Long-term care costs, such as nursing home expenses, can rapidly deplete retirement savings. While Medicare provides minimal assistance with these bills, Medicaid can cover nursing home costs for those who meet stringent financial eligibility criteria.
Employing certain strategies like special trusts, home equity transfers, and annuities can help meet these eligibility requirements and safeguard assets, such as your home and retirement accounts, from Medicaid spend-down mandates. However, these strategies require planning, often years ahead. Consulting a financial advisor can help you prepare for long-term care and other future needs.
Nursing homes offer round-the-clock care for seniors who can no longer live independently, but they come at a steep price. The national average cost for a semi-private room exceeds $94,000 per year, according to Genworth.
Medicare, a federal health insurance program for individuals aged 65 and older, typically covers only short-term nursing home stays for rehabilitation following a hospitalization. For ongoing long-term care, Medicaid can serve as the primary payer. Unlike Medicare, Medicaid is a means-tested program, with eligibility based on strict income and asset limits. Rules vary by state, but most limit individuals to no more than $2,000 in countable assets. For married couples, the at-home spouse can often retain up to $148,620 in assets in 2023.
If you require help planning for these potential expenses, consider working with a financial advisor. Individuals with assets exceeding Medicaid’s limits may need to spend their own money on care before qualifying for Medicaid. Another strategy involves transferring assets to another person or entity, such as a trust. However, Medicaid imposes a five-year lookback period, scrutinizing any asset transfers made within five years before applying for eligibility.