to Amy. In the end, Amy and Rory came out $55,000 ahead simply by planning two months out.

How is this possible? Why is it this way? It’s because most states will allow the spouse outside the nursing home, frequently called the “community spouse”, to have UP TO about $110,000 of assets, but it is not done by simply transferring the assets to the community spouse. (In some states, they can). It’s done by taking the whole of the cash assets, dividing by two, and seeing how much the community spouse and the spouse in the nursing home get to keep. Again, a good but simple technique using a simple revocable living trust in conjunction with timing the snapshot date made a world of difference. Or at least a $55,000 difference.

The Five Year Rule

This is probably one of the most misunderstood rules around. The five year “look back” period refers to how far back Medicaid will look in Care Assistance Planning to see if there were any gifts or transfers that would trigger a period of ineligibility. Let’s take a look at what the Five Year Rule does mean before showing what it doesn’t mean.

It DOES mean:

* Have the Medicaid office look back five years from the date of application to see if there were any gifts made.

* Imposes a period of ineligibility for all collective gifts made within the five years before the date of application.

* The period of ineligibility is the sum of those gifts divided by the cost figure determined by the Medicaid office to be a “monthly average cost” of skilled nursing home care (currently about $6,000) to come out to a number of months of ineligibility. (See below in the rule on gifting for an example).

* The period of ineligibility begins from the date of application.

It DOES NOT mean:

* That the maximum period of ineligibility is five years; it can be much more.

* That a gift of $6,000 a year ago already expired because the ineligibility month started when the gift was made (it used to be that way, but it is not under current law)

The five year rule can be a little tricky and can profoundly and negatively impact planning. As you saw in the story at the start of this section, not understanding the fine points can lead to much more than five years before Medicaid Care Assistance Planning starts.


Gifting can be an important and effective technique in Care Assistance Planning, but it has to be done in absolutely the right way. Even more important to understand, gifting within five years of applying for Medicaid Care Assistance is not necessarily a bad thing. In fact, many “crisis” Care Assistance Plans we develop include a lump sum gift with an accompanying ineligibility period, applying for Medicaid to get the period of ineligibility started, and then having the family take over paying for care during that period of ineligibility because the net gain to the family (along with the other spend down techniques) still has the family come out ahead.

Probably the biggest misconception around gifting is something I already mentioned: the annual amount of gifting excluded from gift taxes is not excluded from Medicaid scrutiny. The $13,000 amount most people have heard about (which jumped to $14,000 January 1, 2013) only relates to federal gift taxes. It has nothing to do with Medicaid. Another piece of that same misconception is that if the gifts are spread out among a lot of different relatives, then the implications are diluted. Again, this relates to the federal gift tax in that you can give $100,000 as 10 gifts of $10,000 each and it is not gift taxable, but there would be gift tax implications if you just gave one $100,000 gift to a person. As far as Medicaid is concerned, there is no difference since it counts up the total gifts given within the last five years regardless of the recipient or recipients (excepting spouses).

Care Assistance Planning can have a huge impact on the family and a spouse staying out of the facility. Unfortunately, doing Care Assistance Planning the wrong way can also have a huge impact on the family if done incorrectly and not for the better.


There are many different rules surrounding Medicaid, and they are different from the rules surrounding qualification for the Aid and Attendance Pension Benefit for veterans, their spouses, or widow(er)s. However, a good plan to qualify for the Pension Benefit will also take into account the possible need for Medicaid down the road.

As always, if you have questions, you can contact me through my law office at 919-518-8237 or you can reach The Senior Veterans Council through their website at www.SeniorVeteransCouncil.com.

This concludes our V.A. Pension Benefit Planning mini-course. If you would like more information and would like to schedule a free appointment to meet or attend one of my seminars on V.A. Pension Benefit Planning, then please call my law office at 919-518-8237 and a member of our friendly staff can help, but please mention you are calling in response to my V.A. Pension Benefit Planning e-mails. Thanks again and we hope you found this information valuable.

