When you start to get older, the discussions that you have with your extended family members and peers will take on a different complexion. You start to talk about the eventualities of aging, and at some point, you will hear about an inconvenient reality.
Medicare does not pay for a stay in a nursing home, and over one-third of senior citizens will require this level of care. More than half of people that reach an advanced age will need some type of paid living assistance, so this is relevant to everyone.
Medicaid is the widely embraced solution because it does cover long-term care. In this post, we will share six pieces of information about senior Medicaid planning that will help you understand the process.
There is a low asset limit, but some things do not count.
You cannot qualify for Medicaid if you have more than $2,000 in assets, but some things that you own are not counted. Your home is the most significant non-countable asset, but there is an equity limit of $1.071 million in New Jersey in 2024.
Other non-countable assets include wedding and engagement rings, heirloom jewelry, one motor vehicle, personal belongings, and household goods. Prepaid burial plots are exempt along with unlimited term life insurance, $1,500 of whole life insurance, and $1,500 saved for final expenses.
Medicaid can place a lien on your home after your death.
The fact that your home is not a countable asset may inspire confidence, but there is a catch. If you are in direct possession of your home at the time of your passing as a Medicaid beneficiary, the program could place a lien on your home.
However, there is an exception to the rule. If one of your adult children has been caring for you in the home for at least two years prior to your entry into a long-term care facility, you can give the home to the child, and it would be protected during the Medicaid recovery phase.
There is one caveat: the level of care that you received from your adult child must be equivalent to the custodial care that would be provided in a nursing home.
There are provisions for a healthy spouse.
When a healthy spouse can live independently while their spouse is entering a nursing home, the independent spouse is entitled to a couple of allowances.
One of them is the Community Spouse Resource Allowance, which is half of the countable assets up to $154,140. There is also a minimum allowance of $30,828 in New Jersey this year. These figures are indexed for inflation annually, so they will be higher next year.
Income that is brought in by the institutionalized spouse must go toward the cost of the care unless an independent spouse is relying on the income. Under those circumstances, the community spouse is entitled to a Monthly Maintenance Needs Allowance.
The maximum allowance in our state during the current calendar year is $3,853.50 a month, and the minimum allowance stands at $2,465.
You can divest yourself of assets, but there is a look-back period.
When you digest all the above, you will naturally resolve to give gifts to your loved ones to qualify for Medicaid if and when you need long-term care. Unfortunately, this is not possible, because there is a five-year look-back period.
Your eligibility is delayed if you give away assets within five years of the submission of your application. For example, if you divest yourself of enough to pay for a year of nursing home care, your eligibility would be delayed by year.
A Medicaid trust can provide the perfect solution.
Many people receive income from invested assets during their senior years. They rely on the money that comes in on a consistent basis, so they would never get rid of the cash cow.
In an effort to shape a financial profile that will need to eventual Medicaid eligibility, you could put that nest egg into an irrevocable Medicaid trust. The assets that you convey to the trust would no longer be accessible to you, but they would not count if you apply for Medicaid.
This is assuming you fund the trust at least five years before you apply. Along the way, you can continue to receive distributions of the trust’s earnings. As a result, nothing really changes. Your savings are generating income just like they were before you created the trust.
In addition to income-producing assets, you could transfer your home to the trust as well. Once again, nothing changes with regard to your day-to-day life. However, if you become a Medicaid beneficiary, the home would be protected during the estate recovery phase.
We can help you devise a nursing home asset protection strategy.
The most important thing to understand about senior Medicaid planning is the simple fact that qualified legal help is just a phone call away.
This is just one aspect of a broader estate plan. When you work with our firm, we will gain understanding of your family dynamic and your legacy goals. There are different ways to proceed, and we will make recommendations based on the circumstances.
At the end of the process, you will go forward with a tailor-made estate plan that is ideal for you and your family. Over the years, we can help you keep your plan up-to-date when revisions become necessary. Your family can also engage our firm to assist during the administration process after your passing.
You can give us a call at 908-222-8803 to schedule an appointment at our Warren, NJ estate planning office, and you can use our contact form to send us a message.
If you are interested in learning more without setting up a consultation, join us for one of our upcoming webinars. There is no charge to attend these events, and you will learn a lot if you participate. To see the dates and obtain registration information, visit our webinar schedule page.
- Can I Write My Own Will, or Do I Need an Attorney? - August 15, 2026
- Is There Any Way to Change an Irrevocable Trust? - August 8, 2026
- How Do You Keep Your Estate Plan Flexible? - August 1, 2026
