Nursing Home Asset Protection FAQs

According to the United States Department of Health and Human Services, 70 percent of elders will require some type of living assistance. Just over one third of these individuals will eventually reside in nursing homes.

It averages out to about one year, but over 10 percent of people receive the care for more than five years, many for as long as 10 years. Just over 20 percent require the care for between two and five years.

Since Medicare is a health insurance program for seniors and most elders will need some type of living assistance, you may assume Medicare will cover long-term care.  However, whether it is fair or not, Medicare does not pay for the custodial care provided by nursing facilities.

In Oklahoma City, in 2021 you can expect to pay $70,000-$80,000 a year for a stay in a nursing home. A married couple may face two nursing home bills, so the expenses could consume a significant portion of your legacy.

Medicaid is a jointly administered federal-state government health insurance program. It pays for long-term care, but it is a needs-based program so countable assets are limited to $2000.

Certain property is not counted. Your home is a non-countable asset for at least some period of time.  You can retain possession of one motor vehicle, your wedding rings, engagement rings, heirloom jewelry, personal belongings, and household items.

You can have $1500 of whole life insurance, the same amount saved for final expenses, unlimited term life insurance, a prepaid burial plot, and a prepaid funeral plan.

Two allowances are available.  One is the Community Spouse Resource Allowance, which allows the healthy spouse to keep half of shared assets up to approximately $130,000.

If a single person is applying for Medicaid, all but $75 of income must go toward the cost of  care. This requirement is waived when a healthy spouse is relying on the income to maintain a reasonable standard of living.

The healthy spouse can receive a Monthly Maintenance Needs Allowance drawn from the income of the institutionalized spouse.

You can convey assets into a Medicaid trust to shape your appropriate financial profile.

A Medicaid trust is an irrevocable trust.  You can receive trust income, but you will not be able to access the trust principal. This warrants more discussion than available in this report, but is a primary tool for Medicaid planning.

If you apply for Medicaid, the principal in your Medicaid trust will not count against you, but you will no longer be able to receive any income.

Yes, but your assets will still count if you apply for Medicaid. There is a five-year look-back period, so all trust funding must take place at least five years before you submit your application.