Between the paperwork, the ever-changing rules and regulations, and the inevitable waiting game that you’re up against, there’s a lot you need to know about applying for Medicare. Adding to that, the need to turn to Medicaid to help manage long-term health expenses can conflict with the desire to preserve assets and potentially leave a legacy for loved ones.

Explore Some Strategies Before You File

Consider whether one or more of these strategies fit your situation and needs—and be sensitive to the five-year look-back period most states have (2.5 years in California) whenever you gift or transfer assets¹:

1. Use assets to pay off debt and expenses.

Use at-risk assets to pay off bills prior to applying for Medicaid assistance.

2. Buy assets not counted by Medicaid.

Certain assets are excluded from assets Medicaid considers for benefits qualification: home, car, and personal effects. For example, you could buy a more expensive home, improve an existing one, or buy a new car.

3. Convert assets to income.

Depending on your circumstances and preferences, you may consider using an annuity to convert assets to income. It’s important to note that most annuities are not appropriate for Medicaid planning; however some conform to Medicaid law requirements, such as a non-assignable, non-transferable option.

4. Gift to loved ones.

Give money or assets during your lifetime to those you love. The IRS allows you to give up to $18,000 to a person; any amount over that requires a filing of a federal gift tax return. If you’re married, your spouse can also gift up to the same amount to the same recipient(s). (Check out the IRS’s frequently asked questions on gift taxes for more information.)

5. Consider using an irrevocable trust.

Unlike a revocable/living trust, this type of trust is exempt from nursing home costs. While you can’t receive principal, interest or dividends are safe from seizure (“Medicaid trust”). A Spousal Limited (Lifetime) Access Trust (SLAT) is one such trust.

6. Set up a life estate for your real estate.

With this technique, you establish ownership of land (or home) for a person’s lifetime. The property can revert to an original owner or pass to an heir, as designated.

7. Have a spouse refuse to care for the one needing health care.

Some states permit something called spousal refusal, or more commonly, spousal ref. The well/ community spouse denies support for the spouse needing care. As a result, the spouse who needs care becomes immediately eligible for Medicaid and medical services.

Helping Your Heirs As Well As Yourself

By using one or more of the outlined strategies, you can make long-term care spending decisions easier for your children or heirs, as well as yourself.

Taking these steps allows your loved ones to focus on your health and well-being without any concern about any potential inheritance or other conflict of interest.