What Assets Can a Nursing Home Take in PA?

When considering long-term care options such as nursing home residency, many Pennsylvania residents worry about asset protection and Medicaid eligibility. Nursing home costs can be significant, leading families to question what assets may be at risk. An experienced estate planning attorney in Pennsylvania can recommend key asset protection strategies to help secure your financial future. 

Medicaid and Nursing Home Costs in PA

Nursing homes in Pennsylvania can cost anywhere from $120,000 to $150,000 per year or more, depending on the facility and level of care required. Many individuals cannot afford these costs out-of-pocket and rely on Medicaid for assistance.

Medicaid is a needs-based program, meaning applicants must meet strict income and asset limits to qualify. If an individual has assets exceeding the allowable limits, they may be required to “spend down” their assets before becoming eligible for Medicaid. 

The concern for many is how much of their personal wealth, including their home, savings, and investments, may be subject to liquidation to cover nursing home costs.

Countable vs. Non-Countable Assets for Medicaid Eligibility

Medicaid distinguishes between countable and non-countable (exempt) assets when determining eligibility.

Countable Assets (Subject to Medicaid Spend-Down Rules)

These assets are considered when evaluating Medicaid eligibility and may need to be used for nursing home costs:

• Bank Accounts (Checking, Savings, CDs, and Money Market Accounts)
• Investment Accounts (Stocks, Bonds, and Mutual Funds)
• Retirement Accounts (401(k)s, IRAs) – Depending on Payout Status
• Real Estate (Other Than a Primary Residence)
• Cash Value of Life Insurance Policies (Over $1,500 in Value)
• Second Vehicles or Luxury Vehicles
• Valuable Personal Property (Art, Jewelry, Collectibles, Boats, RVs, etc.)

If an individual has these assets above Medicaid’s limit ($2,000 for an individual in 2024), they’ll typically need to spend them down before Medicaid coverage begins.

Non-Countable (Exempt) Assets

These assets are generally protected from nursing home costs while the individual is alive:

• Primary Residence (If the applicant or their spouse continues living in it; home equity limits apply, which is $713,000 for 2024)
• One Vehicle (Used for transportation of the applicant or spouse)
• Personal Property (Furniture, clothing, appliances, etc.)
• Prepaid Funeral and Burial Arrangements (Irrevocable agreements are exempt)
• Certain Life Insurance Policies (With a face value of $1,500 or less)
• Assets Held in an Irrevocable Trust (If properly structured and outside of the five-year Medicaid lookback period)

The Medicaid Five-Year Lookback Rule

A critical factor in protecting assets from nursing home costs is Medicaid’s five-year lookback period. This means Medicaid reviews all financial transactions within five years of the application date. If assets were transferred to family members or placed into an irrevocable trust within this timeframe, Medicaid may impose a penalty period, delaying coverage and requiring private payment for care.

Strategic estate planning, including early asset transfers or the use of Medicaid-compliant trusts, can help individuals legally protect assets while preparing for long-term care.

How a Nursing Home Can Seek Payment for Care

If an individual enters a nursing home without Medicaid eligibility, they must privately pay until their assets are reduced to Medicaid-eligible levels. Here’s how nursing homes typically seek payment:

• Direct Payment from Personal Assets: Savings, investment accounts, and liquid assets may be used first.
• Placing a Lien on the Home: If Medicaid is used and the individual is unmarried, Medicaid may seek estate recovery upon their death, claiming reimbursement from the sale of the home.
• Estate Recovery Program (MERP): Pennsylvania participates in Medicaid Estate Recovery, meaning Medicaid can attempt to recover funds from the individual’s probate estate after death.

Common Mistakes to Avoid in Pennsylvania

Failing to plan for nursing home costs can lead to financial loss. Here are key mistakes to avoid:

• Delaying Medicaid Benefits Planning
• Improper Gifting
• Not Using Medicaid-Compliant Trusts
• Ignoring Spousal Protections
• Failing to Seek Legal Advice

Strategies Our Elder Law Attorneys Use to Protect Your Assets

At Morella Bencsics, our elder law attorneys help individuals and families protect their assets while ensuring they remain eligible for Medicaid and other benefits. 

Medicaid Asset Protection Trusts (MAPTs)

One of the most effective strategies for shielding assets from nursing home costs is the use of a Medicaid Asset Protection Trust (MAPT). 

