Can a Nursing Home Take Our Assets? We Have a $500K IRA and a Trust to Protect Us

Can a nursing home seize your savings? What if your money is in a trust or a Roth IRA? For married and single retirees alike, these are important questions with nuanced answers. First for the good news: A nursing home cannot simply take your retirement accounts or savings. Short of legal action due to an unpaid bill, you can distribute your assets as you see fit. However, you will have to plan ahead to optimize your end-of-life finances. In some cases, its possible the government could seize assets post-death to pay for nursing home expenses.

A financial advisor can help with planning your long-term care needs.

Plan Ahead for Long-Term Care

Long-term care, especially stays in nursing homes, can be costly. Options for covering these costs include paying out of pocket, private insurance, and Medicaid. Your assets, even if they’re in a Roth IRA or certain types of trusts, can impact your Medicaid eligibility.

Long-term care can include everything from homemaker services to home health aides to nursing home care. The median monthly cost of a private room in an American nursing home was estimated at around $10,797 in 2025, according to GenWorth, ¹ an insurance company that offers long-term care coverage. Those costs are expected to increase to $14,300 per month by 2034.

That’s well beyond what most people can afford from their retirement income, and many times what Social Security pays. That’s why it’s important to plan ahead, says Alec F. Root, a Chartered Financial Analyst (CFA) with DBR & Co.

“As with estate planning in general, it is helpful to have these conversations sooner rather than later,” he told SmartAsset. “Five to 10 years prior to retirement is generally a good time to discuss this subject. A strong estate plan will detail the terms of late-life care, while a good financial plan will account for nursing home care and final expenses.”

Medicare won’t cover the costs of a nursing home or other facilities. Instead, the best way to afford long-term care may be through dedicated long-term care insurance. The earlier you purchase this coverage the less expensive this will be. For a healthy 55-year-old in 2025, you can expect to pay between $950 and $1,500 per year for a $165,000 benefit, according to Data from the American Association for Long-Term Care Insurance. ² At 65, those averages jump to between $1,750 and $2,700 per year. So prepare ahead of time.

Remember, a financial advisor can walk you through your options for paying for long-term care. They can even help you purchase an insurance policy.

Medicaid Covers Long-Term Care But Has Asset Caps

If you can’t afford long-term care insurance, the next most common option is Medicaid. This government program provides medical care for low-income households. Medicaid offers limited coverage but does pay for nursing homes in some instances. However, it’s important to be aware of the Medicaid Estate Recovery Program (MERP). This policy makes it possible for the government to claim your assets to pay for nursing home expenses.

Medicaid also has strict income and asset caps, and every state has its own eligibility requirements and scope of coverage. For example, in New York in 2025, your income cannot exceed $1,800 per month. Your total assets cannot exceed $32,396. ³ However, the state does not count your IRA or 401(k) toward those total assets if they are in payout mode.

Just keep in mind that Medicare, the health care program for all Americans over 65, does not pay for long-term care facilities.

On the other hand, in Massachusetts, your income cannot exceed $1,305  per month. Your total assets cannot exceed $2,000. ⁴ There, the state does include your IRA among those total assets.

Keep in mind that if you have an IRA you’ll have to take required minimum distributions (RMDs) by age 73. These withdrawals will count toward your annual income cap. Roth IRAs are not subject to RMDs but states may count the portfolio among your total assets, as Massachusetts does. But if you need help calculating your RMDs or managing your Roth assets, consider speaking with a financial advisor.

Trusts and Investments Can Offer Imperfect Protection

If your wealth exceeds these caps, you may have to spend almost all of it in order to qualify for coverage. Then again, there are ways to preserve your assets if you need Medicaid to cover your nursing home expenses.

“Traditional investments can be vulnerable to these financial threats, and that’s precisely why we need to explore alternative avenues,” said Dutch Mendenhall, CEO of RAD Diversified and author of Money Shackles.

You can move your money into assets that your state’s Medicaid program does not count against eligibility limits. Beyond a Roth IRA potentially shielding your assets from Medicaid, many households look to put their money in trusts. Doing so can reduce your on-paper wealth, making you potentially eligible for Medicaid coverage.

“Using a trust, such as an irrevocable trust, is a formidable weapon in your arsenal to shield your assets from the voracious appetite of long-term care costs,” said Mendenhall.

“Placing your assets in an irrevocable trust effectively removes them from your ownership, making them less susceptible to being counted as part of your financial assets during eligibility determinations for Medicaid,” he added. “This separation can be a game-changer, potentially preserving your wealth.”

But only an irrevocable trust will work for Medicaid qualification. Assets in a revocable trust, meaning one that you can change or revoke while you’re still alive, still count toward your overall household wealth.

The typical vehicle for this is a form of irrevocable trust known as a Medicaid asset protection trust.

Be aware that there’s usually a “look-back” period during which Medicaid considers your financial transactions leading up to your long-term care application. The assets you transfer into a trust may be subject to this scrutiny, so planning in advance is crucial. Most, if not all, states look back five years.

Special Rules for Married Couples

The asset limits discussed above apply differently when only one spouse needs nursing home care. Medicaid recognizes that a healthy spouse, often called the “community spouse,” still needs to live on the couple’s combined resources while the other spouse receives care, so the rules carve out a separate allowance specifically for that spouse.

This is known as the Community Spouse Resource Allowance (CSRA). Rather than forcing the couple’s entire combined assets under the same tiny cap a single applicant faces, states generally let the community spouse keep a separate pool of countable assets, often calculated as half of the couple’s combined resources at the time care begins, up to a state-specific maximum. In many states, that maximum runs into six figures, a significant difference from the $2,000 or $32,396 limits discussed earlier, which apply to individual applicants rather than married households.

Income works similarly. Under the Minimum Monthly Maintenance Needs Allowance (MMMNA), a portion of the applying spouse’s income goes to the community spouse if that spouse’s own income falls below a state-set threshold. This helps prevent a situation where the spouse remaining can’t cover basic living expenses while the other spouse receives care.

Married couples’ see their homes treated differently as well. If the community spouse continues living in the couple’s primary residence, that home is generally exempt from Medicaid’s asset count regardless of its value, though states can still pursue estate recovery against it after both spouses have passed away.

Because CSRA and MMMNA figures vary considerably by state, and typically adjusted annually, it’s worth checking your state’s current allowances directly rather than assuming the individual limits discussed elsewhere in this article apply to your household. A financial advisor or elder law attorney can help calculate your specific CSRA and structure your assets accordingly before applying for coverage.

Bottom Line

This is a complicated answer to the complicated question of whether a nursing home can take your savings. While nursing homes can’t seize your assets, the costs of this care are high and can quickly drain your savings. Experts recommend preparing for these costs with diversified investments, income-generating assets, and long-term care insurance. If that’s not an option, using a trust to qualify for Medicaid can be a potential avenue for getting coverage. But the specifics will range widely based on your personal situation, your assets and the state in which you live.

Medicaid Management Tips

• While we didn’t have time to explore the topic fully here, some other options for protecting your assets from Medicaid can include annuities, life estates and even your own home.
• A financial advisor can help you determine whether you could potentially qualify for Medicaid. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/katleho Seisa, ©iStock.com/SilviaJansen, ©iStock.com/Hailshadow