As of February 8, 2006, "Medicaid planning" is no longer possible for middle-class and wealthier people.
Before then, people protected their heirs by transferring ownership of their assets while they were still relatively healthy. Then, if they lived another 3 to 5 years (the maximum waiting period) before their health declined and they had to move into a nursing home, it was easy to qualify for Medicaid. And, because they no longer owned any substantial assets, Medicaid paid their nursing home bills.
Under the new law, the waiting period can run for up to 5 years, and it doesn't begin until you move into a nursing home and apply for Medicaid. That is, depending on the value of assets that you transfer, you will have to find some other way to pay your nursing home bills for up to 5 years. Medicaid won't start to pay until your waiting period has expired.
Other techniques were also available for people who wanted to protect their assets for their heirs and still qualify for Medicaid. These included special annuities, life estates, etc. Now, all of these are included in the long list of assets that can cause your waiting period to run for as long as 5 years AFTER you move into a nursing home.
Because the new law is so complex, and is filled with so many potholes, we strongly recommend that you talk with an attorney who specializes in elder law BEFORE you transfer any assets or purchase an annuity, even if you have already completed the paperwork. And, don't take the word of any insurance agent who is trying to sell you an annuity to protect your assets.
To find an attorney who specializes in elder law, check the yellow pages in your local telephone directory, or go to the National Academy of Elder Law Attorneys' website. On their home page for the public, you'll find a link in the upper left corner (just below their logo) that will help you locate an elder law attorney.