Working with Health Insurance Providers

Need Free Help Fast?

For no cost, you can contact the Patient Advocate Foundation (PAF) to help you solve your insurance issues.  The PAF employs case managers to help people with financial, insurance, access, and employment-related issues relating to chronic, debilitating, and life-threatening illnesses. You can contact the PAF by calling 1-800-532-5274, by email at, and by visiting its website at

For issues related to Medicare or Medicaid, you can call the Medicare Rights Center phone hotline from 9:00 a.m. to 5:00 p.m. Eastern time at 1-800-333-4114, or the official Medicare information line 24 hours a day, 7 days a week at 1-800-633-4227.

Health Insurance Basics

Today, health insurance helps pay for some of the medical costs associated with prevention, certain health screenings, basic illnesses, and many major conditions. However, it is highly likely that you will still have out-of-pocket costs. When you add your out-of-pocket expenses to your monthly premium, which is the amount you pay every month for your policy, you can figure out about how much you will have to spend on your health care.

Before you start comparing policies, it helps to know a few key terms:

Premium: The monthly amount you pay for your policy.

 Deductible: How much money you will have to pay each year before the policy coverage starts.

Co-pay: The amount you have to pay for services.

Co-insurance: The percentage of the total charges that you have to pay in addition to your co-pay.

Out-of-pocket maximum: The top amount you can spend outside the premium during the benefit year.

Today, consumers are paying more of their medical expenses through higher premiums, higher deductibles, and higher co-insurance. To control your costs, it’s important to know exactly what your health insurance plan covers and what it does not. For most insurance plans, the important rules fall into the following groups:


Working with Your Insurance Company

Health insurance plans can be confusing.  However, you are responsible for knowing what benefits you are entitled to under your policy.  If you do not fully understand something, ask your insurance representative or your employer’s benefits administrator to explain it.

Following the steps below will help ensure that you receive all the benefits to which you’re entitled.

  • Make sure you have accurate contact information for your insurance company.
  • Contact your insurance provider and request an up-to-date copy of your plan and its summary.

This will tell you how your plan works, covered benefits, and how to file a claim. Be confident when calling your insurance company. You are their customer. You have the right to receive complete information regarding your health benefits.

Your insurance company’s customer service representatives are there to assist you.  Part of their job includes answering questions to your satisfaction.  Communicate as clearly and calmly as possible. Be courteous and polite, even if you are not happy with your insurance provider. The person on the other end of the phone probably wasn’t responsible for whatever has disappointed you. Remember that your ultimate goal is to get coverage for what you need.

If you are met with resistance, simply restate your request. Carefully follow the steps outlined by your health plan for requesting prior authorization, submitting claims, or filing appeals.  Not following these steps may result in a delay in processing or a denial of your request for coverage.

Tip: Don’t give up.  Don’t take no for an answer. 

If you have tried discussing your request with your health plan’s customer service representative but are not satisfied with how your insurance matter was handled, ask to speak to a supervisor in the customer service department, or the manager or director of customer service or member services.

Follow up in writing or email after speaking with a health plan representative on the phone.  Keep your correspondence simple and to the point.  Include relevant dates, names of representatives with whom you spoke, and what was discussed.  Also, be sure to include your name, policy number, and any other identifying information.  Do not hesitate to ask for help from your employer’s human resources department or your health care provider.

In many cases, your employer makes decisions about what will be covered under your health plan. Your employer’s support can also influence the approval of your request for coverage. Having your doctor contact your insurance representative can also be helpful since she or her can support the communication that you have had with your insurance company as to why the requested medical products or services are needed.

Advocate for yourself at all times. If needed, write to your state’s health insurance commissioner and/or your state and federally elected representatives to enlist their help. Inform them of your health needs and what has occurred with your health plan insurance claims. Notify your insurance company that you have requested help from your state’s health insurance commissioner and other agency representatives to resolve difficulties meeting your health care needs.
You can make a difference! Remember the expression, “the squeaky wheel gets the grease.”  The more you make your needs known, the more likely you will get those needs met.

Working with Insurance Providers After a Diagnosis

Once you have determined your preferred treatment with your doctor(s), find out which procedures require you to pay a co-payment and co-insurance, and how much that will be. If you buy your own insurance rather than receiving it as a benefit of employment or your spouse’s employment, make sure you pay your premiums on time.

