The High Cost of Bad Long-Term Care Advice

“You need to use up all your savings before you’re eligible for Medicaid.  It’s called the ‘spend down.’”


“Your home is exempt from Community Medicaid.”


“You can transfer half your money shortly before you go into a nursing home, and then when you apply for Medicaid, the Penalty Period will be half as long.”


“You have too much income to qualify for Medicaid.”

  • WRONG!!

Coming face to face with the enormous cost of long-term care can be a huge shock for seniors who need assistance.  When they begin to ask questions about how to pay for it, all too often they receive incorrect or incomplete answers from people who are not Elder Law attorneys.  Time after time we have seen potential clients who took these answers as fact, with disastrous consequences.

Sometimes the “advice” comes from nursing home personnel, or it can be nurses, hospital discharge planners, or Social Workers who are not fully informed about current Medicaid regulations.

It is disheartening to us to speak with seniors who come in seeking advice only when they are almost out of money, when our timely advice would have saved them tens of thousands of dollars – and in some cases, much, much more.

Consider a senior woman who needs long-term care, who hears from Medicaid, or from a Medicaid application service, that her mortgage-free house is exempt from being considered a resource for Community Medicaid.  Even if she did other planning, such as transferring her money to a family member or to an irrevocable trust, and then applied for Medicaid, there’s a hole in her plan as large as her entire house.

That’s because Medicaid keeps track of how much they are spending on her care.  Yes, the home is exempt – as long as it’s her primary residence, and her home equity is less than $1,033,000 in 2023.  Once she moves out for any reason (such as assisted living, nursing home, or other), or dies, then wham! – the situation changes. 

Now Medicaid can put a lien against the home, and demand reimbursement from the home equity for any amounts spent on the person’s care.  That can easily eat up every penny of her equity in the house, leaving nothing to help pay for any future care needs (for example, if she goes into an assisted living residence), and nothing for her heirs when she dies.

If she had transferred the house to a child, or had put it into an irrevocable trust, Medicaid would not be able to seek reimbursement from the home equity.  This incomplete understanding of the rules could literally cost her hundreds of thousands of dollars.

Other times, people learn that Medicaid will only provide services if a person has less than a certain – very low – amount of assets.  They hear from friends or family that they need to spend all their savings before they can apply for Medicaid.  So, they glumly use up their entire nest egg to pay for their care – when they could have protected that money.  It could have been transferred to an irrevocable trust or gifted to children or others, and remained available to supplement their care, instead of being rapidly and completely consumed by health and long-term care providers.

Income misinformation is out there as well.  Many people believe that if they have a lot of income, they won’t be eligible for Medicaid services.  This is also incorrect information.  If you’re over 65, your income is NOT a factor in determining your eligibility for Medicaid. 

However, for those who qualify for Community Medicaid benefits, Medicaid does have a monthly income limit. Any amount above the limit is called “surplus income.”

If you do not take steps to protect your “surplus,” Medicaid will require it to be contributed to the cost of your care.  Fortunately, there is an established strategy that will enable you to protect your “surplus income” and allow you to continue to use it to pay for your expenses, or goods or services you desire.

We feel terrible when we have to tell people that the huge amount of the money they spent on their care could have been saved, if only they had come to us sooner.

Elder Law planning, and creating and implementing your plan, takes a lot of legal work, and the costs can seem high.  However, the alternative – doing nothing, or doing the wrong thing – can and often does cost many multiples of the amount people would have spent on implementing a plan with an Elder Law attorney.

Our firm has always helped our clients not only to create and document a plan, but also to help them implement it.  We do not and would not recommend a plan for a potential client unless we feel that it will clearly be cost-effective for them.  We also explain the options, as it is always a client’s decision as to whether and how to proceed.

Don’t fall prey to the belief that people who deal with seniors know the ins and outs of the Medicaid program and how best to pay for long-term care.  Even if you believe your affairs and wishes are very simple, every situation, including yours, is unique, and requires its own analysis, discussion, and actions.

Do yourself the favor of having a consultation with an experienced Elder Law attorney.  Talking through your family situation, your needs, and your goals, will point to the steps you can take to protect what you’ve worked a lifetime to save.  Not doing so could cost you everything.

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