What Happens If You Can’t Pay for a Nursing Home?

Nursing home care is a common concern for aging Americans, and unfortunately many of them aren’t prepared for the cost. According to recent estimates, the average cost of a semi-private room in a nursing home exceeds $100,000 a year, and that number continues to rise. So what happens if you or a loved one needs nursing home care but can’t afford it?

The good news: there are options. Let’s walk through what to expect and how to navigate this challenging situation. 

The Reality of Paying for Long-Term Care

Many people are surprised to learn that Medicare does not cover long-term nursing home care. While it may pay for up to 100 days of skilled nursing care following a hospital stay, it won’t pay for ongoing custodial care—like assistance with bathing, dressing, or eating. That leaves families to explore three primary ways to pay:

• Private pay (using savings or assets)
  
• Long-term care insurance
  
• Medicaid

But what if you don’t have savings or long-term care insurance? That’s when Medicaid becomes a critical safety net.

Read more: Nursing Home Resident Rights

Medicaid: The Primary Payer for Nursing Home Care

If you can’t pay for a nursing home out of pocket or want to avoid depleting your entire nest egg, Medicaid is your most likely solution. Medicaid is a joint federal and state program that covers long-term care costs for individuals who meet specific financial and medical criteria.

To qualify, you must meet your state’s income and asset limits, which are generally very strict. In most states, an individual can have no more than $2,000 in countable assets to qualify. Fortunately, not all assets count against you. Medicaid typically excludes your:

• Primary residence (if you or your spouse lives there)
  
• One vehicle
  
• Personal belongings
  
• Irrevocable funeral arrangements

However, if your assets exceed the limit, you may need to “spend down” before becoming eligible. 

What Happens During the Spend-Down Process?

If you apply for Medicaid and have more assets than allowed, you may be required to spend-down those assets on approved expenses, such as:

• Medical bills
  
• Home improvements
  
• Paying off debt
  
• Purchasing exempt assets (like a new vehicle)
  
• Prepaying funeral costs through an irrevocable trust
• Funding a Medicaid Compliant Annuity

It’s important to follow state-specific rules to avoid penalties. Improper asset transfers can trigger a Medicaid penalty period, delaying your coverage. That’s why many families choose to work with a planning professionals to make the most of their resources while staying compliant.

Read more: How to Protect Your Assets from Nursing Home Costs

Protecting Assets with a Medicaid Compliant Annuity

Fortunately, even if your loved one is already in a nursing home and seeking Medicaid eligibility, it’s not too late to protect what they have left. With a Medicaid Compliant Annuity (MCA), they can spend down their excess countable assets by converting them into an income stream. Strategies for using an MCA vary depending on your state, marital status, and other factors. 

The key point is that even if you have too many assets to qualify for Medicaid, you can still protect some or all of what you have left by funding an MCA and receiving Medicaid benefits. 

Take the Next Step

Running out of money doesn’t mean running out of options. With smart planning and support from Senior Care Counsel, you can ensure you or your loved one receives the care they need—without sacrificing everything you’ve worked for. Tell us about your situation to get started.