Nursing home care is one of the most significant financial challenges a family can face. In 2026 the average cost of a private room in a nursing home is approximately $10,000 per month — and in high cost states like Alaska Hawaii and Connecticut costs can reach $18,000 to $25,000 per month or more. A two year nursing home stay can cost $240,000 or more. For most families this is a devastating expense.
The good news is that with the right planning many families can protect a significant portion of their assets while still qualifying for Medicaid coverage of nursing home costs. This guide explains your options in plain English.
Understanding the Basic Problem
Most people assume that Medicare pays for nursing home care. It does not — at least not for long. Medicare covers only short term skilled nursing care after a qualifying hospital stay and only for up to 100 days under limited circumstances. After that you are on your own.
Private pay nursing home care drains assets quickly. A couple with $300,000 in savings can exhaust those savings in two to three years of nursing home care. Once assets are gone Medicaid steps in — but by then there may be little left to protect.
The key to protecting assets is planning ahead — ideally years before nursing home care is needed.
Option 1 — Medicaid Planning with an Elder Law Attorney
Medicaid is the primary payer for long term nursing home care in the United States covering more than 60 percent of all nursing home residents. Medicaid is a needs-based program with strict income and asset limits — but with proper planning many middle-class families can qualify without spending down everything they own.
Medicaid planning involves legally restructuring assets and income to meet Medicaid eligibility requirements while protecting as much of the family’s wealth as possible. Common Medicaid planning strategies include:
Medicaid Asset Protection Trusts
An irrevocable trust that holds assets outside of the Medicaid applicant’s name. Assets transferred into a Medicaid Asset Protection Trust — MAPT — at least five years before applying for Medicaid are generally protected from the asset limit and from Medicaid estate recovery. This is one of the most powerful tools available but requires careful planning well in advance.
Spousal Protection Strategies
Federal law protects the community spouse — the spouse who remains at home — from complete impoverishment when the other spouse needs nursing home Medicaid. In 2026 the community spouse may retain up to $162,660 in assets plus the family home a vehicle and other exempt assets. An elder law attorney can help maximize the amount the community spouse keeps.
Exempt Asset Conversion
Certain assets are not counted toward Medicaid eligibility limits. Converting countable assets into exempt assets — for example paying off a mortgage making home improvements or purchasing a prepaid funeral — is a legitimate way to reduce countable assets before applying.
Qualified Income Trusts
In states with income caps — where monthly income cannot exceed $2,982 in 2026 — applicants whose income exceeds the cap must establish a Qualified Income Trust — also called a Miller Trust — to qualify for Medicaid. An elder law attorney can set this up.
Important — plan early
Medicaid has a 60-month look-back period meaning that asset transfers made within five years of applying for Medicaid can trigger a penalty period of ineligibility. Planning that happens more than five years before nursing home care is needed avoids this look-back entirely.
Option 2 — Long Term Care Insurance
Long term care insurance — LTCI — pays a daily or monthly benefit toward the cost of nursing home care assisted living or home care. Policies purchased years before care is needed can provide substantial protection.
The best time to purchase long term care insurance is in your 50s or early 60s when premiums are lower and you are more likely to qualify medically. Waiting until your 70s makes coverage significantly more expensive and harder to obtain.
Key considerations when evaluating long term care insurance:
- Daily or monthly benefit amount — how much the policy pays per day or month
- Benefit period — how many years the policy will pay
- Inflation protection — does the benefit grow over time to keep pace with rising nursing home costs
- Elimination period — how many days you must pay out of pocket before the policy kicks in
- The financial strength of the insurance company
In 2026 a good long term care policy with three to five years of coverage and 3 percent inflation protection typically costs $2,000 to $4,000 per year for a person who purchases at age 60.
Long Term Care Partnership Programs
Many states offer Long Term Care Partnership Programs that allow policyholders to protect additional assets dollar for dollar equal to the insurance benefits paid when they later apply for Medicaid. This makes long term care insurance even more valuable from a planning perspective.
Option 3 — Veterans Benefits
Veterans and their surviving spouses may be eligible for VA benefits that can significantly offset the cost of nursing home care.
VA Aid and Attendance Pension
The VA Aid and Attendance benefit is a pension benefit available to wartime veterans and their surviving spouses who need help with activities of daily living. In 2026 the maximum monthly Aid and Attendance benefit is $2,431 for a veteran with a dependent spouse — $1,478 for a surviving spouse — and $2,642 for a couple where both need care. These benefits are tax-free and can significantly reduce out of pocket nursing home costs.
VA Community Living Centers
The VA operates Community Living Centers — also called VA nursing homes — that provide nursing home level care at little or no cost to eligible veterans. Availability varies by location.
State Veterans Homes
Every state operates at least one state veterans home that provides nursing home care to eligible veterans at a subsidized cost significantly below private nursing home rates. Spouses may also be eligible in many states.
Option 4 — Home and Community Based Care
Nursing home care is the most expensive option. For many seniors receiving care at home or in an assisted living facility is significantly less expensive and more desirable.
Medicaid HCBS Waivers
Most states offer Home and Community Based Services — HCBS — Waiver programs that pay for care at home or in assisted living for people who qualify for nursing home level care. These programs use the same Medicaid income and asset limits as nursing home Medicaid but allow people to receive care in a less expensive and more comfortable setting.
The PACE Program
The Program of All-inclusive Care for the Elderly — PACE — is a comprehensive program available in many states that combines Medicare and Medicaid funding to provide all necessary medical and personal care services for eligible seniors aged 55 and older. PACE allows participants to remain in the community while receiving nursing home level care through a coordinated care team.
Option 5 — Spend Down and Apply for Medicaid
For families who have not planned ahead spending down assets to qualify for Medicaid is often the only remaining option. While this means using savings to pay for care there are smart ways to spend down that protect some assets.
Allowable spend down expenses include:
- Paying off a mortgage or home equity loan
- Making necessary home repairs or modifications
- Purchasing a vehicle for the community spouse
- Prepaying funeral and burial costs
- Purchasing household goods and furnishings
- Paying outstanding debts and medical bills
- Purchasing Medicaid compliant annuities in some circumstances
An elder law attorney can help identify all allowable spend-down options in your state.
The Most Important Step — Plan Ahead
The single most effective thing you can do to protect assets from nursing home costs is to plan early. Families who consult with an elder law attorney five or more years before nursing home care is needed have the most options available to them. Families who wait until a crisis occurs have far fewer options and often lose significantly more of their assets.
If you or a loved one is beginning to think about long term care planning the time to act is now — not when a health crisis forces the issue.
Finding Help
The following resources can help you find qualified professionals to assist with nursing home planning:
- National Academy of Elder Law Attorneys — NAELA — naela.org — find a qualified elder law attorney in your area
- Eldercare Locator — eldercare.acl.gov — 1-800-677-1116 — connect with local aging services
- Your State Medicaid Agency — see our state resource pages for contact information for your state
- Medicare.gov — medicare.gov — information on Medicare nursing home coverage
The information in this article is for general informational purposes only and does not constitute legal or financial advice. Medicaid rules vary significantly by state and change frequently. Always consult a qualified elder law attorney in your state before making decisions about nursing home planning.
Last updated: July 2026