First, the best defense is not to use Medicaid in the first place. Long-term care insurance owners, CCRC residents, and families with sufficient unpaid care and nursing support reduce or eliminate the need to depend on Medicaid.

Second, if there is a chance you or your spouse will depend on Medicaid at some point, you may want to consult a Medicaid Planner more than 5 years before any potential need. The financial aspects of eligibility alone are daunting, and they vary by state. There are countable and exempt assets. A caveat is that if the Medicaid Estate Recovery Program may recoup its care and nursing expenditures from exempt assets in the estate. In general, everything counts except what goes into a community spouse's resource allowance to shield them from impoverishment. There are also income eligibility requirements and income disregards.

Third, there are ways to spend down that aren’t subject to the look-back period including Life Care Agreements, Medicaid Exempt Annuities, debt reduction, home modifications, and irrevocable funeral trusts. These basically reduce amounts that Medicaid otherwise would have paid to maintain care.

Fourth, by acting over 5 years in advance you can take steps to restructure the ownership of assets. The most used and straightforward is a Medicaid Asset Protection Trust. It must be irrevocable, the future Medicare applicant can’t benefit, and the trustee must be independent and follow the rules of the trust. It also protects the beneficiaries from Medicaid’s Asset Recovery Program. Another strategy uses a Miller or Qualified Income Trust to place assets in a trust that generates income independent of the applicant so that it’s the trust’s not the applicant’s income. Other strategies include: Modern Half a Loaf Medicaid strategy which uses gifting and an annuity, other primary estate planning tools, and even divorce.