Estate Planning | Making a Difference One Family at a Time

//  by 

long-term careResearch from the U.S. Department of Health and Human Services (HHS) and the Urban Institute found that 70% of adults who reach age 65 develop severe long-term care needs. Nearly 48% will rely on paid care at some point in their lifetime.

This finding highlights the importance of planning for long-term care expenses. Many seniors assume that Medicare will cover these costs, but Medicare does not pay for custodial care, whether at home or in a nursing facility.

Without a plan, the cost of care can quickly deplete your savings, leaving few resources for your spouse or heirs. Medicaid, however, does cover long-term care, but qualifying requires careful planning.

The High Cost of Long-Term Care

Long-term care services include assistance with daily activities such as bathing, dressing, and eating. These services can be provided at home, in an assisted living facility, or in a nursing home. However, the costs can be overwhelming.

A private room in a nursing home can exceed $200,000 per year in the Westport, CT area, and even in-home care services come at a steep price. If you require paid care for several years, your savings could disappear quickly.

Medicaid offers coverage for these services, but you must meet strict income and asset limits to qualify.

Why Medicaid Planning Matters

Medicaid is the largest payer of long-term care in the United States, but it has financial eligibility rules that can disqualify those with even modest savings. Many people assume they can simply spend down their assets when they need care, but Medicaid has a five-year look-back period.

Any asset transfers made within five years of applying can result in a penalty period, delaying access to benefits.

Planning in advance allows you to structure your assets in a way that preserves your wealth while ensuring Medicaid eligibility when the time comes. A properly established irrevocable Medicaid trust can protect assets while allowing you to qualify for benefits.

By transferring assets to this type of trust at least five years before applying for Medicaid, you remove them from your ownership, preventing them from being counted against Medicaid’s asset limits.

Protecting a Spouse From Financial Hardship

For married couples, Medicaid planning is especially important. If one spouse needs nursing home care, the healthy spouse may struggle financially if all available resources must be spent on care costs. Medicaid has special protections for the spouse who remains at home, but without a plan, the financial burden can still be significant.

The Community Spouse Resource Allowance (CSRA) lets the healthy spouse retain a portion of the couple’s assets, but it is subject to limits set by Medicaid. In 2025, that limit is $157,920 in Connecticut.

Similarly, the Monthly Maintenance Needs Allowance (MMNA) allows the healthy spouse to keep a portion of the couple’s income, ensuring they have financial support. The maximum MMNA this year is $3,948.

The Role of a Medicaid Trust

An irrevocable Medicaid trust is a powerful tool for protecting assets while securing future eligibility for benefits. Once assets are placed in the trust, they are no longer considered yours for Medicaid purposes, as long as the transfer occurs outside the five-year look-back period.

A properly structured Medicaid trust allows you to preserve wealth for your heirs while still maintaining financial security. Unlike an outright gift, which transfers full ownership of assets to another person, this type of trust offers continued benefits.

You can retain the right to receive income generated by the trust, such as interest or rental earnings, while ensuring that the principal remains protected. This income stream can that many seniors rely on will remains in intact.

Key Takeaways

Many seniors delay Medicaid planning, assuming they will never need long-term care. However, with nearly half of adults over 65 requiring paid care, failing to plan can put both you and your family in a difficult financial position.

Taking action early gives you more options and greater flexibility in structuring your assets.

A long-term care crisis can happen unexpectedly. By planning ahead, you can protect your savings, secure your Medicaid eligibility, and relieve your family of the financial burden of care costs.

Attend a Complimentary Learning Event!

If you would like to learn more, attend one of our special events. These seminars are held at comfortable, convenient locations, and there is no charge, so this is a great way to connect with our firm.

To see the dates and obtain registration information, visit this page: Westport/Glastonbury Estate Planning Events.

John McCann, Estate Planning Attorney
Latest posts by John McCann, Estate Planning Attorney (see all)
Spread the love