Dec 12, 2025
Long-term care isn’t just a health issue — it’s a financial one, too, as these facilities are remarkably expensive.
In 2024, the average monthly cost of a private room in a nursing home was $10,646, according to CareScout. (1) That’s a hefty financial burden that most older adults would struggle to manage on their own.
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Fortunately, some of these people can count on the government to help with some of these costs. As of 2023, Medicaid accounted for 45.6% of total spending on long-term care and support, according to Congress. (2)
The problem is that Medicaid is a notoriously complicated program with tight eligibility requirements. However, there are a few loopholes that can help you access these benefits without wasting all your savings.
Qualifying for Medicaid
The Medicaid program is designed for “some people with limited income and resources,” according to the Department for Health and Human Services. (3) In other words, the benefits are means-tested.
Typically, individuals need to have less than $2,000 in countable assets to qualify for Medicaid long-term care. Married couples both requiring care, meanwhile, usually face a limit of $3,000. However, the exact limits vary from state to state.
What qualifies as a countable asset? Usually, liquid resources that can easily be turned into cash to pay for care, such as bank balances, certificates of deposit, stocks, bonds, retirement accounts and real estate that isn’t the applicant’s primary residence.
Exceptions generally include the applicant’s home furnishings and appliances, personal items, term life insurance, vehicle and primary residence. Again, state guidelines vary on what exactly is considered a “countable asset.”
If your assets exceed these tight limits, you can spend them down to become financially eligible. However, you can only qualify for Medicaid if you spend your money on eligible costs like medical bills, home modifications or funeral trusts. And the agency has a five-year look-back period to ensure you haven’t spent your assets in ways that go beyond these limits.
Simply put, there’s a very high bar to qualify for this program. However, there are three strategies that could allow you to preserve your nest egg while improving your chances of meeting Medicaid’s strict eligibility requirements.
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3 secret strategies
If you’re trying to qualify for Medicaid but want to avoid spending down your assets, there are some alternative strategies that could help boost your chances.
An irrevocable trust
You could place your assets in an irrevocable trust to separate them from your personal ownership. This should, in theory, lower your personal assets to meet Medicaid’s requirements, according to Fidelity. (4)
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However, be aware that such transfers are still considered countable assets if executed within Medicaid’s five-year lookback period.
This means you’ll need to do the transfer well in advance of needing Medicaid-funded long-term care. Irrevocable trusts are also highly complex and must be constructed with a professional’s assistance to ensure you don’t trap your assets.
Strategic gifting
Instead of transferring assets to an irrevocable trust, you could gift them to your loved ones.
However, gifted assets are also considered assets that count toward Medicaid limits if completed within Medicaid’s five-year lookback period, so you’ll need to strategically gift your assets before then.
An exception can be made for certain gifts to a disabled child, a child who is a primary caregiver for two years before you enter the nursing home or a spouse. Such gifts might be exempt from Medicaid’s rules and penalties.
Medicaid-compliant annuity
You could purchase an annuity that complies with the rules of Medicaid to convert assets into monthly streams of income. Your monthly income is also subject to strict limits for eligibility, so make sure you understand the annuity plan thoroughly before signing up.
The bottom line
All three strategies mentioned above are subject to change and state-level regulations. They’re also highly complicated maneuvers, which means a small mistake could create a major expense.
The biggest mistake you can make is not planning early and trying to do it all yourself. Try to include plans for long-term care when you’re crafting your retirement plan and reach out to a qualified eldercare specialist for advice and guidance on these strategies.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CareScout (1); Congress.gov (2); U.S. Department of Health and Services (3); Fidelity (4).
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
