How to afford a nursing home without going broke

| Feb 23, 2019 | Medicaid Planning

Most people set aside a significant amount of savings during their lifetimes. This type of financial planning is both wise and widely recommended. However, it may also be a source of frustration when this planning seems to fall short.

It would be completely natural to become dismayed upon facing the prospect of long-term residential medical care. The national average for this type of living situation is around $8,000 per month. Even if someone were to save for several years of care at that rate, it could come as a surprise when care centers started quoting the significantly higher Colorado nursing home prices. The money saved for care may even seem to disqualify certain people from receiving payment assistance. However, even in these situations, there is often hope.

Three strategies

There are two immediately obvious alternatives for people who have saved up money and are facing a necessity for nursing home care: to spend the entire savings until qualifying for Medicaid or to pursue other care options. However, there is often a third, less obvious path forward. This third strategy involves the specialized investment of certain assets until people qualify financially for the assistance program they need.

Medicaid

For anyone who has heard of or engaged in estate planning, this Medicaid asset protection strategy may seem very familiar. Many parallels exist between the two, but they differ fundamentally and occasionally oppose each other. While estate planning aims to secure assets so they might transfer smoothly, asset protection often aims to give people the most control over their money possible while removing it from their personal holdings.

In the most general terms, asset protection is a way to legally establish specific uses for funds, much like one would in a household budget. It uses financial tools, such as trusts, to set aside money and qualify people for certain types of programs, such as Medicaid.