Medicaid Planning

Long-term care is one of the largest financial risks facing Oklahoma families. The average cost of nursing home care in Oklahoma exceeds $5,000 per month as of 2026, and most people will need some form of long-term care during their lifetime. Medicare does not cover extended nursing home stays. And paying out of pocket can devastate a lifetime of savings in a matter of months.

Medicaid can help — but only if you qualify. Oklahoma’s Medicaid program has strict income and asset limits that exclude many middle-class families unless they plan ahead. That is where Medicaid planning comes in.

I help Oklahoma families navigate these complex rules — protecting assets within the legal limits while positioning for eligibility. Whether you are planning years in advance or facing an immediate need, there are strategies that can help.

Understanding Oklahoma Medicaid Eligibility

Qualifying for Medicaid long-term care benefits in Oklahoma requires meeting both income and asset tests. These rules are detailed and technical, and even small mistakes can result in denied applications or penalty periods.

Asset limits. To qualify for institutional Medicaid in Oklahoma, an individual’s countable assets must be below a specific threshold (which changes annually). Not all assets count. Your primary residence, one vehicle, personal belongings, and certain other assets are typically exempt. But bank accounts, investments, additional real estate, and most other financial assets count toward the limit.

Income limits. Oklahoma also has income limits for Medicaid eligibility. If your income exceeds the state’s threshold, you may still be able to qualify through a Qualified Income Trust (QIT), sometimes called a Miller Trust. This legal tool redirects excess income through the trust, allowing you to meet the income requirement.

Functional requirements. Beyond financial eligibility, applicants must demonstrate a need for a nursing home level of care. This is determined through a medical assessment that evaluates your ability to perform daily activities.

The application process itself is demanding. Oklahoma requires detailed financial documentation going back five years, and the state reviews every transaction during that period. Incomplete applications, missing documentation, or unexplained transactions can all result in delays or denials.

The Five-Year Look-Back Period

The look-back period is the most misunderstood aspect of Medicaid planning — and the one with the most serious consequences if mishandled.

When you apply for Medicaid, Oklahoma reviews all financial transactions from the five years preceding your application. Any gifts, transfers, or sales of assets for less than fair market value during that period may trigger a penalty — a period during which you are ineligible for Medicaid benefits.

The penalty period is calculated based on the total value of the transfers divided by the average monthly cost of nursing home care in Oklahoma. A $50,000 gift made three years before application could result in approximately ten months of ineligibility — ten months during which you need care but cannot receive Medicaid assistance.

This is why advance planning is so critical. Transfers made more than five years before application are not subject to the look-back. But timing is everything. You cannot wait until you need care and then try to transfer assets — the look-back catches those transfers. You also cannot simply hide assets or fail to disclose them — Medicaid applications require detailed financial disclosure, and fraud carries serious legal consequences.

The most effective Medicaid planning starts early — ideally five or more years before you anticipate needing long-term care.

Spousal Protections

When one spouse needs nursing home care and the other remains at home, Oklahoma’s Medicaid rules provide important protections for the community spouse — the spouse who is not entering the facility.

Community Spouse Resource Allowance (CSRA). Oklahoma allows the community spouse to retain a portion of the couple’s combined countable assets, up to a maximum set by federal guidelines. This prevents the at-home spouse from being impoverished by the other spouse’s care costs.

Minimum Monthly Maintenance Needs Allowance (MMMNA). The community spouse may also be entitled to a portion of the institutionalized spouse’s income if the community spouse’s own income falls below a threshold amount. This ensures the at-home spouse has enough income to maintain a reasonable standard of living.

Home protection. The family home is generally exempt from Medicaid’s asset calculations as long as the community spouse lives there. However, after both spouses have passed, estate recovery may apply.

These protections are significant, but they are not automatic — you have to know the rules and assert your rights. In some cases, the community spouse can increase their CSRA through a fair hearing or court order. Understanding these options can mean the difference between retaining adequate resources and being left with an amount that does not cover basic living expenses.

Medicaid Trusts and Asset Protection

Certain types of trusts can serve as effective Medicaid planning tools — but only when properly structured and implemented well in advance.

Irrevocable Medicaid asset protection trusts. These trusts remove assets from your countable estate for Medicaid purposes. Once assets are transferred to the trust, they are no longer considered yours under Medicaid’s rules — provided the transfer occurred outside the five-year look-back period. You typically retain the right to receive income from the trust, but not the principal.

Qualified Income Trusts (Miller Trusts). If your income exceeds Oklahoma’s Medicaid income limit, a QIT can make you eligible. Your excess income flows through the trust, satisfying the income test. Oklahoma requires QITs for applicants whose income exceeds the state limit.

Special needs trusts. If a disabled individual receives an inheritance or settlement, a special needs trust can preserve their Medicaid eligibility while supplementing their care. These trusts are governed by strict federal rules and must be carefully drafted.

It is critical to understand that not all trusts protect assets from Medicaid. Revocable living trusts — the most common type used in estate planning — do not protect assets from Medicaid. The assets in a revocable trust are still considered countable because you retain the power to revoke the trust and access the funds.

Crisis Planning for Immediate Needs

Not everyone has the luxury of planning five years in advance. Some families face an immediate need — a sudden health crisis, an unexpected diagnosis, an urgent nursing home admission — without any prior Medicaid planning.

Even in crisis situations, there are legitimate strategies that can help:

• Spousal transfers. Transfers between spouses are generally not penalized under Medicaid’s look-back rules. Shifting assets to the community spouse can be a valid crisis strategy.
• Spend-down on exempt assets. Using countable assets to purchase exempt assets — such as prepaying funeral expenses, making home repairs, or paying off a mortgage — can reduce your countable estate without triggering penalties.
• Caregiver agreements. If a family member provides care, a properly structured caregiver agreement can compensate them fairly without creating a penalized transfer.
• Annuities. Certain Medicaid-compliant annuities can convert countable assets into an income stream for the community spouse, reducing the institutionalized spouse’s countable assets.

Crisis planning is more limited than advance planning, and the strategies carry more risk. But doing nothing is almost always worse. Even late planning can save families tens of thousands of dollars.

Coordinating Medicaid Planning With Your Estate Plan

Medicaid planning does not exist in a vacuum. It must be coordinated with your broader estate plan to ensure consistency and avoid unintended consequences.

For example, powers of attorney must include specific language authorizing Medicaid planning activities — such as creating trusts, transferring assets, and applying for benefits. Without this authority, your agent may be unable to help you plan if you become incapacitated.

Your advance directives also play a role. Medical decisions — including decisions about the level of care you receive — directly affect Medicaid eligibility and costs.

And your overall asset distribution plan must account for Medicaid’s estate recovery program, which allows Oklahoma to seek reimbursement from your estate for Medicaid benefits paid during your lifetime. Proper planning can minimize or eliminate estate recovery exposure.

This is why I approach Medicaid planning as part of a comprehensive strategy — not as an isolated transaction. Every piece of your plan should work together.