Powers of Attorney and Long-Term Care Medicaid

A durable power of attorney may be the single most important document for a family facing long-term care. When a parent or spouse can no longer manage their own affairs, because of dementia, a stroke or another illness, someone has to pay the bills, deal with banks, apply for Medicaid and carry out any planning. Without a power of attorney, the family may need to go to court for a guardianship, which is slow, expensive and public. This guide explains what powers of attorney are, which powers matter for Medicaid, and the mistakes to avoid.

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

The short version

A power of attorney (POA) is a legal document in which one person (the principal) gives another person (the agent, sometimes called the attorney-in-fact) authority to act for them.
A durable POA stays in effect if the principal loses mental capacity. A non-durable POA ends at incapacity, exactly when it is needed most.
A POA can only be signed while the principal still has capacity to understand it.
For Medicaid planning, the POA should expressly allow the specific acts a plan may require, such as gifts, transfers to a spouse, creating or funding trusts, and dealing with the Medicaid agency.
A health care power of attorney (health care proxy) is a separate document for medical decisions.
An attorney prepares powers of attorney. State law governs their form and powers.

Types of powers of attorney

Type	What it does
Durable financial POA	Lets the agent handle money and property, and continues during incapacity
Springing POA	Takes effect only when the principal becomes incapacitated, usually after a doctor’s certification
Limited (special) POA	Covers only certain acts, such as selling one house
Health care POA / proxy	Lets the agent make medical decisions when the principal cannot
Living will / advance directive	States the principal’s wishes about life-sustaining treatment

Most families facing long-term care need at least a durable financial POA and a health care POA. Many states have adopted versions of the Uniform Power of Attorney Act, which requires certain powers (including the power to make gifts) to be granted expressly.

Why a POA matters for Long-Term Care Medicaid

A Medicaid application asks for years of financial records, signatures on forms, decisions about assets and, often, quick action. An agent under a good POA can:

gather bank statements, tax returns and property records;
sign and file the Medicaid application and respond to caseworker requests;
pay bills, including the nursing home;
spend down on allowed purchases, such as a funeral trust or home repairs;
transfer assets to a spouse, which is allowed without penalty;
sell or refinance property;
set up and fund a Miller trust if income is over the cap;
buy a compliant annuity or carry out other planning, if the POA allows it;
request a fair hearing if an application is denied.

The powers that matter most for planning

Standard POA forms often leave out the powers that Medicaid planning needs. Look for clear authority to:

Make gifts, including gifts to the agent and to family members, and above the annual gift tax exclusion if needed. Without express gifting power, an agent generally cannot make gifts, and in many states gifts by an agent without it are invalid.
Transfer assets to the principal’s spouse.
Create, fund, amend or revoke trusts, including asset protection trusts and Miller trusts.
Change beneficiary designations on life insurance, annuities and retirement accounts (often restricted).
Buy annuities and other financial products.
Deal with government benefits, including Medicaid, Social Security and VA benefits.
Sign personal care agreements and pay caregivers.
Disclaim (refuse) inheritances, with care, because disclaiming can be treated as a transfer for Medicaid.
Handle real estate, including signing deeds such as a Lady Bird deed where state law allows.
Access digital accounts and records.

Choosing an agent

The agent should be trustworthy, organized and willing to do the work. An agent has a legal duty to act in the principal’s best interest, keep the principal’s money separate, keep records and avoid conflicts of interest. Many people name one primary agent and one or two backups. Naming co-agents who must act together can cause delays.

Because gifts to the agent can be part of a Medicaid plan, the POA should address whether and how the agent may make gifts to themselves. Clear limits help protect both the principal and the agent.

When there is no power of attorney

If a person has already lost capacity and has no durable POA, the family has limited options:

Guardianship or conservatorship. A court appoints someone to manage the person’s affairs. It takes time and money, involves court supervision, and the court may need to approve any planning, especially gifts.
Authorized representative for Medicaid. Most states let a family member or other person be named an authorized representative to file and follow a Medicaid application. That can be enough for a simple application but does not give power over the person’s money.
Representative payee. For Social Security benefits, the Social Security Administration can appoint a representative payee to manage the benefit checks only.
Joint accounts. A joint account owner may be able to pay bills, but using joint accounts for planning can create problems. See Joint bank accounts.

Signing a POA early, while the person still has capacity, avoids all of this.

Health care powers of attorney

A health care POA (sometimes called a health care proxy or medical power of attorney) names someone to make medical decisions if the principal cannot. It matters for long-term care because decisions about hospital discharge, nursing home admission, therapies and hospice all involve health care consent. It is usually paired with a living will and, in some states, a HIPAA authorization so the agent can get medical information.

Common mistakes

Waiting too long. Once dementia has progressed, it may be too late to sign.
Using a basic form that does not allow gifts, trusts or spousal transfers.
Springing powers that require hard-to-get medical certifications in a crisis.
Old documents. Banks sometimes hesitate to accept very old POAs. Many states have laws requiring acceptance of valid POAs, but delays still happen.
Agent misuse. An agent who treats the principal’s money as their own can cause Medicaid problems and legal liability. Records protect everyone.
Not telling the agent. The agent should know where the document is and what the principal wants.

A simple example

Sam, 78, signs a durable POA naming his daughter Lisa, with express power to make gifts, transfer assets to his wife, create and fund trusts and handle Medicaid matters. Three years later, Sam has advanced dementia and needs nursing home care. Lisa uses the POA to transfer Sam’s half of the savings to his wife Carol, buy funeral contracts for both, and file the Medicaid application. Because Carol keeps more under the spousal rules, Sam qualifies quickly, and no court involvement is needed.

If Sam had signed only a basic form without gifting or spousal-transfer powers, Lisa might have needed a guardianship and a judge’s approval for the same steps, adding months and expense.

Getting help

A power of attorney is a legal document governed by state law, and an attorney prepares it. Because the powers needed depend on the plan, a Certified Medicaid Planner and an attorney often work together to make sure the documents allow the strategies the family may need later.

Frequently asked questions

Does a POA give the agent the right to make medical decisions? Not a financial POA. A separate health care POA covers medical decisions.

Can the agent apply for Medicaid? Yes, a durable financial POA usually authorizes the agent to apply, and many states accept it.

Does a POA end at death? Yes. After death, the executor or administrator of the estate takes over.

Can I revoke a POA? Yes, as long as you have capacity. Notify the agent and any institutions that relied on it.

Is a POA from another state valid? Generally yes, if it was valid where signed, but banks and agencies may have questions. An attorney can review it after a move.

Key terms

Principal: the person who signs the power of attorney and gives authority.
Agent (attorney-in-fact): the person given authority to act.
Durable: stays in effect if the principal loses capacity.
Capacity: the mental ability to understand the document and its effect when signing.
Guardianship (conservatorship): a court process to appoint someone when there is no valid power of attorney.

Keeping the documents usable

Keep the original in a safe place, give copies to the agent and backup agents, and record where the original is kept. Review the document every few years and after a move to another state.

If the agent will make gifts as part of a plan, the agent should keep a written record of each gift, the reason for it and the date.

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