Tip: Request a case manager to speak with each time you call your insurance company.

Tip: Make notes about each call. Record the date, the name(s) of who you spoke with, and any instructions you were given. You can save and organize your records with file folders or by scanning and saving them on your computer.

If your doctor wants to refer you to one or more specialists, make sure that the specialists are covered in your plan’s network. If they are not and you still want to see them, consider that you will likely be responsible for their entire fee.

Organize your records, including bills, claims, payments, records of phone calls to and from doctors and your insurance company, and letters to and from your employers, doctors, and insurance company. Include dates, who you spoke to, and a brief note of what transpired for each occurrence.

If you’re required to submit bills to your insurance company, try to send them in as soon as you get them. Keep the original bills and send copies. If you’re recovering from treatment, ask a loved one or a friend to help you.

Doctors and Hospitals

Insurance companies sign contracts with doctors, hospitals, and other health care professionals to care for their plan members. Your plan likely refers to these groups as providers. In return the contracted doctors, hospitals, and other providers agree to certain reimbursement rates for the services they provide, and they agree to follow the plan’s rules. This group of providers is often called the plan’s network.

Tip: Your insurance company might not pay for you to go to a provider who is not in its network, or it may pay much less. You are responsible for the part of the bill that the plan doesn’t pay.

Even if your doctor is part of the plan’s network, he or she may prefer to send patients to a hospital that is not in the network. If that happens, ask if your doctor can send you to a hospital in your network. If that’s not possible, you can ask the insurance company if it will approve the use of the out-of-network hospital. If no other arrangements can be made, you might have to choose a different doctor who has privileges at a hospital that is in your network. Your insurance company customer service can help you find qualified doctors who practice at in-network hospitals and treatment facilities.

Rules for Seeing Specialists

Many managed care plans, especially health maintenance organizations (HMOs), will not pay for you to see a specialist unless your primary care physician thinks it is necessary. If you see a specialist without a referral from your physician, you might have to pay for it out-of-pocket. These rules may be different if your plan is a preferred provider organization (PPO), where physician referrals are not required.

Rules for Getting Expensive Services

If your doctor decides that you need to go to the hospital, have surgery, or have certain tests, your insurance company may refuse to pay for it unless it can preauthorize the treatment (approve it beforehand).


Almost every managed care plan has a drug formulary. A formulary is a list of prescription medicines that your health plan has approved. If a drug isn’t on the formulary, you will probably have to pay more for it. Your insurance company can give you a list of drugs that are on its formulary. If necessary, show the list to your doctor when he or she writes you a prescription.

Handling Claims

Keep detailed records of all the claims you submit. Note when they were submitted, whether they’re still pending, and when they were paid. Also, keep copies of all paperwork related to your treatment, diagnosis, and insurance claims, including:

  • Requests for sick leave
  • Receipts
  • Letters to and from your doctor, employer, and insurance company
  • Bills from providers
  • Summaries of phone calls to your insurance company, including the date, time, and person’s name to whom you spoke.

Managing the Costs of Care

Learn whether the procedure you want requires you to pay a co-payment and co-insurance, and how much that will be. Ask how you are required to pay. Does your insurance company make the first payment and you are billed for the balance? Or do you pay the entire bill and then get reimbursed? If you’re required to submit bills to your insurance company, try to send them as soon as you receive them. If you’re recovering from treatment, ask a loved one or friend to help you. Section 13 of this Guide is devoted to helping you reduce and manage your health care costs.

Fighting Insurance Denials

Many insurance companies deny claims just because they know there is a good chance the consumer will not appeal. When you advocate for yourself, you let the insurance company know that you are not going to go away without a fight. Sometimes just being polite and persistent is enough to get your denial reversed.

So, how do you know if your claim is denied? An explanation of benefits (EOB), which is sent to you by your insurance company, is one way to determine what the insurance paid to the provider and how much you may still owe. The EOB should also disclose if your claim was denied. If the insurance company portion of the payment shows $0, this can indicate a denial. The payment amount should be followed by a Reason Code(s). This code provides an explanation for the lack of payment. The insurance company may also send you a letter confirming the denied medical claim and detailing the reason(s) for denial.

