How to Protect Money from a Nursing Home

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Nursing home care may be the only option for some senior citizens. Unfortunately, nursing home expenses incurred can be overwhelming. Protecting hard-earned assets is a challenge many seniors face when nursing home placement is inevitable. For many, the only way to afford nursing home care is by becoming eligible for Medicare or Medicaid. If you want to avoid out-of-pocket costs, the only way to do so is by becoming Medicaid eligible.The laws are strict regarding the assets a senior can have before acceptance into a nursing home. Preserving assets before entering a nursing home requires proper planning.


  1. Take inventory of all bank accounts, stocks, bonds, annuities, vehicles, and property. Your insurance provider will limit the amount of assets you can own. According to Medicaid, there is a 60-month look-back period. Medicaid will look at 60 months' worth of financial records. Medicaid states it will not penalize anyone if he chooses to spend his assets. You must be careful to avoid fraudulent conveyance. This means you cannot sell or give away your assets for less than the fair market value.

  2. Determine the assets allowed. Medicaid differs from state to state. Contact your local Medicaid office to find out which assets are covered. Medicaid and most other insurance companies will allow you to keep your home if it is your primary residence that you intend to return to. You are also able to keep one vehicle as long as you use the vehicle for your transportation or transportation of a household member. If you do not have insurance, the nursing home facility may have different rules regarding your allowed assets.

  3. Liquidate as much of the assets as possible. Because Medicare and most other insurance companies do not touch your home, consider spending money on your remaining asset. Pay down the mortgage. Hire a contractor to renovate the home. Purchase new furnishing for the home. Your personal possessions are not counted as assets. Not only are you spending the assets, but you also are increasing the value of your home. You can even spend funds by trading your existing car for a newer model.

  4. Reposition your assets. You can transfer your assets to an irrevocable trust. By placing assets in the trust, you legally no longer own the assets. Because you are not the legal owner, no one can touch the assets or demand you liquidate the assets. This also eliminates probate and can lessen estate taxes. It is best to do this as early as possible.

  5. Enter a caregiver agreement with a relative. You can give assets to family members as compensation for a particular service. For example, you can pay your grandson $2,000 for maintaining your home and lawn or looking after your finances while you are away. You would need a written agreement predating any payment.

  6. Learn the rights of your spouse. Assets that are not exempt will be added and divided in half. You must reduce your asset amount to $2,000 to become eligible. The spouse may also keep his burial reserve, automobile and other personal items. A prenuptial agreement is not valid when it comes to dividing assets for Medicaid eligibility.




  • Photo Credit senior couple holding hands image by Janet Wall from

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