Half-A-Loaf Medicaid

What Is Half-A-Loaf Medicaid? Is It Right for You?

“Saving half-a-loaf is better than losing the whole loaf.” That’s the principle that gave birth to several strategies to help soon-to-be Medicaid applicants preserve a large portion of their assets for family members and to qualify for Medicaid as soon as possible. The predominant “Half-a-Loaf” strategies used in New York and New Jersey are called

  • Promissory Note Planning (New York)
  • Annuity Half-A-Loaf Planning (New Jersey).

At Ely J. Rosenzveig and Associates, we work to provide plans that protect your valuable assets as you or your family members begin to anticipate the need for long-term nursing home care. Medicaid will pay the monthly nursing home expenses for applicants who are income and asset eligible. But, Medicaid uses a 60-month “look back” period during which any countable assets (i.e., assets that are deemed available and are counted to determine Medicaid eligibility) transferred to someone for under fair market value triggers a penalty period of ineligibility. If countable assets remain unprotected in the run-up to applying for Medicaid, call Ely J. Rosenzveig and Associates today. We can construct a plan that will help you avoid spending down all your assets before qualifying for Medicaid.

How Do “Half a Loaf” Medicaid Plans Work?

In a perfect world, everyone would consult with an experienced elder law, and trusts and estates planning lawyer well before they consider applying for Medicaid to cover nursing home costs. As experienced elder law and trusts and estates lawyers at Ely J. Rosenzveig and Associates, one of our primary services is creating legal instruments through which our client’s assets and future income are exempted from consideration when applying for Medicaid benefits.

The “Half a Loaf” Medicaid strategy got its name because applicants who continue to have countable or nonexempt assets available when they are about to apply for Medicaid may still be able to save half of their assets by using one of these strategies.

As noted, Medicaid imposes an “eligibility penalty period” on an applicant if it determines that they transferred available assets at lower than market value within the previous five years. This includes assets currently owned, above the Medicaid asset threshold, as well as assets transferred within the last 60 months which are considered uncompensated transfers. How does a family deal with this penalty period without first exhausting every last penny in the applicant’s name?  How will they pay for care?

The “Half A Loaf” Medicaid plans anticipate that a penalty period will be imposed, but they balance the amount of assets you can transfer to a loved one or to a trust against the amount you need to reserve to pay medical expenses during the penalty period. By transferring roughly half your assets, you reduce the length of your ineligibility period, and you preserve a substantial portion of assets that won’t need to be spent down on nursing home expenses. Instead, those assets can go to those you hold dear, and not paid to a nursing home until your assets are fully depleted.

Please Note: The detailed calculations required to plan an effective “Half A Loaf” strategy are complicated. It is necessary to determine precisely how much of a client’s assets can be transferred safely and how much must be retained to pay expenses during the Medicaid penalty period. Consulting with an experienced Medicaid lawyer who is familiar with these sophisticated concepts is imperative. No one should attempt to execute any “Half A Loaf” Medicaid transfer strategy without professional advice and guidance. A mistake in calculating the penalty period or in determining care expenses could lead to disastrous consequences.

Promissory Note “Half A Loaf” — New York

This “Half A Loaf” Medicaid transfer strategy is not a true “Half A Loaf” plan but is one in which the Medicaid applicant gifts a substantial part of their excess countable assets to a family member and then “lends” the remaining amount to someone who signs a promissory note to repay the amount of the loan to the applicant in monthly payments.

Half-A-Loaf Medicaid
The best strategy to preserve your family’s wealth and protect assets from being depleted to pay for expensive nursing home care is to contact an experienced elder law and estate and trusts attorney who fully understands law regarding Medicaid eligibility.

Why does the promissory note plan work? The Medicaid penalty period is based on the total value of an applicant’s countable, available assets plus any disallowed transfers of wealth in the five years before the Medicaid application date. When someone loans money to a family member or friend and the debtor signs a promissory note requiring them to repay the loan in monthly installments, Medicaid does not count the money lent to the friend as an available asset. If the applicant kept the money, Medicaid would count it as an available asset and extend the ineligibility period corresponding to the amount of those additional funds. By using the promissory note strategy, the applicant doesn’t lose or spend down the money that is lent, and the penalty period is thereby shortened.