Make sure to keep copies of all correspondence you receive from the insurance company, including denial letters, approval letters, and EOBs. Make copies of all correspondence you send to the insurance company, including letters, your health history, medical files, doctor’s letters, etc. As mentioned earlier in this section, keep a written record of all phone calls with the insurance company

If your insurance company denies a claim, follow the steps below:

Tip: For no cost, the Patient Advocate Foundation will help you solve your insurance issues. Contact them by calling 1-800-532-5274, by email at, and on their website at

Step 1. Check Your Plan

Make sure the benefit you want is included. Make a note of the part of the policy that leads you to believe your claim should not have been denied.

Step 2. Organize Your Records

Collect and organize all information pertaining to the denied claim. Make sure you have the original bill, your EOB, any letters from the insurance company, and your insurance card before you call.

Step 3. Missing Information

Call the number provided on the letter from your insurance company; if you did not receive a letter call the customer service number. There is the possibility the claim was denied simply because of missing information. Once the missing information is provided, the claim can be reprocessed, and you may be done.

Step 4. Miscoding

Sometimes claims are denied because of miscoding. If that is the case, ask your doctor to review the coding and resubmit a request with more specific medical justification for the procedure and you may be done.

Step 5. Other Reasons for Denials

If your claim was not denied for missing information or miscoding, find out why it was denied and how you can file an appeal.

Step 6. Ask for Help

Ask the insurance provider’s representative for suggestions or guidelines for appealing a denial.  If you would like an appeal form, ask the insurance provider to send one via regular mail or email. If the provider doesn’t have one, use the template in Addendum 2 of this Guide.

Step 7. Understand Your Insurance Denial Appeals Process

Make sure you have the address for the appropriate department to return the completed appeal documents.

Step 8. Keep Accurate Records

Always keep a record of the date, time, and name of the insurance company representative you talked with, along with a brief summary of the discussion. Keep this with copies of any documents you send to the insurance company.

Step 9. Get Documentation

In appealing the denied claim, you should have the opportunity to review the information the insurance company used to make its decision.

Step 10. Get Help from Your Doctor(s)

If necessary, get your doctor involved. Their office should have staff that can help explain why the procedure or care is medically necessary.

Step 11. Writing Your Appeal

Get help wording your appeal so that it mentions your medical problem and does not include words that automatically trigger denials. Talk to the person who handles insurance claims at your doctor’s office. This person may be able to help you with the appeal process and provide any documentation your insurance company requires.

Step 12. Follow All Instructions

Remember each insurance company has its own appeal process. Before submitting your information, make sure you have completed and included all of the required paperwork. Once all of the documents are complete, make a copy of everything for your reference.

Step 13. When Appeals Are Denied

If your insurance company denies your appeal, in most cases you can contact them to request an external appeal. Usually this will be conducted by a medical professional or group of medical professionals who are not associated with the insurance company.

Step 14. Take Legal Action

Sometimes it takes the threat of a lawsuit to get your insurance company to approve your claim.

Send all of your correspondence to the insurance company via certified mail with return receipt. Be persistent. Remember that a denial is not necessarily the final word. Ask your insurance company to reconsider its decision, and follow up to make sure it is taking action.


Medicare is health insurance offered by the federal government to people who are 65 or older, and meet specific eligibility requirements. The specific requirements can be found on the Medicare website at Some people qualify for both Medicare and Medicaid. This is called “dual eligibility.”

Tip: Medicare coverage can be confusing. Fortunately, you can find out if your test, item, or service is covered through a feature found on the home page of the Medicare website at  

Original Medicare is a fee-for-service plan that covers many health care services and certain drugs. Usually, you can go to any doctor or hospital that accepts Medicare. With all of the recent and expected changes to Medicare, it is important for you to contact your local Medicare office to discuss your situation every time you expect to need services. At the end of your conversation you want to know as best you can what expenses Medicare will cover and what your financial obligations will be.

Medicare has four parts:

  • Part A helps pay for hospital bills.
  • Part B is a supplemental insurance option that pays for physician services and supplies outside of the hospital.
  • Part Cincludes private health plans that are Medicare-approved.
  • Part D is prescription drug coverage.

