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March 18, 2025
By: Anthony B. Ferraro

Are you Worried About the Devastating Costs of Long-Term Care in a Nursing Home, Assisted Living, or Home Care?

There Are Steps You Should Take to Protect Your Home and Your Hard-Earned Life Savings.

 

Approximately 66% of the U.S. population will need some form of long-term care.

There are only four ways to pay for long-term care in the United States:

1.) Medicare Reimbursement – However, that coverage is limited to rehabilitation services and does not cover custodial care, which is what most people in skilled care eventually need.

2.) Private Pay – Costs can range from $8,500 to $14,000 per month out-of-pocket.

3.) Long-Term Care Insurance – Currently, only about 6% of the population has this type of coverage.

4.) Medicaid Long-Term Care Program (or Medicaid LTC) – A government program that U.S. taxpayers are entitled to if they meet financial eligibility requirements.

Many clients that come into our office have no choice but to seek Medicaid LTC. If an individual qualifies for Medicaid LTC benefits, Medicaid covers all nursing home costs. Medicaid also pays for supportive living services, which function is similar to assisted living. Medicaid eligibility rules are strict, which is why many clients seek our legal assistance to become financially eligible—both legally and ethically—for Medicaid LTC benefits.

Understanding Medicaid’s Asset Limits

Medicaid imposes stringent limits for eligibility. Without additional planning, the rules allow:

  • A single person on Medicaid to have only $17,500 in countable assets.
  • A married couple, where one spouse remains at home, to retain:
    • The family residence
    • One vehicle
    • Up to $135,648 in other assets
  • A married couple, where both spouses are in a nursing home, to keep only $17,500 in total assets.

For most of our clients, these asset limits are too low.

Strategies to Protect your Assets

Fortunately, there are exceptions to Medicaid’s strict asset limits, including:

  • Spending down assets on exempt purchases such as:
    • Personal possessions
    • Prepaid burial arrangements
    • Home repairs
    • Purchasing a new car
  • Converting excess assets into allowable assets through:
    • Medicaid-compliant annuities
    • Medicaid-compliant promissory notes
    • This strategy helps to convert assets into income instead of requiring a full spend-down.
  • Creating a Medicaid-compliant irrevocable trust, such as
    • A private asset protection trust
    • A government-approved OBRA trust
  • Establishing a life estate in a residence, allowing a parent to transfer their home to their children while retaining a life estate interest in the property.
  • Gifting strategies, such as:
    • Transferring assets at least five years before applying for Medicaid to avoid penalties.
    • Intentionally gifting assets and strategizing to pay through any penalty period.

Reviewing Existing Estate Plans

While long-term care is a looming concern, traditional wills, trusts, and powers of attorney—especially between spouses—may need to be revised. Updates can help minimize the financial burden of long-term care costs on one or both spouses.

Every Case is Unique

There is no one-size-fits-all solution. Each Medicaid planning strategy must be tailored to the individual’s circumstances.

If you would like a free telephone consultation to discuss how to protect your assets from the high costs of long-term care—for yourself, your parents, or a loved one—please contact our office. We would be happy to help you protect your assets.