Home > Education > Tax & Finance > Q&A: Medicaid Benefits and Your Assets

Q&A: Medicaid Benefits and Your Assets

Don't make the mistake of "asset shifting" to qualify for Medicaid benefits.

Question: I’ve heard that one way to obtain Medicaid benefits without getting rid of nearly all your assets is to get a divorce, put all the assets in one spouse’s name but still live together while the other spouse gets the Medicaid benefits. That way the couple can live a lot more cheaply. Is this true?

Ric: Not anymore.

You’re describing something called asset shifting. Several strategies, including the one you cited, are available to protect your assets in the event you start to incur long-term care costs. A similar idea is to give all your money to your children. In both cases, the theory goes, you become poor but you protect the money for your (ex)spouse or the kids, while enabling yourself to qualify for Medicaid.

However, the government is aware of these tactics — which really are nothing more than tax dodges. Therefore, Medicaid now imposes a five-year look-back period: If you’ve engaged in an asset-shifting strategy within five years of applying for Medicaid, your application will be declined. So the idea isn’t viable.

I’ll add that it’s not ethical either. Medicaid was designed to serve the poor, not help those with assets preserve inheritances for children. Your strategy would foist your long-term care costs onto the taxpayer for the benefit of your kids. As a taxpayer, I resent that.

There are also practical concerns with these ideas. Do you really think your wife would be willing to sign a divorce decree at the moment you are in desperate need of care? Do you really think your children will use your money to help you after you’ve given them your life savings?

(Remember that your kids have spouses too — and possibly issues of their own: marital, health, job, financial.)

There are better ways to protect yourself from the costs of long-term care. Let us review your situation to see what might make the most sense for you.

Talk with a Financial Advisor

No Cost. No Obligation.

Single Step Form Articles

  • What is the approximate value of all your investments and savings, not including your home or other real estate? Investments and savings include your retirement accounts, stocks and bonds, funds and savings accounts. We can help you move your financial life forward no matter where you are in your journey.

By clicking submit you are agreeing to our Terms of Use and Privacy Policy.

Schedule Your Free, No Obligation Consultation

You May Also Like:

  • husband and wife sitting on couch discussing finance
    Article
    Are You 'Open' With Your Spouse About Money?
    Read More
  • Edelman Financial Engines Decorative Triangle Background
    Article
    Invest or Pay Off Student Debt?
    Read More
  • Edelman Financial Engines Decorative Triangle Background
    Article
    Q&A: Giving Stock to Charity
    Read More