Ah I see. There are a variety of irrevocable trusts that move assets to a separate legal identity from the original owner of the assets (ex: charitable grantor trusts that are used by the Waltons often). This would reduce the size of the estate for both estate tax and medicare purposes.
In the past, transferring assets to such a trust entailed gift tax, but since the estate tax and lifetime gift tax exemption are now bundled together, you can basically "use" the estate tax exemption to fund this irrevocable trust "for free". As a result your personal assets plummet, you name your heirt the beneficiaries of the irrevocable trust, and you (the parent) can take advantage of medicare fully as you describe.
The drawback to this strategy is that you do lose real flexibility in controlling your assets. Also, the legality of this widespread practice is definitely in a gray zone and carries future legal risk. Transferring a significant portion of one's assets to such a complex instrument is definitely not advised.
