Medicaid Planning: How to Protect Your Home from Nursing Home Costs

The Nursing Home Cost Crisis

The average cost of a private room in a nursing home is now $108,405 per year. For a couple where one spouse needs memory care, costs can exceed $200,000 annually. Medicare covers only short-term skilled nursing care. For long-term custodial care, you're largely on your own — unless you plan ahead.

How Medicaid Works

Medicaid is a joint federal-state program that covers long-term care costs for those who qualify financially. To qualify, you must have limited assets and income. The rules vary by state but generally require:

The 5-Year Lookback Period

Medicaid has a 5-year lookback period. Any assets transferred within 5 years of applying for Medicaid may be counted as if you still own them, creating a penalty period during which you're ineligible for benefits.

This is why planning must start early.

Strategies to Protect Your Assets

Irrevocable Medicaid Trust: Transfer assets to an irrevocable trust more than 5 years before you need care. Assets in the trust are protected from Medicaid spend-down.

Spousal Protections: Federal law protects the "community spouse" (the one not in a nursing home) from complete impoverishment. The community spouse can keep the home, a car, and a portion of assets.

Caregiver Child Exception: If an adult child lived with you and provided care that delayed nursing home placement, they may be able to receive the home without triggering a penalty.