Avoid These Common Mistakes in Medicaid Planning

Did you know that nearly 60% of all nursing home residents in the United States rely on Medicaid to pay for their care? That’s right—more than half of long-term care is funded by this essential program. But here’s the problem: many people make costly mistakes when trying to qualify for Medicaid, which can delay care, cause stress, and drain savings.

If you or your loved ones are thinking about long-term care, understanding Medicaid planning is critical. With the right information and guidance, you can avoid common errors and protect your health, finances, and future.

In this article, we’ll go over the top Medicaid planning mistakes and explain how to avoid them—using clear language and simple tips that anyone can understand.

What Is Medicaid Planning?

Medicaid is a government program that helps people with limited income pay for healthcare. In many cases, it covers long-term care costs like nursing homes or assisted living—expenses that private insurance often doesn’t cover.

Medicaid planning is the process of preparing your finances and assets so that you can qualify for Medicaid benefits when you need them. It often involves working with professionals like elder law attorneys to make smart decisions about your home, income, savings, and more.

But there’s a catch: the rules are complex and changing all the time. Making the wrong move—whether it’s giving away money or not planning ahead—can lead to serious consequences.

1. Waiting Too Long to Start Planning

One of the most common Medicaid planning mistakes is waiting until it’s too late.

Many people don’t start planning until a crisis hits—like when a loved one suddenly needs nursing home care. By then, options are limited, and you may have to spend more of your savings than necessary.

Why it’s a problem:

Medicaid has a 5-year look-back period. This means that any gifts or transfers you made in the past five years may be counted against you.

How to avoid it:

Start Medicaid planning early—even before you think you’ll need care. Talking to a qualified attorney ahead of time gives you more tools and better results.

2. Giving Away Assets the Wrong Way

A lot of people think they can just give their money or home to a family member and instantly qualify for Medicaid. But it doesn’t work like that.



Why it’s a problem:

If you give away assets, Medicaid may view it as an attempt to qualify unfairly. This could lead to a penalty period—a time when you won’t receive benefits, even if you need them.

How to avoid it:

There are legal ways to protect your assets, but they must be done correctly. For example, setting up an irrevocable trust may help, but it must follow strict rules.

3. Thinking All Assets Must Be Spent Down

Another mistake is believing that you have to become completely broke before Medicaid will help.

Why it’s a problem:

Medicaid does require limits on income and assets, but some property—like your primary home, a car, or personal belongings—may be exempt (not counted).

How to avoid it:

A Medicaid planning professional can help you preserve exempt assets and make informed decisions about what to keep and what to spend.

4. Failing to Plan for the Spouse

When one spouse needs long-term care, the other may still be living at home. Ignoring the needs of the “community spouse” is a big Medicaid planning mistake.

Why it’s a problem:

Without proper planning, the at-home spouse may be left with very little money or support.

How to avoid it:

Medicaid rules include protections for spouses, like the Community Spouse Resource Allowance (CSRA). A professional can help make sure both spouses are cared for properly.

5. Not Understanding State Medicaid Rules

Each state has its own version of Medicaid, and the rules can be quite different from one state to another.

Why it’s a problem:

What works in one state might not work in another. Applying the wrong strategy could cause delays or disqualify you.

How to avoid it:

Work with a local attorney or Medicaid planner who understands the rules specific to your state, like Florida’s Medicaid program.

6. Applying for Medicaid Too Soon or Too Late

Timing is everything in Medicaid planning.

Why it’s a problem:

Apply too soon, and you might get denied. Wait too long, and you could spend more than necessary.

How to avoid it:

Have your Medicaid plan ready, and apply at the right moment, based on your needs and finances. A Medicaid planning attorney can guide this process.

7. Thinking DIY Planning Is Enough

While it’s tempting to handle everything yourself using online forms, Medicaid planning is not a do-it-yourself project.

Why it’s a problem:

Without expert help, you may misunderstand key rules or miss opportunities to save money.

How to avoid it:

Talk to a trusted professional, like a Medicaid planning attorney or elder law expert. Their experience can help you avoid costly errors.

8. Not Reviewing or Updating Plans Over Time

Medicaid planning isn’t a one-time task. Laws change, personal situations change, and your plan should keep up.

Why it’s a problem:

A plan made years ago might not work anymore. That could mean wasted money or denied benefits.

How to avoid it:

Review your plan regularly, especially if you experience major life changes like retirement, a medical diagnosis, or the loss of a spouse.

Final Thoughts

Planning for Medicaid may seem confusing, but the key is to start early, get help, and stay informed. Avoiding these common mistakes can help you:

• Protect your savings.
  
  
• Get the care you need.
  
  
• Reduce stress for your family.
  
  
• Make the most of available resources.
  
  

By working with professionals who understand Medicaid planning, you can make confident decisions and protect your future.

Need help with Medicaid planning? Contact Doane & Doane today to schedule a consultation and protect your family’s future.

FAQs: Medicaid Planning