Help! My Parent Is In a Nursing Home — Is It Too Late to Do Medicaid Planning?

For those who wish to protect their assets from the cost of long-term care, it is always best to plan in advance—e.g., to transfer real property and/or liquid non-retirement assets to an Irrevocable Medicaid Asset Protection Trust (MAPT) when one is healthy enough to expect that they will not need nursing home (NH) care for at least five years. Once five years have passed from the date of the transfer, the assets are fully protected from NH Medicaid. Unfortunately, the more common scenario is that planning wasn’t done far enough in advance (or at all), and Mom or Dad need immediate care in a NH. What are the options? Spending Down Spending down one’s assets is always an option. For the year 2026, the Medicaid financial eligibility resource limit is $33,038. If one’s assets exceed this amount, they can first be spent down on the Medicaid applicant’s permissible expenses (e.g., credit card debt, medical bills, legal fees, the purchase of an irrevocable pre-paid funeral agreement) before being applied toward the cost of care at the NH. Once below the threshold, a NH Medicaid application can be submitted to cover the cost of future care. Spousal Refusal If the Medicaid applicant (MA) is married and their spouse is healthy (i.e., doesn’t need Medicaid), the MA can transfer assets in excess of $33,038 to the well spouse, and the well spouse can sign a Spousal Refusal (SR), refusing to contribute their resources and/or income toward the cost of the MA’s care. This allows the MA to become financially eligible for Medicaid. While Medicaid then has the right to sue the well spouse to recover monies spent on the cost of the MA’s care,  there is no guarantee that Medicaid will do so, and even if they do, they can only recover from the well spouse at the Medicaid rate, which is approximately 50% of the private pay rate. Medicaid Crisis Plan If the MA is single (or their spouse also has/needs Medicaid) and their savings far exceed the Medicaid limit, a third option is a Medicaid Crisis Plan, which allows the MA to preserve approximately 40%-50% of their resources. It works like this: The MA gifts 40%-50% of their excess resources to a loved one, which triggers a period of Medicaid ineligibility (the penalty period) due to the five-year lookback period. The remaining 50%-60% of the assets are loaned to the loved one utilizing a Medicaid-compliant promissory note, whereby monthly payments are utilized, together with the MA’s income, to privately pay the NH through the duration of the penalty period. At the penalty period’s conclusion, the excess resources are exhausted, the gifted portion is protected, and Medicaid is able to cover the NH costs going forward. The best practice is always advance planning, but if you haven’t done so, all is not lost. Consult your local elder law attorney to discuss what strategies work for you and your family.