Part A: Hospital Coverage—The Basics

When you sign up for Medicare, you automatically get Part A. If you or your spouse paid Medicare taxes while working, you will not have to pay a monthly premium for Part A coverage. If you paid Medicare taxes for less than 7.5 years, your premium would be about $460 per month at the time of researching this book. If you paid Medicare taxes for more than 7.5 years but less than 10 years, your premium would be about $255 per month.

Part A covers much of the cost of inpatient hospital stays, including semi-private room, food, tests, and doctor’s fees. However, Medicare beneficiaries still pay a portion of their costs. Part A also covers brief stays in a skilled nursing facility if certain criteria are met. In general the criteria are:

  • A preceding hospital stay of at least three days and three nights, not counting the discharge day.
  • An illness or condition diagnosed during a hospital stay or was the main cause of a hospital stay.
  • The patient is receiving rehabilitation, or has some other ailment that requires skilled nursing supervision.
  • The care being rendered by the nursing home must be skilled.

The maximum length of stay that Medicare Part A covers in a skilled nursing facility per ailment is 100 days as of the writing of this Guide. The first 20 days are paid for in full by Medicare, with the remaining 80 days requiring a co-payment. If a beneficiary uses some portion of his or her Part A benefit and then goes at least 60 days without receiving facility-based skilled services, the 100-day clock is reset and that person qualifies for a new 100-day benefit period.

Medicare Part A does not pay for custodial, nonskilled, or long-term care. It does not pay for help with activities of daily living (ADLs). Examples of ADLs are personal hygiene, cooking, cleaning, bathing, etc.

Part B: Medical Coverage—The Basics

Medicare Part B is optional. It can be deferred if the beneficiary or spouse is still working. However, you must sign up for Medicare Part B if you want it. The purpose of Part B is to cover physician and medical services not covered under Part A.

If you sign up, you will pay a monthly premium and a yearly deductible. The premium may increase each January, and it is deducted from your Social Security check. You are also responsible for a 20% co-payment for the services and supplies you are approved for.

If you do not sign up for Medicare Part B when you are first eligible, you may have to pay a higher monthly premium. The additional services covered typically include:

  • Doctor visits (both inpatient and outpatient) at a hospital, doctor’s office, or health care facility
  • Laboratory tests and x-rays
  • Physical therapy or rehabilitation services
  • Ambulance service
  • Some home health care
  • Some medically necessary medical equipment
  • Physician and nursing services
  • Influenza and pneumonia vaccinations
  • Blood transfusions
  • Renal dialysis
  • Outpatient hospital procedures
  • Limited ambulance transportation
  • Immunosuppressive drugs for organ transplant recipients
  • Chemotherapy
  • Hormonal treatments
  • Other outpatient medical treatments administered in a doctor’s office

Tip: The actual administration of medication is covered under Part B only if it is administered by the physician during an office visit.

At the time of writing this Guide, Part B also helps with durable medical equipment (DME). This can include canes, walkers, wheelchairs, and mobility scooters for those with mobility impairments. Prosthetic devices such as artificial limbs and breast prostheses following a mastectomy, one pair of eyeglasses following cataract surgery, and oxygen for home use are also most often covered.

Deductibles and Co-insurance[ii]

After a beneficiary meets the yearly deductible, he or she is required to pay a co-insurance of 20% of the Medicare-approved amount for all services covered by Part B. Lab services are an exception, and they are often covered at 100%. You may also be required to pay an excess charge of 15% for services rendered by nonparticipating Medicare providers.

Part C—Private Health Plans (Medicare Advantage)[iii]

Medicare Part C gives consumers the option to receive their Medicare (Parts A and B) benefits through private Medicare-approved health plans. When you join this type of plan you are still in Medicare. Often called Medicare Advantage Plans, private plans often cover more services and have lower out-of-pocket costs than the Original Medicare plan.

These plans are not available in all areas. They usually include: health maintenance organizations (HMOs), preferred provider organizations (PPOs), private fee-for-service plans, Medicare Special Needs Plans, and medical Savings Account (MSA) plans (such as Medicare Advantage).

