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Here’s the simple answer from an elder law perspective: Medicare does not pay for long-term care in a nursing home.
At most, it covers a short stay for rehabilitation after a hospital stay. If you need ongoing custodial care, such as help with bathing, dressing, or eating, Medicare will not cover it.
Medicaid is the only government program that pays for long-term nursing home care. That is why planning for Medicaid eligibility is so important, even if you expect to qualify for Medicare.
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Medicaid planning helps you qualify for long-term care benefits without losing everything you own. In Louisiana, there are strict asset and income limits. If your resources exceed those limits, you must pay privately until your savings are nearly gone.
With proper legal planning, you can reposition certain assets so they will not be counted against you when you apply.
The goal is to protect your home, preserve savings for your spouse or children, and avoid being forced to spend down your estate.
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This type of trust is a legal tool that allows you to transfer assets out of your name while still keeping some benefits.
You move certain assets, often your home and financial investments, into the trust. Once inside the trust, those assets are no longer considered yours for Medicaid eligibility purposes.
You cannot access the principal, but you can receive any income the trust produces. The key advantage is that the trust shields the assets from being counted while still allowing you to benefit indirectly.
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If you could revoke the trust and take the assets back at any time, Medicaid would treat those assets as still belonging to you. That would defeat the purpose of the trust.
An irrevocable trust, by contrast, is permanent. You give up direct ownership and control, which is why the assets inside are excluded from your Medicaid application after the required look-back period.
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When you apply for Medicaid long-term care benefits, the state reviews your financial transactions from the past five years. If you gave away property or transferred assets for less than fair market value, you will face a penalty period before benefits begin.
That is why timing matters. If you create and fund the trust well before you need care, the assets will no longer be subject to the penalty. Once five years have passed, the assets inside the trust are fully protected.
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Yes. You can reserve the right to live in your home for the rest of your life, even if it is owned by the trust. The trust owns the property, but you continue to use and enjoy it.
This allows you to protect the home from Medicaid recovery after your death without giving up your residence during life.
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The trust document spells out who receives the assets after your death. Because the trust is not part of your probate estate, it passes directly to your chosen beneficiaries. This avoids court involvement and allows for a more private and efficient transfer.
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No, not in a negative way. You are still treated as the owner of the trust for income tax purposes, so you can continue to use existing exemptions.
The trust does not trigger gift tax when set up, and it preserves the step-up in basis for your heirs, which can reduce capital gains tax if the property is later sold.
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Yes. In addition to Medicaid protection, this trust can shield assets from lawsuits, creditors, and second-marriage complications. Because the trust assets are not in your name, they are harder to reach in the event of unexpected legal issues.
The trust also allows you to control how and when your beneficiaries inherit, reducing the chance of mismanagement or disputes.
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The best time to plan is before a health crisis forces you into a nursing home. Once you need care, your options become more limited.
Starting the process early gives you access to the most effective tools, including the irrevocable, income-only Medicaid trust, and helps you protect more of what you have.
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An elder law attorney guides you through every step of the planning process. That includes identifying which assets can be protected, drafting the trust, and helping you comply with Louisiana’s Medicaid rules.
Your lawyer also helps you coordinate other important documents like powers of attorney and advance directives.
Working with a board-certified estate planning attorney ensures your plan is both effective and legally sound.
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Can we get started now?
Sure, simply send us a message or call us at 504-831-2348 to schedule a consultation at our Covington or Metairie, LA elder law office.
