Why do so many seniors think that Medicare will pay their nursing home bill? Medicare, the health insurance coverage that most seniors have, does pay some nursing home bills. But, that coverage is only for 100 days, at the most. Most seniors are notified that they are no longer eligible for Medicare to pay their bills after 21 days in the nursing home. That’s when seniors are on the hook to pay the $15,000 monthly bill themselves. It is important to note that most families can protect themselves from these catastrophic costs.

What happens when a senior runs out of money? Medicaid, a joint federal and state-funded program, steps in. Medicaid is the government’s safety net to pay the nursing home bills of seniors. In most states, seniors who are not married must deplete all but $1,600 of their life savings to meet Medicaid’s asset qualifications. Married couples are allowed to keep $126,420, not counting their house and car. In some cases, you can keep far more than that. Most every asset above this amount must be sold in a process that is referred to as “spending down.”

Is “spending down” – going through your life’s savings – inevitable? No! There are smart financial and legal strategies that allow seniors to shelter assets while still qualifying for Medicaid benefits. These strategies are often called Medicaid planning and every senior should have a working knowledge of how this type of planning may benefit them.

There is a lot of misinformation surrounding the Medicaid program and Medicaid planning. One of the most misunderstood aspects is the belief that once someone enters the nursing home, it’s too late to do Medicaid planning. That’s simply not true. It’s never too late to save assets. Whether someone is entering the nursing home tomorrow, already has been there one week, or has been a resident of the nursing home for five years, Medicaid planning to help save their nest egg is still possible.