When you have always been able to handle your own day-to-day needs, the prospect of living assistance can seem alien. Still, when you look at the facts, most seniors will need living assistance, and many will require nursing home care.
These facilities are very expensive, so the costs can significantly erode your legacy. Fortunately, there is a widely embraced solution.
Medicare Misconception
Many people assume Medicare will cover nursing home care if the need ever arises. After all, it pays for doctor visits, hospital stays, and even short-term rehabilitation. However, Medicare does not cover long-term custodial care.
Custodial care includes help with everyday activities like bathing, dressing, eating, and mobility, which is exactly the kind of support you receive in a nursing home. Medicare may cover a short stay in a skilled nursing facility, but only under strict conditions for a limited period.
If you require permanent placement in a nursing home, you’ll quickly find that Medicare offers little to no financial relief. That’s why it’s essential to understand your alternatives now before a crisis leaves you scrambling for answers.
Medicaid to the Rescue
Unlike Medicare, Medicaid will pay for long-term nursing home care. In fact, it’s the single largest payer of long-term care services in the United States. This program covers room and board, nursing services, medication management, and assistance with daily living.
However, Medicaid is a need-based program. To qualify, your income and assets must fall below certain thresholds. If your financial resources are too high, you’ll be denied coverage even if you can’t reasonably afford the costs out of pocket.
This leads many people to believe they have to spend down their life savings just to qualify. Fortunately, that’s not always the case. With early and strategic Medicaid planning, you can protect your assets, remain eligible for benefits, and avoid financial hardship.
Irrevocable, Income-Only Medicaid Trust
One of the most effective tools in Medicaid planning is the irrevocable, income-only Medicaid trust. This legal arrangement allows you to transfer assets out of your name and into the trust. Once in the trust, those assets no longer count against your Medicaid eligibility.
The trust must be irrevocable, which means you can’t dissolve it or take back the assets later. You also can’t access the principal once it’s in the trust. However, you can still receive income generated by the trust’s assets, which helps you maintain some financial stability.
There’s one key catch: Medicaid has a five-year “look-back” period. If you transfer assets into the trust and apply for Medicaid within five years, the transfer will be penalized. That’s why timing is critical. The sooner you set up the trust, the more protection you’ll have when you need care.
In Louisiana, a properly drafted and funded irrevocable Medicaid trust can shield a wide range of assets, including investments, savings, and even your family home, provided you plan far enough in advance.
Home Ownership and Medicaid Estate Recovery
Many people are surprised to learn they can still qualify for Medicaid while owning a home. Your primary residence is considered an exempt asset with an equity limit of $730,000 in Louisiana in 2025.
But that doesn’t mean your home is fully protected. After your death, the state can try to recover the cost of your care through Medicaid estate recovery. This can result in a lien against your home, forcing your heirs to sell the property to repay the debt.
To avoid this outcome, you can transfer your home into your irrevocable Medicaid trust. Since the trust owns the assets, those resources are not subject to estate recovery. This move can preserve your family’s connection to the home and keep your legacy intact.
Just like with other assets, this strategy works best when done well before the need for care arises. If you wait too long, you risk triggering the look-back penalty and losing the very protection the trust is designed to provide.
Start Planning While You Still Have Options
Medicaid planning isn’t just about protecting money—it’s about preserving choice. When you wait until a crisis hits, your options narrow. You may have to spend quickly, sell assets at a loss, or scramble to figure out how to qualify. That creates unnecessary stress for you and your family.
By taking action now, you give yourself time to explore all available strategies. You’ll have more control over your future care, and you’ll protect the resources you’ve worked a lifetime to build.
Whether you’re planning for yourself or helping aging parents prepare, now is the time to speak with an estate planning/elder law attorney.
Learn More About Elder Law and Estate Planning
You will find many informative blog posts here on our site, and there are other resources. They are available to you free of charge, so we urge you to take a look around.
In addition to these written materials, we provide another avenue for those who like to watch videos. Attorney Chip Morrison has recorded numerous videos that we have uploaded to our YouTube channel. They cover all the most compelling topics of interest.
You don’t have to reach into your pocket to gain access, so this is a good opportunity to gain a more complete understanding of these issues. To check out the videos, visit this page: Morrison Law Group videos.
Need Help Now?
Learning is great, but at some point, you have to make the move to put a plan in place. If you’re ready to do just that, our doors are open.
You can send us a message to request a consultation at our Metairie or Covington, LA estate planning office, and we can be reached by phone at 504-831-2348.
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