We have reached a point in medical science when the average human lifespan is longer than ever before, but the simple effects of wear and tear on our bodies over the passage of time mean that many adults, even those who remain healthy until relatively late in their lives, will likely need some form of long-term supportive care as they grow older. Elder care is the term for this type of care given by families and caregivers in the community (volunteer or professional), while “long-term care planning” is the term typically used by estate planning attorneys as they help their clients put preparations in place to make that care as easy on their loved ones as possible.
Often, this long-term care (LTC) planning involves the formation of a specific type of trust, called a Medicaid trust, because its major goal is to ensure that the person creating the plan will be able to use Medicaid coverage to pay for the costs of his or her long-term care, particularly nursing home care. Estate planning attorneys will frequently help their long-term care planning clients pair Medicaid planning with a variety of other estate planning tools, such as durable powers of attorney, to create a comprehensive long-term and elder care solution that also addresses the individual’s advance care planning concerns.
According to a report prepared for the United States Congress, public funding sources together accounted for somewhat over 69% of national spending for what the report calls “long-term services and supports,” or LTSS, as of 2023. The two largest payers in this public spending category were Medicaid and Medicare; together, payments from these two programs covered nearly 64% of all spending in the LTSS category nationally for that same year, leaving relatively little other public coverage for long-term care needs. Given these numbers, private healthcare or other spending covers only a little over 30% of all LTC expenses nationwide.
The LTSS data collected for use by Congress include services not just for elder care but to meet the needs of younger people with physical and/or intellectual disabilities. The Congressional report is also designed to encompass both residential services (such as nursing home care) and in-home services (such as “home health” visits). There is not necessarily an exact correlation between the LTSS data and the range of support needs an individual contemplating their future as an elder who may need care would automatically equate with long-term care planning; even without a one-to-one match, however, the disproportionate reliance on public spending in long-term care contexts and the fact that many public programs are “means-tested” establishes the framework that makes Medicaid planning so important.
The definition of Medicaid planning used by the American Council on Aging is “any assistance” an individual who is applying or may apply for Medicaid, in preparation for that application. As the Council points out, this definition covers significant ground, encompassing everything from the collection and organization of documents that may be needed to show eligibility for the Medicaid program to an overhaul of the potential applicant’s finances.
Medicaid is a publicly funded “means-tested” program, which means that Medicaid benefits are only available to individuals who can be shown to lack the resources to cover the costs of necessary medical and long-term support care from within their own households. The “means” standard a senior citizen in Missouri would need to meet in order to qualify for Medicaid can be extremely Spartan; as of late 2025, the maximum annual income for a Missourian applying for Medicaid on the basis of their age is 85% of the federal poverty line. That makes the upper limit just over $13,000 per year for a single individual living alone, or a little under $18,000 for a two-person household.
Long-term care costs can quickly consume an entire lifetime’s savings and leave the individual still needing LTC and needing to go through the process to qualify for Medicaid after exhausting other options for covering the costs of that care. In addition, there is often quite a large gap between the eligibility “ceiling” for Medicaid and the amount of money, judged monthly or yearly, that it would realistically take to consistently cover anyone’s long-term care needs. In response to all these factors, it is very common for individuals who can pull together the initial resources necessary to do so to set up Medicaid trusts, or more formally, Medicaid asset protection trusts (MAPTs), as part of their long-term care planning strategy.
A somewhat similar trust formation strategy is sometimes also used in special needs planning for younger adults and even for children with developmental disabilities whose parents want to take a proactive approach by making sure that their children will have access to support services as they age into adulthood. In either case, the purpose of the trust is to ensure that the individual has access to financial resources while still meeting the means-testing requirements for Medicaid eligibility. Setting up a Medicaid Asset Protection Trust effectively can therefore call for striking a delicate balance: Make the trust terms too restrictive, and the resources will not be available for the individual’s use, or for use in aspects of elder care not adequately covered by Medicaid. Make the terms of the trust too generous, and the risk is that the Medicaid application will be denied outright, on the grounds that the applicant has resources sufficient to cover his or her own LTD needs.
At The Binder Firm, one point we like to emphasize with all our Medicaid planning clients is the importance of getting a timely start on the process. In addition to all of the usual reasons why it generally makes sense to make any type of preparation well ahead of the time when it is likely to be needed, with Medicaid planning, there is particular cause for concern because of what is called the “lookback” period.
The lookback period refers to a period of time (typically five years) measured backward from the date when an individual’s Medicaid application is submitted. The agency “looks back” to perform a thorough review of the individual’s financial history over that entire period, primarily looking for evidence that this person has placed assets in trust, or given them away (especially to friends or close relatives) in order to artificially lower the estimated resources that can be counted “against” them in an assessment of Medicaid eligibility.
The kind of asset reduction strategy Missouri’s Department of Social Services (DSS) is instructed to look for under Mo. Rev. Stat. 208.212 is, of course, exactly what Medicaid Asset Protection Trusts are designed to achieve. For this reason, long-term care planning in Missouri that involves a Medicaid trust needs to make a “have the cake, or eat it” choice: Medicaid eligibility in your later years can provide significant peace of mind, and setting up a Medicaid asset protection trust can keep safe the inheritance you hope to leave to your children (or other loved ones).
In order to be effective, however, an Medicaid Asset Protection Trust generally has to be created at least a full 60 months prior to the date of the initial Medicaid application. The trust also has to be irrevocable, meaning you cannot change your mind and recover the assets placed into it, and any distributions you receive from the trust through the trustee appointed in the trust instrument will need to be carefully structured and carefully calibrated to avoid pushing you over the annual income limit and undoing all of your preparations.
Whether you are making preparations for your own eventual long-term care needs or seeking an overview of elder care essentials to help you take care of a loved one, you are likely to have questions about Medicaid planning, eligibility for long-term care coverage, and the many ways in which this type of planning may intersect with an individual’s total estate plan. Our Kansas City attorneys have years of experience helping Missouri and Kansas families prepare plans to meet their immediate and long-term needs, and we are always happy to receive calls with questions from our community. You can reach out to our office today and schedule a consultation.