Using Medicaid to pay for your long term care is not recommended as a first choice, but there are instances where it may be beneficial. With single individuals, using Medicaid to pay for long term care is typically a way to protect assets for your future needs and for the needs of your beneficiaries.
These needs can include burial costs as well as additional care costs that are not covered by Medicaid. In this situation, using a strategy referred to as “half loaf,” would help you to protect some of your assets while also helping you to become Medicaid eligible.
The half loaf strategy requires you to move 50% of your assets into an OBRA 93 compliant annuity, while transferring the other 50% either into a irrevocable trust or to a family member. Moving the money into a trust will create a penalty period of 25 months, but with the income generated with the annuity along with pension income and Social Security, you will be able to self pay for the cost of care during that penalty period. At the end of the 25 months, you will have become eligible for Medicaid and protected half of your assets for either future use or for your beneficiaries needs.
