Medicaid Asset Protection Planning

Thinking about growing older brings up many questions. You wonder if you will have enough money to live comfortably. You worry about being a burden on your children. Perhaps the biggest concern is the cost of long-term care. It is no secret that nursing home care is expensive, and without the right plan, it can drain a lifetime of savings in a surprisingly short time. 

You might wonder why you need an attorney for this. Can’t you just apply for Medicaid when the time comes? Unfortunately, the rules are strict. One wrong move—like gifting money to a grandchild at the wrong time or filling out an application incorrectly—can lead to a denial of benefits or a penalty period where you must pay for care out of pocket. An attorney can help you avoid those mistakes by developing a legally compliant strategy to keep your property safe. 

At The Law Office of Marialta Z. Sparagna, I help families face these challenges head-on. My goal is to help you preserve the assets you have worked so hard to build while making sure you or your loved ones receive the care they deserve. I serve clients in Bloomfield, Connecticut, and the surrounding areas, including Simsbury, Bantam, and throughout Hartford County and Litchfield County. 

Understanding the Need for Protection

Many people believe that Medicare will cover their long-term care costs. This is a common misunderstanding. Medicare generally covers short-term rehabilitation after a hospital stay, but it does not pay for custodial care. Custodial care includes assistance with daily activities such as bathing, dressing, and eating, which most people in nursing homes need. 

Once Medicare stops paying, you will be responsible for payment. In Connecticut, the cost of a private room in a nursing home can easily exceed $15,000 a month. For many families, paying this rate privately can quickly lead to financial ruin. 

Medicaid is the government program that pays for this type of care, but it is "means-tested." This means you must be practically destitute to qualify. "Spending down" is the process of paying for care until your assets drop low enough to qualify for Medicaid. However, you do not have to lose everything. With asset protection planning, we can legally structure your assets so they are not counted against you for Medicaid eligibility. 

Proactive vs. Crisis Planning

Ideally, we start this process years before you need care. This is called proactive planning. By setting up the right legal structures early, we can protect a significant portion of your estate. This gives you peace of mind knowing that if your health changes, your finances are already secure. 

However, life does not always go according to plan. Sometimes, a stroke, fall, or sudden illness forces a move to a nursing home immediately. This is crisis planning. Even if you are already in a nursing home or about to enter one, it is not too late. I can still help you save a substantial amount of your assets. We have different tools for crisis situations, but taking action quickly is vital. 

Strategies I Use to Protect Assets

There is no one-size-fits-all solution, but I use several common tools to help my clients. 

Irrevocable Trusts 

One of the most powerful tools is the Medicaid Asset Protection Trust. This is an irrevocable trust. When you transfer assets into this trust, you no longer legally own them in the eyes of Medicaid (after the waiting period passes). You can still live in your home and receive income from the trust assets, but the principal is protected from nursing home costs. 

Caregiver Agreements 

If a child or loved one is providing care for you at home, we can set up a formal agreement where you pay them for their services. This serves two purposes: it rewards your loved one for their hard work, and it legally reduces your assets to help you qualify for benefits sooner. It must be done correctly, with a contract in place, to avoid looking like an improper gift. 

Spousal Protections 

If you are married and only one of you needs care, the "healthy spouse" (called the Community Spouse) is entitled to keep a portion of the couple's assets and income. I work to maximize what the healthy spouse keeps so they can maintain their standard of living while their partner gets the care they need. 

Connecticut Laws Governing Medicaid Asset Protection Planning

Each state administers Medicaid differently, and Connecticut has its own specific set of regulations that we must follow. These laws determine how much money you can keep, what counts as an asset, and how penalties are calculated. 

The Five-Year Look-Back Period 

Connecticut enforces a five-year "look-back" period. When you apply for Medicaid, the state looks at all your financial transactions from the past 60 months. They are checking whether you gave away assets or sold them for less than fair market value. 

If the state finds any gifts during this window, it will impose a penalty period. During this time, Medicaid will not pay for your care, even if you are otherwise eligible. This is why "gifting" assets to your children is risky without legal advice. 

Asset Limits 

In Connecticut, the asset limit for a single individual applying for Medicaid is very low—typically $1,600. This means you generally cannot have more than $1,600 in "countable" assets. 

However, not all assets are countable. Your primary residence (if your equity is under a certain limit and you intend to return home), one vehicle, burial plots, and prepaid funeral contracts are usually exempt. Understanding the distinction between countable and exempt assets is a major part of the planning process. 

The Community Spouse Resource Allowance (CSRA) 

Connecticut law protects the spouse who remains at home. The Community Spouse Resource Allowance sets minimum and maximum asset limits for the healthy spouse. According to recent figures, the spouse can typically keep half of the couple's combined assets, up to a specific cap. If the couple's assets exceed the cap, we may need to use specific strategies to protect the excess. 

Estate Recovery 

Connecticut also has an Estate Recovery Program. If you receive Medicaid benefits after age 55, the state may try to recoup those costs from your estate after you pass away. This often puts the family home at risk if it was not properly titled or placed into a trust. Protecting the home from estate recovery is a primary goal for many of my clients. 

Why "DIY" Planning is Dangerous

I often meet people who tried to handle this on their own or took advice from a neighbor. The regulations regarding Medicaid are unforgiving. A bank teller or a social worker might mean well, but they cannot give you legal advice. 

Simple mistakes can have huge consequences. For example, adding a child's name to your bank account or deed might seem like a good way to avoid probate, but it can create immediate eligibility issues for Medicaid. It exposes your assets to your child's creditors, divorce proceedings, or lawsuits. 

When you work with me, we look at the whole picture. I review your income, assets, family dynamics, and health needs. We build a plan that works for you. 

Medicaid Planning Attorney Serving Bloomfield, Connecticut

At The Law Office of Marialta Z. Sparagna, I know that every client and family is different. When you come to me with sensitive issues or during a crisis, I take the time to truly understand your specific situation. I tailor legal solutions to fit your unique goals. If you cannot visit my office, I will come to you—whether at a hospital, a nursing home, or your residence.  

With over eighteen years of legal practice and corporate experience, I am ready to help you plan for the future. Call me for legal assistance in Bloomfield, Connecticut, and the surrounding areas, including Simsbury, Bantam, and throughout Hartford County and Litchfield County.