How We Helped a Kansas Family Preserve $43,000 While Qualifying for Medicaid | Advanced Legal Planning
When families call our office for Medicaid help, the first thing I often hear is this:
“Mom is going into a nursing home. Are we going to lose everything?”
Let me walk you through a real example, with names changed, so you can see how this works in everyday life.
The Situation
Mary was a 78-year-old widow. She had recently moved into a skilled nursing facility.
A skilled nursing facility is different from While an assisted living facility provides help with medications, bathing, mobility, and daily living needs, a skilled nursing facility adds There is 24-hour nursing supervision and medical oversight. This is what most people mean when they say “nursing home.”
The cost of care in Mary’s facility was $9,000 per month.
Mary’s monthly income from Social Security and a small pension was $5,000 per month.
That meant she had a $4,000 shortfall every month.
Mary had approximately $125,000 in savings. Most of that came from selling her home before entering care.
If nothing was done, her $125,000 would have been spent paying the nursing home. Once it was gone, she would then qualify for Medicaid.
That is the standard spend down most families assume is their only option.
In some cases, it is.
In other cases, we can do better.
Step 1: Planning for the Medicaid Application Timeline
Medicaid approval does not happen overnight.
In Kansas, a typical Medicaid application can take four to six months to process. During that time, the nursing home still must be paid.
Before we talk about preserving anything, we first have to make sure the facility is paid and Mary remains in good standing.
We prepaid six months of care, which totaled $54,000.
That money was going to be spent regardless. The difference is that we structured the timing intentionally rather than letting it disappear month by month without a plan.
If you’re facing a similar situation, you can request a consultation here.
Step 2: Understanding the Medicaid Gifting Rule
Many families are told that they cannot give anything away. That is not exactly accurate.
Medicaid does allow gifting. However, gifts create what is called a penalty period.
In Kansas, each year the state sets a number called the penalty divisor. In January of 2026 It was set to approximately $8,600. For every $8,600 gifted, Medicaid imposes roughly one month during which it will not pay for care.
If you gift $43,000, you create about a five month penalty period.
This is not a fine. It simply means Medicaid will not pay during those months. The nursing home still has to be paid privately during that time.
If you do not plan for that penalty period, gifting can create serious problems.
If you do plan properly, gifting can be part of a strategy.
In Mary’s case, we intentionally gifted $43,070 to her son Mike. That created a five month penalty period.
Step 3: Covering the Shortfall During the Penalty Period
Remember, Mary had a $4,000 monthly shortfall.
During the five month penalty period, plus additional time needed to process a new Medicaid application after the penalty, we needed to cover approximately seven months of that $4,000 gap.
Seven months multiplied by $4,000 equals $28,000.
We used that $28,000 to purchase what is called a Medicaid compliant annuity.
Most annuities count as assets for Medicaid purposes. (Medicaid calls them “resources.”) However, federal law allows certain annuities, when drafted properly and containing very specific provisions, to be treated as income instead of as a resource.
That distinction is critical.
Once Mary’s remaining savings were converted into that income stream, she was considered resource qualified. In other words, she no longer had excess countable assets.
At that point, Medicaid could begin counting down the five month penalty period.
(An important thing to note here is that even the best plans can have obstacles to overcome. In Mary’s case, The Medicaid offices messed up and we are currently going through a “redetermination.” The rest of the story shows what is supposed to happen once this obstacle is overcome.)
During the months of penalty and processing of the new application, the annuity income will help cover the $4,000 shortfall. When the penalty period ends, we will reapply. The second application process moves more quickly.
Mary will qualify for Medicaid.
The Result
Out of the original $125,000:
$54,000 paid the facility during the application processing period
$28,000 funded the annuity to cover the shortfall during the penalty period
$43,070 was preserved for her son
Could we save everything? No.
Was it better than losing the entire $125,000? For this family, absolutely.
This Strategy Does Not Work in Every Case
I want to be clear about something.
Not every case justifies full planning.
If someone has very limited assets, no home, and only a large shortfall between income and cost of care, it may not make financial sense to pay my fees on complex planning. (In 2026 my lowest fee for this type of planning is $9,000.)
In those situations, it may be more appropriate to hire someone for a smaller fee just to ensure the Medicaid application is completed correctly.
On the other hand, if there are more assets, real estate involved, or more complicated financial circumstances, planning can preserve substantially more.
Every case depends on the numbers:
Total assets
Monthly income
Cost of care
Whether there is a spouse
Timing
The math matters.
The Bigger Lesson
Medicaid planning is not about hiding assets.
It is about understanding how the rules actually work and using them properly.
Many families are simply told to spend everything down.
Sometimes that is the right answer.
Sometimes it is not.
If you are facing facility level care and wondering whether anything can be preserved, the first step is reviewing your specific numbers carefully.
That is what we do.
We look at the math. We explain your options clearly. And we tell you honestly whether planning makes sense in your situation.
