That so many people appear to be interested in giving away considerable assets in order to qualify for government assistance was surprising, Carter said; especially so in light of an earlier Nationwide survey conducted in July when pre-retirees listed maintaining control of their assets as one of their top concerns.

“It's ironic that half of advisers have clients who would give up control,” he said.

Over one-third of advisers say their clients don't understand long-term care costs, and just 31% say their clients understand the long-term care options that are available to them. One thing clients who are thinking about “Medicaid planning” may not appreciate is just how much they have to give away to qualify.

“They have to prove they are impoverished,” Carter said. “In most states, that means they must have less than $2,000 with a five-year look-back period.” Medicaid is a useful option for the people who need it, Carter said, “but it was never intended to pay for long-term care for people who have assets.”

Giving away enough assets to become eligible won't mean clients' long-term care needs are covered, at least not in a way they may be satisfied with. They may find their options are more limited than they expected, Carter said.

For example, for clients who want to maximize their time in their home, if they use Medicaid coverage for long-term care needs, many states don't cover the types of care they would need, such as a home health aide.

That's assuming they become eligible. “If you've given all your assets away and Medicaid deems you ineligible, it's difficult to change your mind and get it back,” Carter pointed out.

It's also important to recognize the effect the Affordable Care Act will have on Medicaid, Carter said. “In 2014, more Americans will be eligible for Medicaid. If this is what you get today, I can't imagine you'll get more [in 2014].”

But why are investors with significant assets even considering using Medicaid for long-term care coverage?

Carter said it's a combination of several factors, some of them familiar. “Corporate retirement benefits are shrinking,” he said, “and people are living longer. The cost for chronic care is rising, and families moving apart reduce the availability of home health care. Investors owe it to themselves to explore opportunities.”

This article was originally posted at AdvisorOne.com, a sister site of Credit Union Times.