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How Can You Protect Assets from Nursing Home Costs?

By Molly Zilli, Esq. on April 26, 2018 | Last updated on March 21, 2019

Most of us don't like to think about getting older and needing to be cared for by others, or having to place a loved one in a nursing home. But these are realities of life, and they're probably going to come up whether we plan for them or not. A big part of that planning process is the financial side of things. Long-term care and nursing home costs can be staggering. So how do you protect your assets from nursing home costs? Here are a few things to consider.

Long-Term Care Insurance

One very effective way to protect assets from nursing home costs is to purchase long-term care insurance. Not everyone is able to get this kind of insurance since some medical conditions can disqualify you. However, if you do qualify, it's important to purchase the insurance early enough while you're still relatively healthy and so that your premiums are not prohibitively high. Some experts recommend buying long-term care insurance in your mid-50s.

Assets, Medicare, and Medicaid

While many people who might need nursing home care will qualify for Medicare -- the federal program for the elderly and disabled -- that program only covers temporary coverage for things like hospital stays, nursing homes, home health care, and hospice. After the temporary period is up, you'll have to pay the costs out of pocket unless you qualify for Medicaid.

Medicaid is a federal program that does cover long-term care like nursing homes. However, it is an income-based program so if your assets put you over the strict threshold level, you won't qualify. Some people attempt to qualify for Medicaid by gifting assets to loved ones, setting up trusts, and the like. However, each state has a "look-back period" that considers assets held in previous years, and you could end up being penalized by an ineligibility period if you don't do it right.

Professional Planning

However, there are legal ways to protect your assets with regard to Medicaid eligibility and nursing home costs. The best way to insure you protect your assets and avoid Medicaid fraud is to consult an attorney with experience in Medicaid and estate law.

An attorney can also help you set up powers of attorney and living wills, and can advise you with regard to nursing home contracts before you sign on the dotted line. These are all important factors in protecting your assets from mismanagement, elder abuse, and the long-term effects of high nursing home costs.

While these aren't the most pleasant topics to consider, it is vital to plan ahead. Nursing home costs can quickly deplete your assets and affect your ability to care for love ones financially. Speak with an attorney to discuss options for asset protection and planning.

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