Planning for Retirement Accounts in Medicaid Crisis Cases

When clients face a Medicaid crisis, retirement accounts like IRAs, 401(k)s, and 403(b)s often present complex challenges. Or there’s another way to look at it. They can create opportunities for asset preservation. During our recent webinar, Amber Hinds of AshBer and Certified Elder Law Attorney Todd Whatley discussed practical strategies to help families protect these accounts while preserving Medicaid eligibility.

The goal in crisis Medicaid planning is to convert countable assets that disqualify an applicant into noncountable assets or income. Because tax-qualified funds have never been taxed, every decision must balance Medicaid rules with potential tax consequences.

Most states count retirement accounts as available assets, meaning planning is essential. Depending on state rules, families can either liquidate the IRA and pay the tax, convert it into a Medicaid-compliant annuity, or, in certain states, apply the “name on the check” rule—allowing annuity income to flow to the community spouse.

Each option has pros and cons related to taxes, timing, and spousal protection, but with proper guidance, families can often preserve substantial savings while ensuring care needs are met.

For attorneys and advisors, understanding these nuances can make a life-changing difference for clients navigating long-term care and Medicaid eligibility. Click here to view the webinar and don’t forget to join us monthly for more topics to help enhance the knowledge and practice areas of your firm.