If you're wondering how to protect assets from a nursing home, start with the part Medicare doesn't cover. On day 101 of a stay, Medicare pays zero and the whole bill is yours. At right around $130,000 a year, two to three years runs about $300,000. That doesn't have to take your house or your spouse's security, and the most popular move families make to protect the house, signing it over to the kids, backfires twice.
What Medicare actually pays for
Medicare covers some nursing home care, but only skilled care, and only after at least three nights admitted to a hospital. That has to be a formal admission. If they keep you under observation instead, even in a hospital bed for three days, those days don't count.
If you meet that bar, Medicare pays for the first 20 days of skilled care in full. From day 21 through day 100, you owe a copay of about $217 a day in 2026, which runs more than $6,000 a month out of your own pocket. You only get those days while a therapist says you're still improving. The moment you plateau, coverage can end well before day 100. After day 100, Medicare pays nothing.
None of that touches custodial care, the daily help with bathing, dressing, eating, and moving around. That's what a long stay is really about, and Medicare never pays for it. Medicare Advantage doesn't change this. It's built on the same rules.
What the care costs and how likely a long stay is
In 2025, the national median for a private room was about $130,000 a year, and a shared room ran about $115,000. Two to three years of that runs roughly $300,000.
About seven in 10 people turning 65 will need some form of long-term care, though most of that care is short or it happens at home. Only about one in five will ever need it for more than five years, and most nursing home stays run closer to a year. The long, expensive ones are usually driven by dementia. More than 7 million Americans are living with Alzheimer's, and that care can run for years. A stay like that is unlikely, and it's the one thing that can take everything you've saved.
How people pay once Medicare is out
There are three ways this plays out. Out of your own savings and retirement accounts, out of long-term care insurance if you have it, or out of Medicaid once your savings are tapped. A lot of families end up leaning on Medicaid, because paying $130,000 a year out of pocket drains a lifetime of savings fast.
Medicaid was built for people with almost nothing. In most states you can have no more than around $2,000 in countable assets to qualify. So what families do is a spend down. You spend your savings on the care until you're nearly broke, and then Medicaid takes over. Medicaid is also picky about what it pays for. It's required to cover nursing homes. Assisted living is optional, and no state covers room and board there.
Your primary residence gets treated differently. While you're alive, the house is exempt, so it doesn't count against you. After you die, a program called estate recovery kicks in, and federal law requires the state to try to get its money back out of your estate. That usually means the one big thing left, the house. The state can put a lien on the house or file a claim to recover every dollar it spent on your care, so the $300,000 bill shows up after the funeral and the house you held onto for the kids becomes how the state gets repaid. This applies to care you received at 55 or older, and the details vary a lot state to state.
What the spouse at home keeps
If you're married, the law doesn't make the healthy spouse go broke so the other one can get care. The spouse who stays home is what the rules call the community spouse. They keep the house, the car, and a sizable chunk of the savings. In 2026, that protected amount of savings runs from about $32,000 up to $163,000, depending on the state, and the at-home spouse's own income can be topped up to about $4,000 a month drawn from the couple's income.
None of it is automatic. Nobody at the nursing home fills out these forms for you. You have to file for these protections and claim them correctly, and that's where a good elder law attorney earns the fee.
The five-year lookback decides what you can protect
More than anything else, this comes down to timing. Almost every real protection has to be in place at least five years before you need the care, because Medicaid looks back five years at everything you gave away or moved out of your name. Give away $100,000 inside those five years and Medicaid makes you wait, sometimes the better part of a year, before it pays a dime.
The tool a lot of families use is a specific kind of trust. You move the house into an irrevocable trust more than five years before you need care, and it's protected. The catch is in the word irrevocable. You give up control. It's no longer your house to sell on a whim.
Skip the trust and sign the house over to the kids instead, and it costs you in two ways. It counts as a gift, so it trips that same five-year penalty and can block the Medicaid coverage you need. Then comes the expensive part for your kids. Give the house away while you're alive and they take over your original cost basis. If you bought it for $200,000 and it's now worth $800,000, they owe capital gains tax on $600,000 of growth when they sell. If they inherit that same house after you pass, the basis resets to $800,000, and selling right away leaves a gain of zero. You thought you were handing them $800,000, and you handed them a $600,000 tax bill along with it. A trust set up the right way and early enough gets around the penalty and the tax both.
Insurance, hybrids, and paying for it yourself
Long-term care insurance can cover this, but the market has shrunk hard. Thirty years ago, more than 100 companies sold these policies. Today there are fewer than a dozen. Prices have climbed, and a lot of people holding older policies have been hit with steep rate increases. If you want traditional coverage, the time to buy is in your 50s while you're still healthy enough to qualify. For a healthy couple in their mid-50s, a solid policy with inflation protection runs somewhere around $5,000 a year. Wait until your 70s to apply and nearly half of applicants get turned down.
Hybrid policies combine life insurance with long-term care. If you need the care, the policy pays for it. If you never do, your heirs get the death benefit, so the money isn't gone. The trade-off is that you usually commit a large lump sum up front.
If you have a larger net worth, say a couple million in savings, self-funding can be the right call. Instead of paying premiums for decades, you set aside income to cover the possible care gap. There's no single right answer here, so match the plan to the money you actually have. For a self-funder, the danger is being forced to sell investments at the worst possible time, right when you need the money to pay for the care. Set the cash aside ahead of time, a pool earmarked for that care, so a market drop never decides how a loved one gets cared for.