Nursing home care is overwhelmingly expensive in the U.S., often exceeding $100,000 a year. Since Medicare doesn’t cover long-term stays, families turn to Medicaid, which has strict asset limits. Without planning, people may be forced to spend their savings just to qualify. The good news? There are 10 smart, legal ways to protect your money before it disappears into care costs.
Use Medicaid-Compliant Annuities To Reposition Assets
Buying a Medicaid-compliant annuity lets you turn excess savings into a monthly income stream, helping you meet Medicaid’s asset limits. The contract must follow specific rules and be state-approved. This move is very helpful when time is tight, and you need to act fast to protect your assets and support a spouse at home.
Take Advantage Of The Community Spouse Monthly Income Allowance
Speaking of spousal protection, Medicaid also allows a healthy spouse to keep part of the couple’s income—up to $3,853 per month in 2025, with some states allowing even more. It prevents financial hardship, yet many families are unaware of it and unnecessarily drain their savings before applying for help.
Establish A Caregiver Agreement With A Family Member
Just paying your daughter to help out around the house? That could get flagged. Medicaid requires a formal caregiver agreement to count those payments. It must be written, task-specific, and fairly priced. Done right, it keeps funds in the family while preserving your eligibility for benefits down the road.
Set Up An Irrevocable Medicaid Asset Protection Trust
A properly structured Medicaid Asset Protection Trust shields your wealth from spend-down rules. Once your assets are in, they no longer count toward eligibility, though some income may still reach you. To avoid Medicaid penalties, the trust must be in place for at least five years before you apply for long-term care coverage.
Prepay For Irrevocable Funeral And Burial Contracts
You can use extra savings now to prepay for your funeral using an irrevocable plan. Since it can’t be refunded or changed, Medicaid won’t include it in your asset count. It’s an easy way to protect what’s left while ensuring your final arrangements are handled without added emotional or financial burden.
Work With A Certified Medicaid Planner (CMP)
Understanding Medicaid’s rules isn’t easy, especially when they vary from state to state. That’s why you need a Certified Medicaid Planner to help you structure your finances and stay eligible. They know the details and also work with elder law attorneys to build personalized plans. This way, you can protect your assets, avoid costly errors, and ensure you don’t miss out on critical benefits.
Make Home Improvements With Excess Savings
Use some of your extra savings to make necessary improvements to your home, like fixing the roof or building wheelchair ramps. Why does this help? Because Medicaid looks at your available assets, and if you’ve used those funds to improve your home (which doesn’t count against you), your countable savings drop.
Invest In Long-Term Care Insurance Early
More than 50% of Americans over the age of 65 will require extended care, so early planning can help preserve your savings. Aim to purchase long-term care insurance before age 60. It lowers premiums and helps cover care costs that Medicaid and Medicare often don’t. Many policies even combine life and long-term care benefits.
Plan A Legally Protected Trust For A Dependent In Need
Think you can just leave money to a special child and call it a day? Not quite. Without the right setup, it could cost them their benefits. A special needs trust keeps that from happening. It protects the assets and still allows support, as long as the legal rules are followed closely.
Transfer Property With A Life Estate Deed
By signing a life estate deed, you give someone ownership of your home but retain lifetime occupancy. Medicaid often excludes the property from your assets, which improves your chances of qualifying for coverage. It’s a smart move that safeguards your living space and prevents unnecessary financial loss in later years.
