Medicaid Planning for Long-Term Care: Protecting Your Assets While Qualifying for Benefits

Posted on February 16, 2025 by shieldsandboris

Long-term care costs are extraordinarily high. They are one of the biggest threats to your assets. According to data cited by the U.S. Health News, the average cost of a semi-private room in a nursing home is nearly $10,000 per month. The good news is that Medicaid can provide coverage for long-term care. The bad news is that Medicaid only provides coverage to those with limited assets.

Long-term care planning offers the solution. There are proactive strategies that can help you protect your assets while still allowing you to qualify for benefits. At The Elder Law Offices of Shields & Boris, we have extensive experience with Medicaid planning. Here, our Pennsylvania elder law attorney provides a guide for protecting your assets while still qualifying for benefits.

Understanding the Role of Medicaid and Long-Term Care

Long-term care is a term used to describe a range of medical and personal services designed to assist individuals with chronic illnesses, disabilities, or other conditions that limit their ability to perform daily activities independently. These services include help with bathing, dressing, eating, and mobility. Long-term care also includes skilled nursing care for more complex medical needs. It can be provided in many settings, including nursing homes.

As long-term care can be expensive, many people have questions about what type of public support is available. As explained by the Commonwealth of Pennsylvania, our state does provide some long-term care coverage for people “who qualify for Medicaid.” Medicaid is a program that helps cover costs for nursing homes, assisted living facilities, and in-home care for people with medical needs who also have limited income and financial resources.

Note: It is important to dispel a common misconception. Too many people falsely believe that Medicare covers long-term care. It provides only very limited coverage for short-term needs. Unfortunately, it does not provide extended coverage for custodial care—the type of assistance most people need as they age. Medicare only covers short-term stays in a skilled nursing facility following a hospital stay, and even then, it is limited to 100 days and has strict eligibility requirements.

The Big Risk: You Could Be Forced to “Spend Down” Assets to Qualify

Not everyone who needs long-term care in Pennsylvania will automatically qualify to have it covered by Medicaid. Quite the contrary, Medicaid has strict financial eligibility requirements. The National Council on Aging (NCOA) explains that Medicaid may require a person to “spend down” their remaining assets to a certain level before they can qualify to get their long-term care paid for by the program. Here is a key point to keep in mind for long-term care planning:

Medicaid is Strictly Means-Tested: Medicaid is a means-tested program. Applicants must have limited income and limited assets to qualify. Too many seniors assume they can simply apply when they need care, only to discover that their savings, retirement funds, and even homes may be counted against them.

What happens to a person who has too much financial resources to qualify for Medicaid? The program forces them to “spend down” those assets. Unfortunately, the cost of long-term care is so high in Pennsylvania that even a seemingly short period of need could force a spend-down that can quickly deplete a lifetime of hard-earned assets.

Long-Term Care Planning Strategies to Protect Your Assets and Qualify for Benefits

There is good news: With a proactive estate plan, you can go a long way toward protecting your hard-earned assets from long-term care costs. There is hope for individuals who need long-term care but want to protect their assets. While Medicaid has strict financial eligibility requirements, smart planning can help you qualify without losing everything. A top-tier Pennsylvania asset protection attorney can help you and your family put the right structure in place. Here are some strategies for protecting your assets and qualifying for benefits:

  • Create a Medicaid Compliant Trust: You should establish an irrevocable trust. An irrevocable Medicaid trust can be used to protect your assets from Medicaid’s spend-down requirements. As assets in the trust are no longer considered part of the applicant’s estate, they are not counted against Medicaid eligibility. However, that is only true if the transfer occurs outside the five-year lookback period. You must set up a trust at least five years before any actual long-term care needs in order to ensure you can qualify for Medicaid.
  • Use a Medicaid-Compliant Annuity: A Medicaid-compliant annuity is a financial tool that converts excess assets into an income stream. A key advantage is a Medicaid applicant’s spouse receives payments while ensuring eligibility. The strategy is often used in cases where one spouse requires long-term care while the other remains at home. By structuring the annuity properly, a couple can protect savings from being depleted.
  • Consider an Early Gifting Strategy: Another strategy is early gifting. It involves transferring assets to family members or loved ones well before long-term care is needed. Since Medicaid has a five-year lookback period, gifts made within five years of applying could result in a penalty, delaying eligibility. However, if gifting is done strategically—such as transferring property or financial assets to heirs before the lookback window—it can help preserve family wealth while still allowing for Medicaid qualification later.
  • Develop a Strategic Asset Spend-Down Plan Strategy: For those who exceed Medicaid’s asset limits, a controlled spend-down strategy can help. Instead of simply paying for nursing home care until assets are depleted, people and families reallocate funds toward exempt assets such as home improvements, paying off debts, purchasing a prepaid funeral plan, or making modifications for aging in place.

Contact Our Pennsylvania Medicaid Planning Lawyer Today

At The Elder Law Offices of Shields & Boris, our Pennsylvania long-term care planning attorney is always prepared to go the extra mile to help clients find the best solution. If you have any questions about Medicaid planning, we are here to help you protect your assets. Call us at (724) 286-4745 or contact us online for a fully confidential consultation. We provide long-term care planning services throughout Western Pennsylvania.



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