Medicaid planning
Reviewed by Owen Hathaway, AttorneyUpdated June 4, 2026Arranging finances in advance, within the rules, to qualify for Medicaid long-term care without needlessly spending down a lifetime of savings.
Medicaid planning is the lawful structuring of assets and income to help a person qualify for Medicaid long-term care benefits while preserving as much as the rules allow. Because Medicaid is need-based, eligibility turns on strict asset and income limits.
A central constraint is the five-year (60-month) lookback: gifts or below-value transfers made within five years before applying can trigger a penalty period of ineligibility. Effective planning therefore happens well before care is needed.
Medicaid combines federal rules (42 U.S.C. § 1396p, including the 60-month lookback) with state administration. Colorado administers its program (Health First Colorado) with its own eligibility specifics; Wyoming administers its own Medicaid program. Penalty divisors and limits differ and change from state to state.
Related terms
- asset protection planningArranging ownership of assets in advance and lawfully so they are harder for future creditors to reach, done before a claim arises rather than after.
- irrevocable trustA trust that generally cannot be changed or revoked after it's created. Giving up control is the price for benefits like asset protection and tax planning.
- special needs trustA trust that holds assets for a person with disabilities without disqualifying them from need-based benefits like Medicaid and SSI.