Nursing home care is expensive—and getting more expensive every year. Many people believe they’ll never need long-term care, but the reality is different. Around 70% of people who turn 65 will need some type of long-term care, and about 40% will spend time in a nursing home. That means planning ahead is more important than ever.
Without a plan, nursing home costs can quickly drain your savings. Private health insurance doesn’t cover this kind of care, and long-term care insurance is often too expensive or doesn’t cover enough. That’s why many Americans rely on Medicaid. But to qualify, you must meet strict income and asset limits—and there are rules about how and when you can move or give away money.
The good news? With smart Medicaid planning, you may still qualify for help while protecting some of your assets.
Why Planning Early Matters
If you wait until you or a loved one is already in a nursing home, your options are limited. But if you start early—even just a few years ahead—you have many more ways to protect what you’ve worked for.
Here are a few facts to consider:
- The average nursing home stay is about 16 months.
- That can cost more than $150,000 out of pocket.
- Medicare typically only covers a short-term stay (like after surgery), not long-term care.
- Medicaid does cover long-term care—but only for people with very limited income and assets.
What Does Medicaid Count?
To get Medicaid, a single person can usually only have $2,000 in countable assets. Some things don’t count toward this limit, like:
- Your home (in most cases)
- One vehicle
- Personal items and household furniture
But everything else—cash, savings, retirement accounts—can count against you.
And there’s something called the “five-year look-back rule.” This means if you gave away money or property in the five years before applying for Medicaid, you could be penalized. That’s why you need to be careful and plan ahead.
Medicaid Planning Strategies
Depending on your situation, there are different ways to protect assets while qualifying for Medicaid:
- Medicaid-Compliant Annuities: These turn your money into income over time and can help in emergency or “crisis” planning when someone needs care immediately.
- Medicaid Asset Protection Trusts: These allow you to move assets out of your name and protect them for the future—but they must be set up and funded more than five years before you apply for Medicaid.
- Promissory Notes: You loan money to someone (like a family member) and get paid back over time. This turns your asset into income.
- Lady Bird Deeds: This is a type of deed that can protect your home from being taken after you pass away while still allowing you to own and use it during your life.
- Spending Down Assets: You can spend your savings on things like:
- Paying off debt
- Making home repairs
- Buying a newer car
- Prepaying funeral costs
- Taking a family trip (within reason)
These are smart, legal ways to reduce your countable assets and still benefit from what you’ve saved.
If you’re married and only one spouse needs nursing home care, the other (called the “community spouse”) is allowed to keep more income and assets. This can also help protect your family’s finances.
Don’t Wait to Get Help
Medicaid and long-term care planning is not one-size-fits-all. Everyone’s situation is different, and there are many rules to follow. That’s why talking to an elder law attorney is so important. They can help you understand your options, avoid mistakes, and put a plan in place that works for your family.
If you or a loved one is nearing retirement or facing health problems, now is the time to plan. The sooner you start, the more options you’ll have.
Contact King Law today to learn how we can help you protect your home, your savings, and your peace of mind. Call 888-748-KING or fill out this form to get started. We have offices located in North Carolina, Upstate South Carolina, and Eastern Tennessee.