Jeffrey G. Marsocci
The Care Assistance Center, LLC
8406 Six Forks Road, Suite 102
Raleigh, NC 27615



Jeffrey G. Marsocci was born in Fort Worth, Texas but was raised in Lincoln, Rhode Island and graduated from Mount Saint Charles Academy High School. He graduated from Hofstra University with an undergraduate degree in Business, and two years later earned his law degree from the same school. He also earned a Certificate Degree in Non-Profit Management from Duke University in 2004, he was the Alumni of the Month for Hofstra University in June of 2013, and his firm was honored by the City of Raleigh with the 2011 Human Relations Business Award. Mr. Marsocci also became a Certified Medicaid Planner™ in 2014, a certification granted by the CMP™ Governing Board*, and he is an attorney accredited by the Veterans Administration to practice before the V.A. and its applicable administrative and legal tribunals.

In addition to working in his estate planning, estate administration, and Care Assistance Planning practice in Raleigh, NC since 1996, Mr. Marsocci is the author of numerous books including Estate Planning Basics, The Veteran’s Long Term Care Solution and other planning books found on Amazon.com. Mr. Marsocci frequently holds seminars for clients, financial advisors and other attorneys on topics related to the life and estate planning field as well as developing and presenting continuing legal education courses for attorneys and life insurance agents. Mr. Marsocci is a member of the North Carolina Bar Association, the Wake County Bar Association, and the National Italian American Bar Association. He and his wife Kathleen live in Raleigh, North Carolina and work with various charitable and non-profit groups including Kiwanis. Both are recipients of the President’s Call to Service Award through the Points of Light Foundation for completing more than 4,000 hours of service during their lifetimes.

*Certification is granted based upon a qualified candidate demonstrating a mastery of the skills and knowledge of the subject matter. To achieve certification, a CMP™ must meet certain education and/or experience requirements, show proficiency in Medicaid Planning through a thorough examination, and commit to adhere to the highest in professional standards.  A CMP™ also subjects himself or herself to discipline by the CMP™ Governing Board. A Certified Medicaid Planner™ is not necessarily an attorney, so this designation is not governed or regulated by any state bar association.

Professional advice on how to access Medicaid and VA Benefits without giving up the house or assets using a trusted step-by-step process that literally walks you through a complex and bureaucratic system.

Get your free information packet “How a Little Known VA Benefit Can Provide Monthly Financial Support”

David Cole of the Senior Veterans Council and I have put together a useful packet of information along with my book “The Veteran’s Long Term Care Solution: The Truth Behind Long Term Care Planning for Veterans with the Aid and Attendance Pension Benefit” which includes:

  • 20-minute DVD outlines how the benefit can provide financial assistance towards the cost of in-home care, Assisted Living, or possibly independent living facility costs.
  • VA Aid and Attendance Benefit Rate Table
  • How to access immediate funds while applying for government assistance
  • Using a NOVA Professional Advocate to Pre-Plan Your VA Claims
  • Special Industry Report: Medicaid Secrets Reveals: Learn proven strategies to save your home and protect your life savings from devastating nursing home costs
  • The Promise to America by Lyndon B. Johnson
  • National Care Planning Council
  • Book by Jeffrey G. Marsocci – The Veteran’s Long Term Care Solution: The Truth Behind Long Term Care Planning for Veterans with the Aid and Attendance Pension Benefit

Yes, I want a free information packet “How a Little Known VA Benefit Can Provide Monthly Financial Support”

Disclaimer: The information contained in this email is provided “as is” with no warranties or guarantees. This information should not be considered as actual legal, tax or investment advice and you should always contact a certified accountant, tax professional, or attorney before making any financial decisions. While every attempt has been made to provide current and accurate information, neither the author nor the publisher can be held accountable for any errors or omissions. You agree that you are solely liable for any and all reliance, use, or action on this information.