As we age, the possibility of needing long-term care becomes increasingly likely. According to the U.S. Department of Health and Human Services, about 70% of people turning 65 will need long-term care at some point in their lives. This care can be expensive, and without proper planning, it can quickly deplete your savings. This is where Medicaid comes in. Medicaid is a joint federal and state program that can help cover the costs of long-term care for those who qualify.

However, Medicaid planning can be complex, and it's important to start early to ensure you have the best options available to you. Here are 10 Medicaid planning strategies for long-term care that you may want to consider.

1. Understand Medicaid Eligibility Requirements

The first step in Medicaid planning is understanding the eligibility requirements. To be eligible for Medicaid, you must have limited income and assets. Each state has its own rules, but in general, you cannot have more than $2,000 in assets (excluding your home and car) and your income must be below a certain level. It's important to note that Medicaid planning should be done well before you need long-term care, as there is a look-back period of up to five years for asset transfers.

2. Consider Long-Term Care Insurance

Long-term care insurance can help cover the costs of long-term care and may help you qualify for Medicaid by reducing your assets. However, it's important to purchase long-term care insurance before you need it, as premiums can be high and it may be difficult to obtain coverage if you have pre-existing conditions. Long-term care insurance can be a great option for those who want to maintain their independence and not rely on Medicaid.

3. Utilize Spousal Impoverishment Rules

If one spouse needs long-term care and the other does not, the spouse who does not need care may be able to keep some of the couple's assets and income under spousal impoverishment rules. These rules are designed to prevent the healthy spouse from becoming impoverished while the other receives care. This can be a great option for couples who want to ensure that the healthy spouse is taken care of while the other receives the care they need.

4. Create a Medicaid Asset Protection Trust

A Medicaid Asset Protection Trust (MAPT) is a type of irrevocable trust that can help protect your assets from Medicaid spend-down requirements. Assets transferred to a MAPT are no longer considered yours, which can help you qualify for Medicaid. However, there are strict rules around MAPTs, so it's important to work with an attorney who specializes in Medicaid planning. This can be a great option for those who want to ensure that their assets are protected and that they qualify for Medicaid.

5. Use a Promissory Note

A promissory note is a legal agreement in which you lend money to a family member or friend in exchange for regular payments. This can be a way to transfer assets out of your name and reduce your assets for Medicaid eligibility. However, there are strict rules around promissory notes, so it's important to work with an attorney who specializes in Medicaid planning. This can be a great option for those who want to transfer assets to family members or friends while still ensuring that they qualify for Medicaid.

6. Consider a Life Estate Deed

A life estate deed is a legal agreement in which you transfer ownership of your home to your heirs while retaining the right to live in the home for the rest of your life. This can help protect your home from Medicaid spend-down requirements, as the home is no longer considered an asset. However, there are strict rules around life estate deeds, so it's important to work with an attorney who specializes in Medicaid planning. This can be a great option for those who want to ensure that their home is protected and that they qualify for Medicaid.

7. Maximize Retirement Account Contributions

Retirement accounts, such as IRAs and 401(k)s, are not counted as assets for Medicaid eligibility purposes. By maximizing your contributions to these accounts, you can reduce your assets and increase your eligibility for Medicaid. This can be a great option for those who want to ensure that they have enough funds for retirement while still qualifying for Medicaid.

8. Consider a Medicaid Compliant Annuity

A Medicaid Compliant Annuity (MCA) is a type of annuity that can help you qualify for Medicaid by converting excess assets into an income stream. MCAs are complex, and it's important to work with an attorney who specializes in Medicaid planning to ensure you are using them correctly. This can be a great option for those who want to ensure that their excess assets are converted into an income stream while still qualifying for Medicaid.

9. Use the Caregiver Child Exception

The caregiver child exception allows adult children who have lived with and cared for their parents for at least two years to keep the family home without it being counted as an asset for Medicaid eligibility purposes. However, there are strict rules around this exception, so it's important to work with an attorney who specializes in Medicaid planning. This can be a great option for those who want to ensure that their family home is protected and that they qualify for Medicaid.

10. Work with a Medicaid Planning Attorney

Medicaid planning can be complex, and it's important to work with an attorney who specializes in this area. A Medicaid planning attorney can help you navigate the rules and regulations, ensure you are using the right strategies for your situation, and help you avoid costly mistakes. This can be a great option for those who want to ensure that they have the best options available to them and that they qualify for Medicaid.

In conclusion, Medicaid planning is an important part of long-term care planning. By understanding the eligibility requirements and utilizing the right strategies, you can protect your assets and ensure you have the necessary funds to cover the costs of long-term care. Remember to start planning early, as there are strict rules around asset transfers and eligibility requirements. Working with a Medicaid planning attorney can help ensure that you have the best options available to you and that you avoid costly mistakes.