Medicaid Planning Scams and Red Flags

Families facing nursing home costs are under stress, short on time and worried about money, which makes them targets. Most people who help with Medicaid planning are honest and qualified, but some are not. Some sell financial products that do not meet Medicaid rules, some charge high fees for work the family could get free, and some give advice that leads to denials or even fraud allegations. This guide describes the most common scams and warning signs, and how to protect a family member.

Figures change periodically. Double-check current amounts before relying on them.

The short version

No one can guarantee a Medicaid approval or promise that “you will not lose a penny.”
Be wary of anyone who wants you to hide assets, leave things off an application or sign papers you do not understand.
Be cautious with annuity or insurance sales pitched as Medicaid planning, especially deferred annuities.
Applying for Medicaid through the state is free. Paying someone only to fill in forms may not be worth it, and a fee that depends on approval can be a red flag.
Check credentials. A Certified Medicaid Planner has passed an exam and agreed to an ethics code that can be enforced, and an attorney is licensed by the state bar.
An attorney prepares legal documents such as trusts and deeds. Be wary of non-lawyers who draft them.

Common scams and bad practices

1. “Guaranteed approval”

No honest professional can guarantee that a state Medicaid agency will approve an application. Eligibility depends on facts, documents and the state’s rules, and caseworkers make the decision. A guarantee is a sales tactic.

2. Hiding or “forgetting” assets

Advice to leave a bank account off the application, cash out and keep the money at home, or quietly move money to a relative is not planning. It is misrepresentation, and the applicant (and sometimes the person advising them) can face denial, repayment demands and fraud charges. States verify assets through electronic asset verification systems, bank records, tax data and property records. See Why hiding assets does not work.

3. Unsuitable annuity sales

Annuities can be a legitimate Medicaid planning tool, but only if they meet strict federal rules. See Medicaid-compliant annuities. Red flags include:

a deferred annuity that does not start paying right away;
a term longer than the person’s life expectancy;
high surrender charges or commissions;
a pitch that does not mention naming the state as a remainder beneficiary;
a salesperson who cannot explain how the annuity affects income and the patient liability.

A non-compliant annuity can be treated as a gift, causing a penalty period, or as a countable asset.

4. Trust mills

Some sellers offer one-size-fits-all “Medicaid trusts” at seminars or online. Many are revocable living trusts, which do not protect assets from Medicaid, or irrevocable trusts with language that makes them countable. Trusts are legal documents that an attorney should prepare for the family’s specific situation. See Revocable vs. irrevocable trusts.

5. Fees for free services

Applying for Medicaid is free. State agencies, Area Agencies on Aging, State Health Insurance Assistance Programs and legal aid offices offer free help in many places. Professional help is often worth paying for when the case is complex, but families should know what they are paying for. A fee charged only to fill out and submit forms, with no planning or follow-through, is a warning sign.

6. Pressure to act immediately

“This offer ends today” or “you must sign now or lose everything” is a classic pressure tactic. Medicaid deadlines are real, but a legitimate professional will explain them and give the family time to read documents and ask questions.

7. Taking control of the money

Be careful of anyone who asks to be named on accounts, to be made agent under a power of attorney, to have checks made payable to them personally, or to “hold” money during the application. Elder financial exploitation often starts this way.

8. Misleading “free seminars”

Free lunch seminars about protecting assets from nursing homes are sometimes sales events for annuities or trusts. Attending is fine, but do not sign anything there.

9. Unlicensed legal practice

Non-lawyers may help with applications in many states, but drafting trusts, deeds, wills and care agreements, or giving legal advice, is generally limited to attorneys. Ask who will prepare the legal documents.

10. Impersonation scams

Scammers call or text claiming to be from Medicaid or Medicare and ask for a Medicaid number, Social Security number or bank details “to keep coverage active.” Medicaid agencies do not ask for payment to keep coverage. Hang up. Use only the contact details printed on an official notice you received by mail.

Red flags at a glance

Red flag	Why it matters
Guarantees approval	No one controls the state’s decision
Advises hiding assets	Fraud; states verify assets
Pushes a specific product first	Product sales may drive the advice
Cannot explain the look-back or penalty divisor	Lacks basic knowledge
Will not put fees in writing	Surprise costs
Pressures you to sign today	Prevents careful review
Wants checks made out personally	Risk of theft
Drafts legal documents without being an attorney	Possible unauthorized practice; documents may fail
Has no verifiable credential or license	No accountability

How to check someone out

Ask about credentials. A Certified Medicaid Planner’s status can be verified with the credential’s governing board. Attorneys can be checked with the state bar. Insurance agents are licensed by the state insurance department.
Ask about fees in writing: flat fee or hourly, what is included and what is not. As a rough guide, help with an application often runs about $500 to $6,000, and full planning plus the application about $2,500 to $15,000 or more, depending on complexity.
Ask how they are paid. Commissions on products can create conflicts of interest.
Ask who prepares legal documents and who will represent the family if the application is denied.
Ask what happens if the application is denied.
See Questions to ask before paying anyone for help.

What to do if something feels wrong

Stop and do not sign anything else.
Get a second opinion from a qualified, independent professional.
Keep copies of all documents, contracts, receipts and messages.
Report suspected elder financial exploitation to the state’s Adult Protective Services agency.
Report insurance sales concerns to the state insurance department, and attorney concerns to the state bar.
Report suspected Medicaid scams or identity theft to the state Medicaid agency.

Why a qualified professional is still worth it

The existence of scams is not a reason to avoid help. Long-Term Care Medicaid rules are complex, and good advice can save a family a great deal of money and stress. The key is choosing someone qualified, transparent and accountable. A Certified Medicaid Planner is one strong option, because the credential requires passing an exam on Medicaid rules and following an enforceable code of ethics. For legal documents, an elder law attorney does the drafting.

Frequently asked questions

Are all annuity sales to seniors scams? No. Some annuities are appropriate, and compliant annuities are a recognized planning tool. The question is whether the product meets the federal rules and fits the person’s situation.

Is it a scam if someone charges for Medicaid help? No. Many legitimate professionals charge fees. It becomes a concern when the fees are hidden, the work is minimal or the advice is unlawful.

Can I fix a bad annuity or trust? Sometimes. A qualified professional can review it and explain the options, which may include restructuring.

Protecting a parent from exploitation

Families can lower the risk of scams with a few routine steps:

Ask the older person to talk with a trusted family member before signing anything about money, insurance or property.
Set up account alerts for large withdrawals.
Keep a list of every professional involved, with contact details and fee agreements.
Make sure the power of attorney names someone trustworthy, and that the agent keeps records.
Be wary of new “friends” or helpers who become very involved in finances.
Shred old statements and keep the Medicaid card and number private.

A short family meeting before a crisis, to agree on who will help and how decisions will be made, can prevent many problems later.

Signs of a trustworthy helper

A trustworthy helper explains the rules in plain language, puts fees and services in writing, says what they will not do, tells the family which steps need an attorney, encourages questions and second opinions, and keeps every step on the record.

If a family member has already been harmed

Act quickly. Contact the bank to freeze suspicious activity, change passwords, request copies of every document signed, and report the matter to Adult Protective Services and, where money was taken, to local law enforcement. If a Medicaid application was affected, tell the caseworker in writing what happened. A qualified professional can explain whether a transfer can be undone or treated as a theft rather than a gift.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.