How to Protect My Assets from Medicaid in Massachusetts

Long-term care costs can quickly drain a lifetime of savings, leaving many Massachusetts residents wondering, “How to protect my assets from Medicaid?” If you need nursing home care or in-home assistance, you may be concerned about Medicaid’s asset and income limits and whether the state can recover costs from your estate after your passing.

The good news is that legal planning strategies can help protect your assets while allowing you to receive Medicaid benefits. Whether you are planning for the future or facing an immediate need for care, understanding your options can prevent unnecessary financial loss.

This blog explains the key ways to protect your assets from Medicaid in Massachusetts, including Medicaid planning, asset transfers, and other legal tools that can safeguard what you’ve worked hard to build.

How Medicaid Affects Your Assets in Massachusetts

Medicaid, known as MassHealth in Massachusetts, provides long-term care coverage for those who meet strict income and asset limits. To qualify for benefits, you must have limited assets, which generally means:

• $2,000 for an individual applying for Medicaid
• As of January 1, 2025, the community spouse may retain up to $157,920 in countable assets. If the couple’s total assets are below this threshold, the minimum allowance is $31,584.
• The spouse of a Medicaid applicant may also keep the home, provided their equity interest does not exceed $1,097,000 as of January 1, 2025.

If your assets exceed these limits, you may be required to spend down before qualifying for coverage. Additionally, the MassHealth Estate Recovery Program may seek to recover costs from your estate after your passing, potentially forcing the sale of your home or other valuable assets.

Proper planning can help reduce your countable assets while preserving your wealth for your spouse, children, or other beneficiaries.

Using an Irrevocable Trust to Protect Your Assets

One of the most effective ways to protect your assets from Medicaid is through an irrevocable trust. Unlike a revocable trust, which Medicaid considers a countable asset, an irrevocable trust removes assets from your ownership, making them inaccessible for Medicaid calculations.

How an Irrevocable Trust Works

• You transfer assets (such as your home, investments, or savings) into the trust.
• A trustee (someone other than yourself) manages the trust.
• You can live in your home, collect income from trust investments, or otherwise benefit from the assets.
• After five years, the assets are protected from Medicaid’s look-back period (explained below).

Key Considerations for an Irrevocable Trust

• You must create the trust at least five years before applying for Medicaid to avoid penalties.
• You lose direct control over the assets you place in the trust, as the trustee now manages them.
• You can still live in your home but cannot sell or refinance it without the trustee’s involvement.

An irrevocable trust is a long-term asset protection strategy that can prevent Medicaid from claiming your home or savings while allowing you to qualify for benefits.

The 5-Year Look-Back Rule and Gifting Strategies

Medicaid has a 5-year look-back period, which means any assets transferred for less than fair market value within five years of applying for benefits may result in a penalty period before eligibility.

Asset Transfers and Gifting

If you plan ahead, you can gift assets to family members or transfer them into a trust at least five years before applying for Medicaid. Common strategies include:

• Transferring assets to adult children or trusted relatives
• Making gradual gifts over time rather than large lump sums
• Using a Medicaid asset protection trust (MAPT), which offers a structured way to transfer assets while maintaining some benefits

Because improper transfers can result in Medicaid penalties, working with an estate planning attorney can help you determine the best gifting strategy.

Protecting Your Home from Medicaid Estate Recovery

Many Massachusetts residents assume their home is safe from Medicaid while they are alive. While this is partially true, Medicaid can place a lien on your home and, after your passing, seek reimbursement through the MassHealth Estate Recovery Program.

Strategies to Protect Your Home from Medicaid Recovery

• Transfer Your Home to a Spouse – If you are married, your home is automatically exempt from Medicaid eligibility requirements as long as your spouse lives in it, provided their home equity does not exceed $1,097,000 as of January 1, 2025. However, after both spouses pass away, Medicaid can seek recovery from the estate. To protect the home in the long term, you need additional planning.
• Use a Life Estate Deed – This allows you to live in your home for the rest of your life while transferring ownership to a beneficiary. Since the home does not pass through probate, Medicaid cannot recover it.
• Place the Home in an Irrevocable Trust – Transferring your home into an Irrevocable Medicaid Asset Protection Trust at least five years before applying for Medicaid removes it from your countable assets. This strategy allows you to continue living in your home while preventing Medicaid from recovering it after your passing.

These are just a few strategies for protecting your home from MassHealth estate recovery. To determine the best approach for your situation, consult a Medicaid planning attorney or Medicaid trust attorney who understands Massachusetts Medicaid laws and can develop a strategy tailored to your needs.

Using Annuities and Asset Spend-Down Strategies

For those who need Medicaid eligibility sooner, converting assets into non-countable resources can be an option.

Medicaid-Compliant Annuities

• If you have too many assets to qualify for Medicaid, you can convert excess funds into an annuity, which provides a stream of income instead of a lump sum.
• To comply with Medicaid rules, the annuity must be irrevocable, non-assignable, and actuarially sound.
• Payments must be made over your expected lifetime and cannot have a balloon payout.

Spending Down on Exempt Assets

• Purchasing a new car or home repairs can reduce countable assets.
• Prepaying funeral expenses or long-term care insurance can also be a strategic way to reduce assets while benefiting from the funds.

Using annuities and exempt asset spending requires careful planning to comply with Medicaid regulations while preserving your wealth.

Planning Ahead to Protect Your Legacy

Medicaid planning in Massachusetts is complex, and waiting until the last minute often results in fewer options. Whether you are years away from needing care or concerned about immediate Medicaid eligibility, taking action now can prevent unnecessary financial losses.

By using legal tools such as Irrevocable Trusts, gifting strategies, Life Estate Deeds, and annuities, you can protect your home, savings, and other assets while ensuring access to the long-term care you may need.

If you are considering Medicaid planning, consulting a Medicaid planning lawyer can provide the guidance needed to structure your assets in compliance with Massachusetts law.

Protecting Your Assets Starts with the Right Plan

Long-term Care Planning can be overwhelming, but you don’t have to risk losing everything you’ve built. With strategic Medicaid planning, you can protect your home, savings, and other assets while qualifying for the care you need.  For more than two decades, The Law Office of Polly Tatum has been committed to helping Massachusetts families secure their future through estate planning, elder law, and probate services. Our Medicaid Planning team takes a personalized approach, offering legal guidance with care, respect, and a deep understanding of MassHealth regulations.

With extensive experience navigating Medicaid’s complex rules, we help families protect assets, safeguard a healthy spouse, and plan for long-term care—without unnecessary financial strain. Whether preparing for the future or facing an immediate need, we provide the strategies and support you need to make informed decisions.

It’s never too early to protect your assets from Medicaid. Call us at (508) 795-1557(508) 795-1557 or complete our confidential online form to schedule your initial strategy session. Virtual and in-person appointments are available to fit your schedule.

PROTECT WHAT MATTERS MOST—Take Control of Your Medicaid Planning Today.

Copyright © 2025. The Law Office of Polly Tatum. All rights reserved.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.

The Law Office of Polly Tatum
19 Cedar Street
Worcester, MA 01609
(508) 795-1557(508) 795-1557
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