How to Pay for Nursing Home & Other Long Term Care

Understanding Medicaid and Long-Term Care Costs

Many people believe they must spend all their savings or have long-term care insurance to afford nursing home or assisted living care. Fortunately, Medicaid—a joint federal and state program—can cover these costs after certain requirements are met. With proper planning, you do not have to deplete your life savings to qualify for Medicaid benefits.

In addition to nursing home care, Medicaid’s Home and Community Board Division can provide benefits for long-term care at home or in assisted living facilities (ALFs). Medicare, while helpful for skilled care, does not cover custodial nursing home or assisted living care.

Medicaid Rules Designed to Cost You If You Don’t Plan

Asset Limitation

To qualify for Medicaid, an applicant may have no more than $2,000 in countable assets in their name or their spouse’s name (joint or trust ownership included). Countable assets include most belongings except for: – One personal residence (if in-state) – One motor vehicle – Personal possessions (clothing, furniture, jewelry) – Assets inaccessible for a specific reason

If both spouses need Medicaid, the limit is $3,000. A community spouse may keep up to $109,560 in countable assets.

The Transfer Penalty

Transferring assets for less than fair market value can result in a penalty period of ineligibility for Medicaid. The length of this penalty is determined by dividing the value of the transfer by $5,000. Some transfers—like those between spouses—are exempt.

Estate Recovery

After a Medicaid recipient’s death, the State may recover expenses from the recipient’s estate, except for exempt assets like the homestead. Proper planning can help protect assets from estate recovery.

Income Limitation

Medicaid applicants must also meet a monthly income cap (currently $2,022.00). If income exceeds this cap, a Qualified Income Trust (QIT) can be used to maintain eligibility. Most of the recipient’s income must be paid to the nursing home, with certain deductions allowed (personal needs allowance, medical expenses, community spouse allowance).

How to Save Your Assets Using Medicaid

• Convert Countable Assets to an Income Stream: The community spouse can have unlimited income. Structured transactions can turn excess assets into income, helping maintain eligibility.
• Purchase of Exempt Assets: Buying non-countable assets with countable resources can help meet asset limits.
• Strategic Divestment: With proper legal planning, assets can be transferred or spent down in ways that maximize eligibility and preserve wealth.

Medicaid Planning: Crisis vs. Pre-Crisis

Medicaid planning can be done in a crisis (when care is immediately needed) or in advance (pre-crisis), which allows for more options and better asset preservation.

Qualifying for Medicaid through ethical and legal planning can make long-term care affordable.

The Importance of Consulting an Elder Law Attorney

Medicaid rules are complex and change frequently. Consult an experienced, board-certified elder law attorney to ensure your plan is compliant and effective. Always get a written agreement outlining the attorney’s services and fees before proceeding.