Strategies for Protecting Assets from Nursing Home Costs

Nursing home care in Florida averages more than $10,000 per month — and rising. For a married couple, even a moderate stay can wipe out a lifetime of savings. The good news: with proper planning, much of your estate can be protected. Here are the most common legal strategies Florida families use to plan for the cost of long-term care.

Why Long-Term Care Planning Matters

Medicare does not pay for long-term nursing home care beyond a brief rehabilitation period. Private long-term care insurance is expensive and increasingly hard to obtain. That leaves two realistic options for paying:

Out of pocket, until savings are gone
Florida Medicaid, which has strict financial eligibility rules

The strategies below help you qualify for Medicaid sooner — while preserving as much of your estate as possible for your spouse and family.

Strategy 1: The Five-Year Plan (Irrevocable Trusts)

Florida Medicaid examines all asset transfers made during the five years before you apply. Anything you gave away during that period can trigger a penalty period of ineligibility.

But after five years, those transfers are no longer counted. This is the foundation of long-range planning:

Place assets into a properly drafted irrevocable Medicaid asset protection trust
Wait at least five years
The assets are protected, you can still receive income from them, and you preserve them for your heirs

The key word is "properly drafted" — the trust must follow specific rules to work. A homemade trust will not.

Strategy 2: Spousal Protection (CSRA)

When one spouse needs nursing home care and the other does not, federal Medicaid law provides important protections for the community spouse (the one staying home):

The community spouse can keep a Community Spouse Resource Allowance (currently around $154,000)
The community spouse can keep the home (regardless of value)
One vehicle is exempt
A monthly maintenance income allowance protects the community spouse from impoverishment

With proper planning, additional assets can often be shifted into protected categories, allowing the at-home spouse to keep substantially more.

Strategy 3: Personal Services Contracts

Florida allows a family member to be paid for caregiving services through a written personal services contract. Done correctly, this:

Compensates a family member who is already providing care
Reduces countable assets (the lump sum is treated as a fair-market payment, not a gift)
Avoids the five-year transfer penalty

This must be set up before services are provided, with clear hourly rates and documentation.

Strategy 4: Qualified Income Trusts (QITs)

Florida is an income cap state. If your monthly income exceeds the limit (currently around $2,829), you cannot qualify for nursing home Medicaid — unless you place excess income into a Qualified Income Trust, sometimes called a Miller Trust.

The QIT doesn't reduce what you actually pay toward care, but it allows you to qualify for Medicaid coverage of the rest. Without it, families above the income limit are simply locked out.

Strategy 5: Spend-Down on Exempt Assets

Not all assets count for Medicaid. Before applying, families can convert countable assets into exempt ones:

Pay off the mortgage
Make needed home repairs or accessibility improvements
Replace an aging vehicle
Prepay funeral expenses through an irrevocable funeral trust
Pay outstanding debts

Done strategically, spend-down can dramatically reduce countable assets without "wasting" a dollar.

When to Start Planning

The earlier, the better. Five-year planning requires, well, five years. But it's never too late — even on the eve of a nursing home admission, "crisis planning" strategies (spousal transfers, personal services contracts, exempt-asset conversions) can still preserve significant assets.

The Takeaway

Long-term care planning isn't about hiding assets or gaming the system — it's about using laws Congress wrote to protect families from financial devastation. The earlier you plan, the more options you have.

At Zacharia Frey PLLC, we help Southwest Florida families navigate Medicaid planning with strategies tailored to their situation. Contact us for a consultation to learn what's possible in your case.