Although many clients are going to be better off paying for their long-term care expenses using an insurance policy or annuity contract, those who have no real assets to speak of may need to apply for Medicaid. This joint federal and state program provides free long-term care to applicants who qualify, but the rules for qualification can be very complicated.

The following steps can help you assist your low-income and asset clients with qualifying for this program. (For related reading, see: Medicaid vs. Medicare.)

  • Find out whether they will be at all eligible. In general, there are certain boilerplate income thresholds that need to be met. The applicant’s income must fall below 133% of the federal poverty threshold in many cases, but some states allow for a higher level of income. The applicant must also be at least 65 years old and/or disabled. Proof of citizenship and residence are also required, although some non-citizens can also qualify if they have a green card or meet certain other requirements. Your client may also qualify if he or she meets the conditions to be classified as “medically needy” by Medicaid or has been diagnosed with tuberculosis. Women who have breast or cervical cancer may also qualify even if their incomes exceed the federal and state limits.

  • Guide clients to where they can find the Medicaid application. You can send them to, or the Medicaid agency for their state.

  • Assist with the spend-down process. Help your clients financially qualify for Medicaid through a gifting program that transfers most of their assets and income to other family members. Most couples cannot have more than $3,000 of assets outside of their primary residence, vehicle and certain other necessities, so those with sizable bank and brokerage balances will have to gift this money away at least five years before they apply for Medicaid. For single applicants, the asset level is usually $2,000. The financial rules for eligibility can be very complex in some cases, and clients should become thoroughly educated with the rules in their state before beginning this process in order to avoid mistakes that can substantially delay the qualification process. There are also some types of trusts that clients can place their assets into in order to get below this threshold. But make sure than your clients understand that there is a risk in gifting away their assets, because the recipients may not be able to use these resources to help them as they anticipate if they get into financial trouble themselves. (For related reading, see: Medicaid vs. Long-Term Care Insurance.)

  • Get expert help. Although you can help your clients to get started with the Medicaid application process, this procedure is too complicated and technical for you to take on by yourself. You need to refer your clients to a qualified elder care attorney in their state who understands the rules for Medicaid to be certain that they are taken care of properly. If you attempt to do it all yourself without adequate training, you could be leaving yourself open for legal liability if your clients fail to qualify due to an error you made.

The Bottom Line

Helping your clients to qualify for Medicaid is not an easy process. Your clients will have to meet certain income and asset criteria to even be considered for this program, and rearranging their finances in order to become eligible can be a difficult and tedious process in many cases. This governmental program should be used as a last resort in any case, and clients who have the means to afford insurance or annuity coverage will probably be much better off by using those instead. (For related reading, see: An Overview of Hybrid Long-Term Care Policies.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.