Medicaid Crisis Planning

Our Process

We implemented a crisis Medicaid plan using the “gift-note” strategy (also known as “half a loaf” planning) to protect approximately half of Margaret’s assets while ensuring care coverage. The plan rolled out through five key phases:

• Initial Analysis. In this phase, we calculated all of Margaret’s countable assets and determined the Medicaid eligibility threshold. We projected nursing home costs and evaluated the gift note potential and optimal timing.
• Gift-Note Strategy Implementation. The first thing we did in this phase was to calculate the strategic gift amount—$90,000. We created a promissory note for the remaining funds. Then we structured note payments to cover care costs and documented all transactions.
• Gift Structure. We made the $90,000 gift to Margaret’s daughter as power of attorney, established the gift date, calculated the penalty period, created clear documentation, and prepared a gift tax return.

We also created a Medicaid-compliant note, structured monthly payments with the appropriate interest rate, established a repayment schedule, and ensured the actuarial soundness of the plan.

The Strategy
The gift-note strategy allowed us to protect approximately half of Margaret’s assets while ensuring care coverage:

• Note Payments:
  • Monthly payments covered care costs
  • Payments exhausted note balance during penalty period
  • Timing aligned with Medicaid eligibility
• Medicaid Application:
  • Filed application strategically
  • Disclosed gift and calculated penalty
  • Demonstrated payment ability during penalty period
  • Provided all required documentation
  • Secured approval with planned start date