The term Medicaid planning encompasses a wide variety of services provided by an equally wide variety of professionals and volunteers. A general definition of Medicaid planning is any assistance provided to a potential Medicaid applicant in advance of and in preparation for their Medicaid application. Medicaid planning can be as simple as assistance with the collection and preparation of documents or as complicated as a complete re-structuring of one’s financial assets.

Much of the complexity associated with Medicaid planning occurs when individual’s monthly income or resources are near, or over, the financial eligibility limits. Incomes can be converted into pooled income or Miller trusts and resources in excess can be converted into non-countable assets. However, these transactions require legal and financial expertise. For example, not all states allow seniors to convert their excess income into pooled income trusts, and in those states, doing so may result in Medicaid ineligibility. One other major complicating factor is when one spouse requires long-term care and the other can live independently.

The expense of nursing home care — which ranges from $5,000 to $8,000 a month or more — can rapidly deplete the lifetime savings of elderly couples. In 1988, Congress enacted provisions to prevent what has come to be called “spousal impoverishment,” leaving the spouse who is still living at home in the community with little or no income or resources. These provisions help ensure that this situation will not occur and that community spouses are able to live out their lives with independence and dignity.