Paying for care when savings run out

Before the money talk

I'll be honest: my family was lucky. My dad planned ahead, and his planning paid for my mom's care. Plenty still came out of my own pocket, and most families don't have that cushion at all. So this guide is built on research, for the families who need it most.

What I can share is how we decided: give my mom the options, listen to what she wanted, and let her make the call. Money is where that's hardest, because it's still her money and her life.

Jan, founder

Don't move, give away or “protect” any of your parent's money until you've talked to someone who knows your state's Medicaid rules.

Medicaid looks back at the 5 years before your parent applies. Gifts made in that window, even well-meaning ones like giving money to a grandchild, can delay their coverage by months (42 U.S.C. 1396p). Free help exists, and it's listed at the end of this guide.

The reason savings run out so fast is the cost. In 2025, the national median was about $9,600 a month for a shared nursing home room and about $6,200 a month for assisted living (CareScout). At that rate, $100,000 in savings covers about 10 months of nursing home care.

If you're paying for things out of your own pocket, keep track of it: what you paid, when, and for what. It helps you see what you're really carrying, and it makes conversations with siblings, a counselor or an attorney a lot easier.

To qualify, your parent generally needs:

• A medical need for nursing home level care, assessed by the state (ACL).
• Very few countable assets. In many states the limit for one person is $2,000 (CMS, 2026). Some states set it higher. California, for example, brought back an asset limit of $130,000 in 2026, plus $65,000 for each additional household member (Justice in Aging).
• Income under the state's rules. Most states let people with higher income qualify through a special trust (often called a Miller trust) or by putting extra income toward medical bills (KFF). A Miller trust has to be set up correctly or it won't count, so get help with it.

What usually doesn't count as an asset (ACL):

• Their home, up to a home equity limit. In 2026 that limit is $752,000 to $1,130,000, depending on the state (CMS). Starting in 2028 it becomes $1 million in every state for non-farm homes. The limit doesn't apply if a spouse, a child under 21, or a blind or disabled child lives there (National Health Law Program).
• One car.
• Personal and household belongings.
• A small burial fund (often $1,500) and a prepaid funeral plan.

"Spending down." If your parent has more than the limit, they can qualify once it's been spent on real needs, starting with their own care. That's normal, and it's how many people end up on Medicaid.

The 5-year look-back. When your parent applies, Medicaid reviews money and property they gave away or sold for less than it was worth in the previous 60 months. California looks back 30 months (Justice in Aging). Gifts in that window trigger a penalty: months with no Medicaid coverage, calculated as the amount given away divided by the average monthly cost of a nursing home in your state (42 U.S.C. 1396p). Say your parent gave you $50,000 and your state's average is $10,000 a month. That's 5 months they'd have to pay for care some other way.

Here's the catch that hurts families most: the penalty doesn't start when the gift is made. It starts only after your parent has spent down, applied and would otherwise qualify. So the penalty months land exactly when they have the least money left to cover them.

Their income goes toward their care. Once on Medicaid, most of your parent's monthly income, like Social Security, goes to the nursing home. They keep a small personal needs allowance. The federal minimum is $30 a month, and most states set it higher (eCFR).

Apply as soon as they may qualify. Medicaid can pay some bills from before the application date. Starting January 1, 2027, it will cover only the 2 months before your parent applies, down from 3 (National Health Law Program). Waiting can leave your family owing for months Medicaid would have paid.

Estate recovery. After your parent dies, the state must try to recover what Medicaid paid for their nursing home and home care after age 55 from their estate, which can include the home. It can't while a spouse, a child under 21, or a blind or disabled child survives them, and every state has a hardship waiver (Medicaid.gov). It's worth knowing about now, so it isn't a shock later.

The home is also protected while the spouse lives there. If this is your family's situation, it's worth getting free counseling or an elder law attorney before applying. The rules here have the most room for getting it right, and for getting it wrong.

1. 1Lay out every option on paper. What they have, what care costs per month, and how long the money lasts. Seeing the numbers helps them decide instead of just hearing "we need to do something."
2. 2Ask what matters most to them. Staying near friends? A private room? Keeping the house? Their answer shapes which path makes sense.
3. 3Tell them what's happening at every step. Not knowing what's next adds to the fear.
4. 4Check the facility before they commit. Ask whether it accepts Medicaid. A Medicaid-certified nursing home can't make you sign as a guarantor for your parent's bill. Once your parent qualifies for Medicaid, it can charge only what Medicaid allows, and it can't discharge them just for switching to Medicaid (42 CFR 483.15).
5. 5Never pressure them to sign over money or property. Beyond being their call, a rushed transfer can trigger the look-back penalty.

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