Medicare Advantage plans provide hospital and medical coverage and medically necessary services. They generally offer extra benefits, including drug coverage. For people who choose to enroll in a Medicare Advantage health plan, Medicare pays the private health plan a set amount every month for each member.

Members of these plans pay a monthly premium to cover items not covered by traditional Medicare (Parts A and B). These items may include prescription drugs, dental care, vision care, and gym or health club membership. These plans often restrict members to a network of providers they can use without having to get special permission and/or pay extra. That means you may have to see the plan’s doctors and go to certain hospitals to get care if you want the plan to pay its part of the expense.

Tip: If you have a Medicare Advantage plan, you don’t need supplemental insurance or a Medigap policy.

Medigap Plans—The Basics[iv]

Medigap policies are standardized by the Centers for Medicare & Medicaid Services. They are sold and administered by private insurance companies. They cover some of the out-of-pocket costs from Medicare Parts A and B. Medicare beneficiaries can’t have both a Medicare Advantage Plan and a Medigap Policy. Medigap policies may only be purchased by beneficiaries who are receiving benefits from Original Medicare (that is parts A and B only).

Medigap plans are not like Medicare Advantage plans that use HMOs and PPOs. Examples of expenses that are usually covered by Medigap plans include co-payments, co-insurance, and the yearly Medicare deductible. However, co-insurance is only covered after the deductible is paid unless your Medigap policy pays the deductible.

Tip: A Medigap policy can only cover one person. If you are married, both you and your spouse must buy separate policies.

There can be big differences in the costs and benefits of the various plans. Therefore, the government requires that the companies providing these plans have to clearly identify that the policy is a Medicare Supplement Insurance on the front of each policy. Remember that Medicare pays for many health care services and supplies, but it doesn’t pay all of your health care costs. There are costs that you must pay, for instance, co-insurance, co-payments, and deductibles.

You might want to consider buying a Medigap policy to cover these gaps in Medicare coverage, or a Medicare Advantage policy to replace your Original Medicare plan. Some Medicare Advantage plans include prescription drug coverage. You can also add prescription drug coverage by joining a Medicare prescription drug plan.

Comparing Plans and Plan Ratings

To compare health plans and Medigap policies, go to the Medicare website at From the home page, click on “Sign Up/Change Plans,” Then click on “Find & compare doctors, hospitals, & other providers.” You can also compare prescription drug plans, nursing homes, hospitals, home health agencies, and dialysis facilities from the same website.

In December 2015 the Kaiser Family Foundation published a report that provided quality ratings for Medicare Advantage organizations. The ratings were based on data from the Centers for Medicare and Medicaid Services (CMS), the Consumer Assessment of Healthcare Providers and Systems (CAHPS), the Healthcare Effectiveness Data and Information Set (HEDIS) data, and the Health Outcomes Survey (HOS). New plans did not receive ratings because data was not available. Almost 60% of the Medicare Advantage programs were rated. The rated plans represented 85% of the enrollment.[v]

The report found that:

  1. Private fee-for-service plans and regional PPOs had below average ratings that were significantly lower than traditional HMOs and local PPOs.
  2. Nonprofit plans had higher ratings than for-profit plans.
  3. Plans with contracts that began before 2004 had higher ratings than newer plans.[vi]

Part D: Prescription Drugs—The Basics

Part D is prescription drug coverage provided by private companies. Everyone with Medicare can get this coverage. There is usually a separate monthly premium for this coverage. If you decide not to enroll in a drug plan when you are first eligible, you may have to pay a penalty if you join later. Part D coverage is not standardized by Medicare. Each plan is free to choose which drugs they cover and what the coverage levels are. If plans cover drugs that are excluded from coverage by Medicare, they are not allowed to pass those costs along to Medicare.

Tip: If you are dually eligible for Medicare and Medicaid, consider that Medicaid may pay for drugs not covered in a Medicare Part D plan. 

Tip: To compare prescription plans, go to the Medicare website at From the home page, click on “Drug Coverage (Part D),”then click on “Find health & drug plans.”