The terms of the promissory note must meet Medicaid requirements. A Medicaid-compliant promissory note must provide for the loan to be repaid in full within the lender’s life expectancy and the monthly payments must be in equal amounts.

Under this strategy, the amount that is gifted and/or loaned depends largely on how much other income the Medicaid applicant has. The loan repayments will be combined with the applicant’s social security benefits and any other income to pay the costs of the needed nursing care during the shortened Medicaid penalty period. If the applicant’s combined income exceeds the cost of the nursing home care, they can be disqualified from Medicaid. If their income is too low to pay for the nursing home care costs for the duration of the penalty period, then their continued care may be jeopardized. 

Needless to say, the promissory note half a loaf asset protection planning strategy is complex. Consulting with experienced elder law counsel is, in our view, essential.

Annuity “Half A Loaf” Medicaid Transfer Plan – New Jersey

In the Annuity “Half A Loaf” strategy,  the soon-to-be Medicaid applicant who has excess countable assets transfers half of their excess countable assets to their children or other family members, understanding that the transfer violates Medicaid’s 60-month look back rule. The other half of the excess countable assets are used to purchase an annuity that is Medicaid compliant. The annuity’s purchase price consumes the remaining excess countable assets and becomes a steady stream of income for the applicant to pay the cost of nursing home or other long-term care during the penalty period imposed because of the asset transfer to the family.

The Medicaid compliant annuity is not a countable available asset. The money used to pay the one-time annuity premium transforms from a countable asset to a noncountable asset.

A Medicaid Compliant Annuity is one that has a one-time, single premium and starts to pay income immediately. It must also be “actuarially reasonable,” meaning that the monthly annuity payments must be in an amount that will pay the annuitant back within their life expectancy. The annuity must  be irrevocable.  Medicaid also requires that the state be named as the annuity’s beneficiary if the Medicaid applicant dies before they recouped their full premium amount.

Planning Ahead Is the Best Strategy

Wherever you and your family live, the best strategy to preserve your family’s wealth and protect assets from being depleted to pay for expensive nursing home care is to contact an experienced elder law and estate and trusts attorney who fully understands New York and New Jersey law regarding Medicaid eligibility. Only attorneys with years of practice working with state Medicaid rules know what method of asset protection best fits your circumstances.

The remedies described in this blog post are options for those who did not act in time to protect themselves, or for others whose sudden illness or accident forced them to need long-term nursing care prematurely. Acting today enhances your asset protection options, and reduces the chance that you and your family will be unprotected.

It’s Not Too Late! — Consult with Ely J. Rosenzveig and Associates

If you or any of your family members may soon need long-term nursing home care, and excess countable assets will interfere with eligibility for Medicaid, contact our office today. We create legitimate, creative solutions for your Medicaid planning issues that can provide you or a loved one the care that is needed while substantially protecting family assets in the process.


Call Ely J. Rosenzveig and Associates today: 1 (914) 816-2900
or email us at: [email protected]


Ariel Rosenzveig

Ariel S. Rosenzveig received his Juris Doctor from the Benjamin N. Cardozo School of Law in May, 2011, and has been practicing law with the firm since August, 2011. During his summers while in law school, Ariel interned with the United States Commodity Futures Trading Commission in New York and with the Securities & Futures Commission in Hong Kong, China.

While in law school, Ariel served on the staff of the Cardozo Public Law, Policy & Ethics Journal, volunteered with the Cardozo Advocates for Battered Women, and participated in the National Institute for Trial Advocacy’s Intensive Trial Advocacy Program. Prior to attending law school, Ariel worked as an arbitrage trader for a small proprietary trading firm on Wall Street. Ariel graduated summa cum laude from Yeshiva University in 2006.

Ariel is licensed to practice law in the states of New York and New Jersey, and is a member of the New York State Bar Association (NYSBA), NYSBA’s Elder Law section, and the National Academy of Elder Law Attorneys (NAELA). In June, 2015, Ariel successfully completed a certificate program in mediation through the Program on Negotiation at Harvard Law School.



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