Protecting Assets from Nursing Home Costs

One of the biggest concerns many face when planning for the future is the potential cost of long-term care. If a nursing home becomes necessary, the costs can quickly drain your savings and assets, leaving little for your loved ones. Fortunately, proper planning can protect your hard-earned assets and give you control over your legacy.

What Happens If You Don’t Plan for Nursing Home Costs?

Nursing home care is staggeringly expensive in the United States. The National Council on Aging (NCOA) reported monthly median costs of $8,669 for a shared room and $9,733 for a private room. Without proper planning, many people spend their life savings to pay for care. This can leave little behind for your spouse or heirs. If the government seeks to recover costs from your estate after you pass away through Medicaid estate recovery, even your home may not be left for loved ones.

Can Medicare Cover Nursing Home Costs?

Many people mistakenly believe that Medicare will cover long-term nursing home care. However, Medicare only covers a limited amount of nursing home care and is usually only for short-term rehabilitation following a hospital stay. It doesn’t cover long-term stays that often become necessary as we age. This is where Medicaid comes in. However, qualifying for Medicaid usually requires spending down most of your assets.

What Is Medicaid Spend-Down, and How Can It Affect You?

Medicaid spend-down is when individuals must reduce their assets to a certain level to qualify for Medicaid coverage of nursing home care. This often means using your savings, selling your home, or depleting other assets to meet the eligibility requirements. While Medicaid will cover your nursing home costs once you qualify, the spend-down process can leave you with little left over, erasing your legacy.

How Can You Protect Your Assets from Medicaid Spend-Down?

According to Elder Law Answers, there are several strategies you can use to protect your assets from the Medicaid spend-down process. These strategies can help preserve your wealth for your loved ones rather than being used up by nursing home costs.

1. Establishing a Medicaid Asset Protection Trust (MAPT)

One effective way to protect your assets is by setting up a Medicaid Asset Protection Trust (MAPT). This type of trust allows you to transfer your assets into the trust, effectively removing them from your ownership. Since the assets are no longer in your name, they aren’t counted when determining Medicaid eligibility. However, it’s important to plan ahead and work with a qualified elder law attorney to create one, since there is a five-year “look-back” period in which transfers can be penalized, and the accurate design and funding of a trust are complex.

2. Transferring Assets to Your Spouse

You can transfer assets to your spouse without triggering a Medicaid penalty if you're married. This strategy is known as spousal impoverishment protection, and it’s designed to prevent one spouse from becoming impoverished due to the other’s long-term care costs. However, consulting with an elder law planning attorney is essential to ensure that this transfer is done correctly.

3. Long-Term Care Insurance

Long-term care insurance can be a valuable tool in protecting your assets. By purchasing a policy, you can cover the costs of nursing home care without depleting your savings. You must purchase this insurance well before you need it, since premiums are lower, and you’re more likely to qualify for coverage.

4. Life Estates and Real Estate Transfers

Transferring your home ownership while retaining a life estate may be another effective strategy. This allows you to continue living in your home while removing it from your assets for Medicaid purposes. After your death, the home passes directly to your beneficiaries, bypassing probate and protecting it from Medicaid estate recovery.

What Should You Do Next?

Planning to protect your assets from nursing home costs can be complex. However, working with a qualified elder law attorney is crucial to securing your financial future and ensuring that your loved ones are cared for. Each person’s situation is unique. The best strategy for you will depend on your specific circumstances, including your health, assets and family dynamics.

Ready to Protect Your Assets?

Don’t wait until it’s too late to protect your assets from nursing home costs. Start planning today to ensure that your wealth is preserved for the people you care about most. Contact our elder law firm to schedule a consultation and learn how we can help you create a plan tailored to your needs. Whether it’s establishing a trust, transferring assets, or exploring long-term care insurance options, we’re here to guide you every step of the way. Reach out today to secure your future and protect what matters most.

Key Takeaways:

• Preserve Your Wealth: Safeguard your savings and property from the high costs of nursing home care.
• Avoid Medicaid Spend-Down: Utilize strategies like trusts and spousal transfers to maintain your assets.
• Ensure Family Security: Protect your legacy, ensuring that your loved ones benefit from your hard-earned assets.
• Plan Ahead: Early planning can help you qualify for Medicaid while preserving your financial future.
• Professional Guidance: Consulting with an elder law attorney ensures a tailored and effective approach.

Contact Attorney John Hoffman, Jr. for a free consultation. We proudly serve clients throughout northeast Ohio including Akron, Fairlawn, Wadsworth, Medina, Stow, Hudson, and beyond.

References:

Elder Law Answers (April 17, 2015) “End of Medigap Plans' Coverage of Medicare Part B Deductible” and National Council on Aging (NCOA) (Oct 27, 2023) “Nursing Home Costs and Payment Options”