Medicare Prescription Drug Choices

The decision to get Medicare prescription drug coverage depends on how you intend to pay for your drugs and what Medicare coverage you have. Most people with Medicare pay for drugs and have one of the five types of Medicare coverage below:

  • Original Medicare only.
  • Original Medicare and a Medigap policy without drug coverage.
  • Original Medicare and a Medigap policy with drug coverage.
  • A Medicare Advantage plan (like an HMO or PPO) or other Medicare health plan, which already includes drug coverage and other benefits.
  • Dual coverage from Medicare with Medicaid drug coverage. These people currently receive comprehensive prescription drug coverage from Medicare.

If you have specific drug needs due to a medical condition, Medicare’s Formulary Drug Finder lets you enter a typical combination of drugs used by people with a certain condition to find out which plans in any particular area have formularies that cover these drugs.

Joining Medicare

Individuals receiving Medicare benefits have a lot of information to go through.  If you have never enrolled in Medicare and are about to do so for the first time, you will need to answer a lot of questions to make the best decision on the best coverage for you. One of the most important tools available is a handbook put out through the federal government called Medicare & You. The most recent government handbook can be found at Consumers can also get a free and secure assessment of their personal Medicare benefits and services at

You can join Medicare every year between November 15 and December 31. At that time you can also make changes to your existing coverage.  On January 1 each year your new coverage becomes effective. You can get Medicare coverage information through your doctor, state health department, city, county, or state department on aging, senior citizen centers, or other health care and senior organizations.


Medicaid is a state and federal partnership that provides health coverage for selected categories of people. Its purpose is to improve the health of people who might otherwise go without medical care for themselves and their children. In most cases a state caseworker will work with you. Medicaid pays for your health care if you qualify, although there are efforts to have Medicaid recipients pay a small part of their expenses.

Medicaid is a state-administered program. Each state sets its own guidelines regarding eligibility and services and sets rules for the program. Generally, if your income is low and you meet one of the following criteria, your odds of qualifying for Medicaid are good.

  • Pregnant
  • Parent or guardian of minor children
  • Aged
  • Blind
  • Disabled

There are many groups of people are covered by Medicaid. Low income is only one test for Medicaid eligibility; assets and resources are also tested against established thresholds.

Medically needy persons who would be eligible except for income or assets may become eligible for Medicaid solely because of excessive medical expenses. The rules for counting your income and resources vary from state to state and from group to group. There may also be special rules for those who live in nursing homes and for disabled children living at home.

Your child may also be eligible for Medicaid coverage if he or she is a U.S. citizen or a lawfully admitted immigrant, even if you are not. However, there is a 5-year limit that applies to lawful permanent residents. Eligibility for children is based on the child’s status, not the parent’s. Your income does not apply to your child in this case. If another child lives with you, he or she may get Medicaid. Apply for Medicaid for your child to find out if you can get it.

People who are eligible for Medicaid may or may not also receive cash assistance from other federal programs like the Temporary Assistance for Needy Families (TANF) and/or Supplemental Security Income (SSI) programs. You should contact your state’s Medicaid office to find out if you are eligible for benefits.

For the most part, you should apply for Medicaid if your income is low and you match one of the descriptions of the eligibility groups in your state, and you or your family need health care. This will allow a qualified caseworker in your state to evaluate your situation.

Medicaid does not pay money to you; instead, it sends payments directly to your health care providers. Depending on your state’s rules, you may also be asked to pay a small part of the cost (co-payment) for some medical services.

Screening Tools–Know Your Benefits

To help you determine whether you are eligible for federal, state, and local programs, you can visit the website at www., or visit another website called BenefitsCheckUp at

When Medicaid Eligibility Starts

Coverage may start retroactively to any of the three months prior to applying, if the applicant would have been eligible during the retroactive period. Coverage generally stops at the end of the month in which a person’s circumstances change. Most states have additional “state-only” programs to provide medical assistance for specified poor persons who do not qualify for the traditional Medicaid program. No federal funds are provided for state-only programs.

Low-income Medicaid beneficiaries who would otherwise become ineligible for Medicaid due to an increase in wages or hours at a job are entitled to up to 12 months of Medicaid benefits under the Transitional Medical Assistance (TMA) program.  This temporary coverage increases the likelihood that low-income people who start a job or find higher-paying work will not lose the security of health coverage because they found a job or will earn higher pay.

