Protecting Your Home from Medicaid through Estate Planning

Protecting a home from Medicaid is crucial for nearly any older adult who requires long-term care in a nursing home, does not want to spend down their assets, and wants to return home eventually. If you have not considered the possibility that you or an elderly parent might need Medicaid, it is important to understand how Medicaid works for elderly Americans. While Medicaid is a benefit for individuals with limited income and assets, most older adults who need long-term care, and especially in a nursing home, will want to become Medicaid-eligible without using all of their resources. Otherwise, they will need to spend down their savings and their assets to pay for long-term care until they become eligible.

For many older adults, one of the most important assets to protect is their home. How can you protect your home from Medicaid with estate planning strategies, and why would you need to do so? Consider the following information.

Why You May Want Medicaid to Pay for Nursing Home Care

According to data from CareScout, in 2024, the cost of a private nursing home room was an average of $14,357 per month, or $172,284. Those numbers have gone up since 2024, and as general costs rise and inflation continues, prices will only continue to increase. In fewer than three years, the cost of nursing home care could total over half a million dollars. In order to avoid paying out of pocket and spending down assets, most New Jersey residents will want to become eligible to have Medicaid cover those costs.

However, you cannot simply gift assets away to avoid having them counted by Medicaid. Medicaid has a five-year “lookback” period, and you can be penalized for any transfers made in the five years prior to the date you need nursing home care. How, then, can you protect your home?

Can Medicaid Require You to Sell Your House?

Can Medicaid require you to sell your home since it is a valuable asset? In short, you can avoid having to sell your home. Generally speaking, “countable” assets include cash, investments, bank accounts, and real estate other than your primary residence. If you own a home and you plan to return to it after receiving nursing home care, your home will be among your “non-countable” assets that will not count toward your Medicaid eligibility.

Income and Asset Limits in New Jersey for 2026

When it comes to your countable assets, to be eligible for Medicaid your monthly income must not exceed $2,982, and you will have a $2,000 asset limit. For married couples in which both spouses need long-term care, the income limit is doubled and the countable asset limit increases to $3,000. If only one spouse needs long-term care and Medicaid coverage, the spouse who does not need Medicaid coverage has an asset limit of $162,660.

Your estate planning lawyer can discuss options for protecting countable assets, which may include establishing a Medicaid asset protection trust or using countable assets to improve non-countable assets, such as making specific types of improvements to your home.

Contact a Summit Estate Planning Lawyer for Assistance with Asset Protection Strategies in Your Estate Plan

Whether you are thinking about an elderly parent who could require nursing home care sooner rather than later, or you want to plan ahead for yourself, there are many asset protection strategies that can allow you to protect your home from Medicaid in the event Medicaid coverage is needed to pay for long-term care. As we discussed above, qualifying for Medicaid is possible even if you have substantial savings and assets by planning ahead. One of the experienced Summit estate planning attorneys at Dempsey, Dempsey & Sheehan can discuss Medicaid planning and asset protection strategies with you today. Contact our firm to learn more about how we can assist you and your elderly parents.

Sources:

nj.gov/humanservices/dmahs/clients/medicaid/

carescout.com/cost-of-care