As we age, the cost of long-term care becomes an increasing concern. Whether it’s assisted living, in-home care, or nursing home expenses, these costs can quickly deplete savings if not planned for in advance. Many individuals assume Medicare will cover their long-term care needs, but unfortunately, that’s not the case for most services. Without proper planning, families may find themselves facing difficult financial decisions. The good news is that there are strategies to help protect assets while ensuring access to quality care.

The Rising Costs of Assisted Living and Nursing Home Care

Long-term care costs have risen significantly over the past few decades, and they are expected to continue increasing. Consider these average annual costs:

• Assisted living facility: $50,000–$60,000
  
  
• Nursing home (semi-private room): $90,000–$100,000
  
  
• Nursing home (private room): $110,000+
  
  
• In-home care services: $25–$30 per hour
  
  

For many families, these expenses can be overwhelming, especially if care is needed for several years. Without a plan in place, assets like retirement savings, real estate, or other investments may need to be liquidated to cover the costs. This is why incorporating long-term care strategies into estate planning is essential.

Medicaid Planning and Asset Protection Strategies

Medicaid is one of the few government programs that covers long-term care costs, but qualifying for benefits requires careful planning. Because Medicaid has strict asset and income limits, many individuals mistakenly assume they must spend down all their savings before becoming eligible. However, there are legal strategies that allow individuals to protect their assets while still qualifying for Medicaid, including:

• Medicaid Asset Protection Trusts (MAPTs): These irrevocable trusts allow individuals to transfer assets while retaining some level of benefit, but they must be established at least five years before applying for Medicaid.
  
  
• Spousal Protections: The community spouse (the one not requiring care) can keep a portion of assets and income while the other spouse applies for Medicaid.
  
  
• Gifting Strategies: With proper planning, some assets can be transferred to children or other loved ones without jeopardizing Medicaid eligibility.
  
  
• Exempt Assets: Some assets, such as a primary residence (in certain cases), may be exempt from Medicaid calculations.

Proper Medicaid planning should be done well in advance to ensure eligibility without compromising financial security.

How Long-Term Care Insurance Fits into an Estate Plan

Long-term care insurance (LTCI) can play a vital role in preserving your estate while covering the costs of care. Unlike Medicaid, which requires meeting strict asset and income limits, LTCI allows individuals to maintain financial independence while still receiving quality care. Policies vary widely, but key benefits of long-term care insurance include:

• Coverage for Various Types of Care – LTCI can cover nursing home care, assisted living, in-home care, and adult day care services.
  
  
• Protecting Assets for Heirs – By offsetting care costs, LTCI helps preserve savings and assets that can be passed down to family members.
  
  
• Customizable Coverage – Some policies allow policyholders to select daily benefit amounts, coverage periods, and inflation protection.

Since premiums are typically lower when policies are purchased earlier in life, it’s wise to consider LTCI as part of a broader estate and retirement plan before health issues arise.

Using Trusts to Preserve Assets While Qualifying for Benefits

Trusts can be an essential tool for safeguarding assets while ensuring access to long-term care benefits. Depending on individual financial and family situations, different types of trusts can provide protection:

• Medicaid Asset Protection Trusts (MAPTs) – By transferring assets into an irrevocable trust at least five years before applying for Medicaid, individuals can meet Medicaid eligibility requirements without losing everything to care expenses.
  
  
• Revocable Living Trusts – These trusts allow assets to bypass probate and can include provisions for long-term care funding while providing more flexibility than irrevocable trusts.
  
  
• Special Needs Trusts – If a loved one receiving long-term care has a disability, a special needs trust can preserve their eligibility for government assistance while supplementing their care.

Trusts must be structured carefully to ensure compliance with Medicaid rules while achieving asset protection goals. Working with an estate planning attorney can help determine the right trust strategy for your situation.

Family Caregiving Considerations and Financial Planning

Many families prefer to keep care within the family rather than relying on outside facilities. While this can be a cost-saving approach, it comes with its own financial and legal challenges. Planning ahead for family caregiving can help avoid unnecessary stress and ensure that care responsibilities are fairly distributed. Important considerations include:

• Compensating a Family Caregiver – Establishing a formal caregiver agreement can provide financial support for a family member who takes on the role of caregiver.
  
  
• Coordinating Family Contributions – Some families choose to pool financial resources to cover care expenses, which should be structured carefully in legal agreements.
  
  
• Utilizing Government Programs – Some states offer Medicaid-funded programs that pay family caregivers for providing care at home.

Without a clear plan, caregiving can create financial strain and emotional stress among family members. Addressing these concerns in an estate plan ensures that care needs are met without unnecessary conflict.

Securing Your Future with a Thoughtful Long-Term Care Plan

The costs of long-term care can be staggering, but with proper planning, you can protect your estate while ensuring access to the care you or your loved ones may need. Whether through Medicaid planning, long-term care insurance, trusts, or family caregiving strategies, there are multiple ways to preserve assets while securing quality care.

At Donohue, O’Connell & Riley, we help individuals and families develop personalized estate plans that account for long-term care needs while maximizing asset protection. Our experienced team is here to guide you through the complexities of long-term care planning, ensuring that your financial legacy remains intact. Contact us today to discuss your options and create a plan that provides security for you and your loved ones.