Can I Protect My Money If I Go Into a Nursing Home?

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Woman in a nursing home
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Nursing home care is expensive. Can you get Medicaid to pick up the tab without having to surrender all your savings?

Money Talks News reader Diane posed that question to us:

“Will you please tell me if there’s a way to prevent the nursing home from taking all of your money when you go into it?”

Well, Diane, I’ve got three things for you:

Thing No. 1: Medicare doesn’t care

If you need long-term care in a nursing home, it’s going to cost a ton of money: Estimates range from $50,000 to $80,000 per year.

You may think, “Medicare will take care of me.” No, Medicare won’t. You can go into a nursing home for a very limited amount of time, and Medicare will pay the bill. But once it becomes long-term, Medicare won’t pay.

However, Medicaid will pay for nursing home care. Medicaid is the health care solution for low-income Americans. In order for Medicaid to pick up your nursing home tab, you’re going to have to spend down almost all of your assets.

And this, I assume, is what Diane is addressing. She’s asking if there’s a way to qualify for Medicaid without having to give up all your savings.

Thing No. 2: Medicaid strategies

There are strategies you can employ that will allow you to legally qualify for Medicaid and preserve some of your money. However, they’re complicated.

Keep in mind, Medicaid isn’t for the rich, or even the middle class. It’s a taxpayer-supported system for the impoverished. That being said, there are some things you can legally do to protect some of your assets.

Examples include certain annuities and giving away your assets to family members at least five years before going into a nursing home. There are also irrevocable trusts you can set up, like life estates and spillover trusts. Sound complicated? It is, which is why you’ll need a lawyer to properly explore your options.

In short, the essence of sheltering your assets from a nursing home and getting Medicaid to pay the bill is to remove assets from your estate, either by giving them away or by putting them in an irrevocable trust. You need to do that long in advance of entering a nursing home. You’ll need a lawyer, and it’s not simple. Therefore, you’ll probably need a lot of assets before it’s even worthwhile.

Thing No. 3: Alternatives

There are alternatives to going down this road, none of which is particularly pleasant or simple. You can get long-term care insurance, which is terrifically expensive. You could self-insure, which means having enough savings to pay for the nursing home. You can opt for home care, if that’s feasible for you, since it’s generally less expensive than a nursing home.

Bottom line? This is a tough situation without obvious solutions. But if you want to explore them, do some reading, then talk to a lawyer. You can start your reading at Money Talks News. Just do a search for “long-term care.”

Hope that answered your question, Diane.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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