Financial Resource Center

Retirement Planning

Get Proactive With Nursing-Home Expenses

by Michelle M. Haas-Dosher, CCUFC / February 7th, 2019

The United States Department of Health and Human Services estimates that 70% of Americans who reach age 65 will need long-term care for an average of three years. The average annual cost of nursing home care is about $82,000 a year or about $6,850 each month.

According to, health-care plans and Medicare insurance account for only a small percentage of the cost of nursing home care.

Be proactive

It’s hard to predict what health issues may arise. But even if you’re relatively healthy, budgeting for long-term health expenses is imperative. The key to protecting your nest egg from nursing home costs is to take steps before the need for care arises, according to Forbes:

  • Visit the Social Security Administration’s website to review Medicare rules. This step also will help you determine the best time to sign up. Medicare is a federal health insurance program for people who are 65 or older, and certain younger people with disabilities or other circumstances making them eligible.  
  • Check state laws to find Medicaid coverage requirements specific to you. Medicaid is a social health care program for families and individuals with low income and resources.
  • Consider your state’s Medicaid coverage requirements. An eldercare attorney can help determine if Medicaid is an option for you. You will not be eligible for Medicaid unless your asset level is quite low. Your attorney may recommend what’s called Medicaid asset protection—which legally protects certain assets from the high cost of nursing home care. An attorney can help to develop an action plan and discuss a time frame for putting it in place. To find a qualified lawyer, call your local bar association and find out which attorneys teach seminars about Medicaid planning to other attorneys. Make sure the attorney is licensed in the state you live in—laws vary from state to state. The National Academy of Elder Law Attorneys, Vienna, Va., has tools to help consumers locate a lawyer near them. If you can’t afford an attorney, visit to determine whether you’re eligible for free legal aid.
  • Consider contributing to a health savings account. You’ll benefit from a triple tax benefit:
    • Cash contributions to HSAs are 100% deductible from your federal gross income;
    • Interest on savings accumulates tax-deferred; and
    • Withdrawals from an HSA for “qualified medical expenses” are free from federal income tax. See for qualified medical expenses.
  • Consider dividing assets between spouses. This strategy gets tricky though; again, consult an estate planning or elder-law attorney for advice.
  • Consider purchasing long-term care insurance while you are young and healthy. Before purchasing, check that the provider is reputable.
  • Consider making financial gifts to family members or an irrevocable trust.
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