You may have a will, a trust, and powers of attorney in place. You may even believe your estate plan is complete. But one uncomfortable truth remains: long-term care costs could undo everything you have built if your plan does not address it directly.
Too often, families focus only on what happens after death. That leaves them vulnerable to the growing reality of aging in America—nursing homes, home care, and medical costs that can drain a lifetime of savings in just a few years.
If you want to protect your assets and support your family, you need to face this issue before it becomes a crisis.
The Medicare Myth: What It Covers and What It Doesn’t
Many people believe that Medicare will cover long-term care expenses. That assumption feels reasonable. Medicare exists to provide health care support for seniors, so it must include nursing homes, right?
Not quite. Medicare only covers skilled nursing care after a hospital stay of at least three days. Even then, coverage is limited to a maximum of 100 days, and only the first 20 days are fully paid.
Medicare also does not cover custodial care, which is the kind of help most people need when they move into a long-term care facility. This is the gap that catches families by surprise. You may be ineligible for help when you need it most, unless you qualify for Medicaid.
Long-Term Care in New Jersey: A High-Cost Risk
If you live in Warren or anywhere else in New Jersey, the numbers are especially troubling.
According to the 2024 Genworth Cost of Care Survey, a private room in a nursing home in this region can cost nearly $200,000 per year. Assisted living and home health care are often less expensive, but they still add up quickly over time.
Very few families have the resources to pay these expenses out of pocket for long. A couple may find themselves draining retirement accounts just to cover one spouse’s care. As a single person, you might worry about leaving nothing behind for loved ones.
Your Existing Plan May Not Offer the Protection You Think It Does
Wills and revocable living trusts are essential tools in estate planning. They help you organize your assets, designate beneficiaries, and reduce confusion after death. But they do not protect those assets from being spent down for long-term care.
If your assets are titled in your name or held in a revocable trust, they are still considered available resources for Medicaid purposes.
In New Jersey, that means you may have to use them for care before becoming eligible for Medicaid benefits. This is where many traditional estate plans fail. They were never designed to guard against this particular risk.
Why You Need a Medicaid Trust
If you want to shield assets from long-term care costs while preserving your eligibility for Medicaid, you may need a different strategy. One common option is the Medicaid trust.
This is an irrevocable trust that removes certain assets from your name and places them under the control of a trustee. You cannot revoke the trust or take the assets back, but you can receive income generated by assets in the trust.
Plus, you can still live in your home as usual after transferring it to the trust. This can be an effective strategy because Medicaid can place a lien on the home after your passing if it is in your direct possession at the time of your death.
The key benefit is that, once five years have passed, the assets in the trust are no longer counted when applying for Medicaid. This allows you to qualify for assistance without being forced to spend everything first.
A trust like this must be drafted carefully and with the right timing. That is why working with an elder law attorney is so important.
The Five-Year Look-Back Period: Act Before It’s Too Late
New Jersey applies a five-year look-back period to all Medicaid applications. That means Medicaid will review your financial transactions going back 60 months.
If they find that you transferred assets during that time to reduce your countable resources, they may impose a penalty. During the penalty period, you will be ineligible for benefits and must pay out of pocket.
This is why advance planning matters. You cannot wait until you are admitted to a nursing home to start thinking about Medicaid. If you take action now, you can begin that five-year clock while you are still healthy and independent.
Coordinating Life and Legacy in One Plan
A complete estate plan does more than distribute your assets. It helps you maintain control during your lifetime and avoid unnecessary financial hardship. For someone in their 60s, 70s, or 80s, this means using tools that address both incapacity and long-term care.
That might include:
- A trust for your home and savings
- Updated powers of attorney and health care directives
- A care plan that aligns with your values and wishes
- Clear instructions for your trustee or future decision-makers
Planning this way allows you to keep your independence longer and reduce the emotional and financial stress your family may face later on.
Final Thought: Face the Truth, Then Take Action
The truth about long-term care is inconvenient, but ignoring it only makes things harder down the road. It is not easy to think about losing independence or needing help with daily tasks, but these situations are common as people live longer.
The good news is that you have options if you start early. Revisiting your estate plan today can help you protect your home, preserve your savings, and give your loved ones a clearer path forward.
We Are Here to Help!
Our doors are open if you are ready to work with a Warren, NJ elder law attorney to implement a nursing home asset protection strategy. You can call us at 908-222-8803 to schedule a consultation appointment, and you can use our contact form to send us a message.
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