Working with a Medicaid Case Manager

If you are getting ready to interview or hire a professional case manager for yourself, a family member, or a loved one, here are some questions you may want to ask during the interview process:

  • How long have you been a case manager?
  • How many people are on your case load?
  • Where do you live?
  • How often do you contact your client and their families?
  • How do you communicate with service providers?
  • Do you develop a care plan for your clients?
  • How often do you review and update your clients care plan?
  • What is the best way to contact you?
  • What should we do in an emergency and we can’t reach you?

Medicaid Planning

There are a few things you can do using Medicaid planning to rearrange your finances and legally shelter your assets from the state. The strategies can be very complicated so you may want to consult an elder law attorney to help you with the specifics. You can find qualified elder law attorneys in your area by visiting the National Academy of Elder Law Attorneys (NAELA) website at

Medicaid planning helps shelter and preserve assets for heirs and provide resources for the healthy spouse. The total value of your countable assets including your income determines whether you are eligible for Medicaid. Under federal guidelines, each state has a list of exempt assets. This list usually includes items like your home, prepaid burials, term life insurance, and an automobile(s).

You can rearrange your finances so that countable assets are exchanged for exempt assets and thus are inaccessible by the state. For example, you can exchange spending your savings on nursing home bills for:

  • Paying off the mortgage on you family’s home.
  • Prepaying for burial arrangements.
  • Making home improvements.
  • Purchasing one car for your healthy spouse.

Preserving assets for your children and heirs allows you to provide financial help for your loved ones. An irrevocable trust can help you accomplish this. Consult an experienced attorney about how to set this up for your circumstances because “irrevocable” means that you can’t come back and change it later, or decide to end it. Also, laws vary from state to state and from year to year, so the assistance of an elder law attorney is crucial.

Property placed in an irrevocable trust will be excluded from your financial picture for Medicaid purposes. Anything that you place into the trust can be sheltered from the state and preserved for your loved ones. More often than not, the trust must be in place and funded over a specific period of time for it to be an effective Medicaid planning tool. You might be able to use an annuity to guarantee that your spouse has enough money to live on if you have to go to a nursing home.

When the state is considering a married person’s eligibility for Medicaid, the couple’s assets are pooled together. Your healthy spouse is generally given a resources allowance that amounts to one-half of the assets. As you can imagine this may not be much money over the long term, especially if your spouse needs to take time off from work.

If you’re married, an annuity can help protect your healthy spouse. An important loophole in the current law is that your healthy spouse can use jointly owned countable assets to buy a single premium immediate annuity for his or her benefit. By doing so, you effectively convert countable assets into an income stream. Each spouse is then entitled to keep all of his or her own income instead of pooling assets. The end result is that the institutionalized spouse can more easily qualify for Medicaid.

Medicaid Planning Risks

Since laws vary from state to state and from year to year, Medicaid planning is more effective in some states and at certain times than others. For example, when you are applying for Medicaid, the state has the right to look back at your finances for a certain period of months before the application date. Generally, there is a 36-month look-back period for transfers of countable assets, along with a 60-month look-back period for similar transfers into irrevocable trusts.

Countable asset transfers for less than fair market value made during the look-back period will commonly result in a waiting period before you can start to collect Medicaid. For example, transferring your house to your children a year before entering a nursing home may make you ineligible for Medicaid for quite some time.

Without question, you should consult with an elder law attorney who is experienced at Medicaid planning in your state. He or she will be aware of the look-back periods, estate recoveries, disqualifications for Medicaid in your state, and all the details you need to be aware of.

[i] CMS. (2017). “Medicar.e” Centers for Medicare & Medicaid Service website. Accessible at

[ii] CMS. (2017). “Medicare 2017 costs at a glance.” Centers for Medicare & Medicaid website. Accessible at

[iii] CMS. (2017). “Medicare Advantage Plans.” Centers for Medicare & Medicaid website. Accessible at

[iv] CMS. (2017). “How to compare Medigap policies.” Centers for Medicare & Medicaid website. Accessible at

[v] Jacobson, G., Gold, M, Damico, A, Neuman, T., and Casillas, G. (2015). Medicare Advantage 2016 Data Spotlight: Overview of Plan Changes. The Henry J. Kaiser Family Foundation website. Accessible at

[vi] Ibid.