5 Strategies to Qualify for Medicaid Without Spending Down Your Assets

If you are ineligible for Medicaid assistance, there are several financial strategies available to you to qualify for Medicaid without spending down your own financial assets.

To qualify for Medicaid in the United States, your income and assets must fit within the guidelines established by the federal government.

One of the most basic of these guidelines is the requirement that you spend down your own assets before receiving any state or federal assistance.

The federal government has established strict Medicaid rules to prevent individuals from getting around these requirements.

However, there are several strategies that individuals commonly use to circumvent these rules.

In this article, we’ll list some of the most common strategies people use to qualify for Medicaid without spending down their assets.

How to Qualify for Medicaid Without Spending Down Your Assets

active old age, people and lifestyle concept - happy senior couple riding bicycles at summer park

There are several strategies available for qualifying for Medicaid coverage without depleting your own assets.

Each strategy has its advantages and disadvantages, and the specifics of your situation can change which works best for you.

For this reason, it’s recommended that you speak with an experienced elder law attorney before setting anything in stone.

In general, however, there are 5 general strategies that you should consider:

  1. Using an irrevocable trust
  2. Transferring your assets to a loved one
  3. Investing in your home
  4. Purchasing exempt assets
  5. Purchasing a Medicaid annuity

We’ll explain each in detail below.

1. Placing Your Assets in an Irrevocable Trust

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An irrevocable trust allows your loved ones to receive the financial benefits of your assets.

Essentially, you can use an irrevocable trust as a time capsule to pass assets down to your loved ones after your death.

When you create an irrevocable trust you give up legal ownership of your assets.

You can not change, revoke, or terminate the trust, and the trust itself acts as a legal entity with ownership over all property included in the trust.

By placing your assets in an irrevocable trust, you can qualify for Medicaid since, legally speaking, they are no longer your assets.

However, this technique will only work by planning far in advance of filing for Medicaid.

For the government to ignore the assets when considering you for Medicaid, you must have created the trust at least 60 months before the date you filed.

This means that the assets will still belong to you for Medicaid purposes for five years after you form the trust.

There are also a few disadvantages to creating an irrevocable trust.

For example, once you create an irrevocable trust it generally cannot be undone.

Additionally, the person creating the irrevocable trust gives up control over the financial assets, so you should be very careful when choosing beneficiaries or assets to place in the trust.

2. Transferring Your Assets to a Loved One

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Transferring some of your financial assets to a loved one can also allow you to qualify for Medicaid.

Much like creating an irrevocable trust, you must comply with the 60-month rule.

As long as you legally transfer the asset to the person at least 60 months before you file for Medicaid, it won’t be counted for eligibility purposes.

The advantage of this strategy is that it’s much easier (and cheaper) than creating an irrevocable trust.

However, there are also no restrictions on how your loved one chooses to spend the money.

3. Concentrating Your Assets in Your Home

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Generally, Medicaid rules exempt your family home for eligibility purposes.

One way to avoid spending your own financial resources on your long term care is to invest in your home.

Spending your money on renovations or repairs to your home may help you fall within the Medicaid eligibility guidelines.

Additionally, you could use your financial assets to pay off any outstanding mortgage left on your home.

You could even purchase a new home that is worth more than your current family home.

For this reason, you have several options to improve the value of your family home while also qualifying for Medicaid.

4. Purchasing Exempt Assets

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The family home isn’t the only asset exempt from the Medicaid eligibility guidelines.

All of the following assets are also exempt in Virginia:

  • One vehicle
  • Burial plans not exceeding $3,500 in value
  • Furnishings and furniture
  • Other personal property, such as clothing, jewelry, and similar personal items items
  • Life insurance policies

Just like investing in your home, another easy way to qualify for Medicaid is to invest in other types of exempt assets.

This strategy allows you to avoid spending down your assets while receiving several valuable investments.

5. Purchasing a Medicaid Annuity

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Another technique that married individuals often consider is purchasing a Medicaid annuity.

A Medicaid annuity is useful if either you or your spouse needs treatment in a nursing home or other long-term medical facility.

By purchasing a Medicaid annuity, the money that would otherwise be counted for Medicaid eligibility is instead treated as a non-countable income stream for the spouse who is not living in the nursing facility.

So, instead of having to spend down all of your own financial assets to qualify for Medicaid, the annuity would instead pay you monthly payments to keep you under the Medicaid eligibility limits.

To be valid, a Medicaid annuity must be irrevocable, you must get back what you put into the annuity during your life expectancy, and the state must be named the beneficiary of the annuity after the at-home spouse passes away.

The primary disadvantage of a Medicaid annuity is that if the at-home spouse dies before the term of the annuity ends, the state will get the remainder of the annuity up to the amount of the Medicaid costs.

While a Medicaid Annuity is a powerful financial tool, purchasing one does carry some risk.


Be sure to check Medicaid’s eligibility requirements to see if you qualify.

If you find that you’re ineligible for Medicaid because you do not fall within their income guidelines, there are still several financial strategies that may be available to you.

However, these financial strategies require flexibility and long term planning.

Further, most of these financial strategies should not be pursued without the advice of an experienced elder law attorney.

Speaking with an experienced elder law attorney first will allow you to choose the strategy that best fits your personal financial needs.

Ultimately, having an experienced attorney by your side is the best way to reach your long-term financial goals.

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A Client-First Approach to Legal Services

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We’re a Richmond, Virginia law firm with clients from around the world. Schedule your free phone consultation today and let’s talk about what we can do for you!