Assets placed in the trust at least five years before applying for Medicaid aren’t counted as part of your resources, ensuring that you qualify for benefits without losing everything to nursing home expenses.

Benefits of a MAPT:

• Protects real estate, investments, and savings from being counted as Medicaid assets
• Allows beneficiaries to inherit assets without Medicaid liens
• Reduces financial burden while preserving eligibility for long-term care benefits

Strategic Gifting and the Medicaid Lookback Period

Gifting assets to loved ones is a common strategy, but it must be done carefully to avoid Medicaid penalties. Pennsylvania enforces a five-year lookback period, meaning any assets transferred within five years of applying for Medicaid can trigger penalties and delay benefits.

Our attorneys help structure strategic gifting plans to minimize risks, including:

• Gradual asset transfers well before the five-year mark
• Gifting exemptions, such as payments made directly to medical providers or tuition for family members
• Charitable giving strategies that provide tax benefits while reducing assets

Spousal Protections and Asset Allowances

Medicaid has special provisions for married couples to protect the financial well-being of the spouse who remains at home (the community spouse). The Community Spouse Resource Allowance (CSRA) allows the non-institutionalized spouse to retain a portion of the couple’s assets while the other spouse qualifies for Medicaid.

Our attorneys ensure that:

• The community spouse maximizes their CSRA rights to retain assets
• Income streams such as spousal annuities are structured legally to preserve wealth
• Proper planning prevents Medicaid from requiring the sale of the couple’s home

Irrevocable Funeral and Burial Trusts

Prepaid funeral and burial expenses can be structured as Medicaid-exempt assets when placed in an irrevocable trust. This ensures that you cover end-of-life expenses while reducing countable assets. Our estate planning attorneys help set up compliant funeral trusts to safeguard funds from Medicaid eligibility calculations.

Converting Countable Assets into Exempt Assets

Some assets aren’t counted by Medicaid when determining eligibility, such as:

• A primary residence (under specific conditions)
• One motor vehicle
• Certain personal belongings and household goods
• Prepaid burial expenses

Our attorneys can help convert countable assets into exempt assets by:

• Paying off mortgages or debts or making home improvements
• Purchasing Medicaid-compliant annuities to convert savings into income
• Allocating funds into exempt asset categories to maintain Medicaid eligibility

Long-Term Care Insurance as a Preventative Measure

While Medicaid planning is essential, long-term care insurance can serve as an additional layer of financial protection. A well-structured policy can cover nursing home expenses, reducing reliance on Medicaid.

We help clients:

• Choose long-term care insurance plans that align with their estate planning goals
• Determine policy coverage that provides the best benefits for future care needs
• Combine insurance planning with legal strategies to maximize asset protection

Establishing a Personal Care Agreement

A personal care agreement is a legally binding contract that allows family members to be compensated for providing care to an aging relative. Instead of depleting assets on nursing home costs, individuals can pay a family caregiver while reducing their countable resources for Medicaid eligibility.

Our attorneys ensure that:

• Personal care agreements comply with Medicaid rules
• Compensation is structured fairly and legally documented
• Family members understand their financial responsibilities in caregiving arrangements

Avoiding Probate and Medicaid Estate Recovery

Even after Medicaid eligibility is established, the state may attempt to recover funds spent on long-term care through Medicaid estate recovery. This can lead to the forced sale of assets, including your home.

To prevent this, our attorneys employ strategies such as:

• Using irrevocable trusts to transfer property outside of probate
• Joint ownership structures that keep assets out of Medicaid’s reach

Get Personalized Representation for Medicaid and Estate Planning in PA

Our elder law attorneys at Morella Bencsics help Pennsylvania Medicaid applicants navigate complex rules to protect their assets while securing necessary medical assistance. Before a nursing home admission, we employ strategies to ensure that assets like a home or savings aren’t lost to medical expenses or long-term care costs.

By structuring financial resources properly, we help nursing home residents preserve their monthly income and ensure that assets are transferred at fair market value to eligible family members. Our skills in human services and estate law allow us to develop customized asset protection plans that align with Medicaid eligibility rules, ensuring that clients can afford a quality nursing facility without depleting their life savings.

To schedule your consultation with our proven estate planning lawyers in PA, call us at (412) 960-1656 or contact us online.