Planning for potential nursing home costs plays an important role in estate planning. Nursing home care costs can quickly deplete your savings if you don’t prepare properly. However, you can use several strategies to protect your assets while covering your care needs.
Use Medicaid to cover nursing home expenses
Medicaid helps cover the high costs of nursing home care in Maryland, but strict financial eligibility requirements apply. You must ensure your income and assets fall below certain thresholds to qualify. Many people restructure asset ownership or create irrevocable trusts to meet these requirements and preserve their wealth.
Create an irrevocable trust
An irrevocable trust enables you to transfer assets out of your ownership, shielding them when determining Medicaid eligibility. By placing assets in this trust, you ensure they remain available for your beneficiaries. Medicaid’s five-year look-back period requires you to establish the trust at least five years before applying for benefits to avoid penalties.
Use a life estate deed
A life estate deed protects your home from nursing home costs while allowing you to continue living there. This legal document transfers your home’s ownership to a beneficiary while preserving your right to use the property during your lifetime. Maryland excludes a home in a life estate from Medicaid eligibility calculations, making this strategy popular for protecting real estate.
Purchase long-term care insurance
Long-term care insurance covers nursing home care costs, helping you preserve your savings. These policies also often cover other forms of care, such as in-home assistance. Purchasing this insurance while younger and healthier allows you to secure lower premiums.
Address Maryland’s estate recovery program
Maryland’s estate recovery program seeks reimbursement for Medicaid benefits used for nursing home care from your estate after you pass away. You can reduce this impact by transferring assets before applying for Medicaid or using trusts to protect certain property.
Planning ahead ensures you protect your assets from nursing home costs. By applying these strategies, you safeguard your financial legacy and cover your long-term care needs.