How Can My Parents Protect Their Savings When They Apply for Medicaid?

The rules differ so much from state to state that it can be difficult to advise you. In general, assuming your parents are 65 or older, if both are seeking Medicaid coverage, they must spend down their savings to $3,000 (this number may be different in some states). If only one is seeking coverage, the other may be able to keep all of the savings.

Your parents can spend down by paying for whatever they need, including paying you fair market rent. They can also prepay for their funerals – admittedly a bit morbid. However, in most cases they cannot give their money away. Doing so could cause them to be ineligible for Medicaid for up to five years. But even this isn’t certain. While such a transfer penalty always applies to Medicaid in a nursing home, some states don’t apply it to Medicaid coverage while living in the community.

Finally, some states permit seniors to transfer funds to special pooled trusts, so that the money can be available for their benefit but not interfere with the asset limit for Medicaid eligibility.

As you can see, they don’t make it simple. To be sure, you and your parents will have to consult with a Medicaid expert in your state. To find one near you, go here: