We Have a House and Savings — Does That Mean We Can't Qualify for Medicaid Long-Term Care?

There's a version of the Medicaid story most people know: it's for people who have nothing. You spend everything you own, you get down to $2,500, and then the government steps in to cover nursing home costs.

That story is partially true. It's also incomplete in a way that costs Maryland families hundreds of thousands of dollars every year.

The part people miss is this: with the right planning, done at the right time, families with real assets — a home, retirement savings, money in the bank — can protect a substantial portion of what they've built and still qualify for Medicaid long-term care when the time comes.

That planning has a name. It's called a Medicaid asset protection trust, or MAPT. And it is one of the most powerful tools available to Maryland families who want to protect their legacy from the cost of nursing home care.

Maryland Medicaid's five-year look-back period is the clock everything else runs against. When someone applies for Medicaid long-term care, the state reviews all asset transfers made in the 60 months before that application. Transfers made to reduce assets — including assets placed into certain types of trusts — can trigger a penalty period that delays eligibility.

Here's the part that changes everything: a properly structured Medicaid asset protection trust, funded more than five years before a Medicaid application, is outside that look-back window entirely. Assets placed in the trust are no longer counted against the applicant. They are protected.

This is not a workaround. It is how the law is designed to work, and Maryland elder law attorneys have used MAPTs for decades to help middle-class families do exactly what Medicaid planning is supposed to allow: provide for long-term care without wiping out a lifetime of savings.

A MAPT is an irrevocable trust — meaning once assets are transferred in, you give up direct ownership and control of them. That's the trade. In exchange, those assets are no longer countable for Medicaid eligibility purposes after the five-year window passes.

You can still live in the home if the home is placed in the trust. You can still receive income generated by assets in the trust. What you give up is the ability to sell the home or move the money without trustee approval. For most families, that's a reasonable trade when the alternative is watching those same assets disappear at $10,000 a month in nursing home bills.

Your children, or whoever you name, become beneficiaries of the trust. When you pass, the assets transfer to them — outside of probate, and protected from Maryland's estate recovery program, which can otherwise pursue a lien against a Medicaid recipient's estate after death.

Middle-class Maryland families are exactly who this planning is designed to serve. Not families with very large estates — they have other tools. Not people who are already in a nursing home — they need crisis planning, which is a different conversation.

This is for the Anne Arundel County family with a paid-off home in Severna Park, a 401k, and some savings. The couple in Bowie or Prince George's County who worked for decades, own a house, and haven't thought much about what happens if one of them ends up needing long-term care for several years. The parent in Annapolis whose kids are watching them get older and are starting to ask the uncomfortable questions.

If any of those describe your situation, the most important thing you can know is this: the window for this kind of planning closes on its own. It doesn't close because of anything you did wrong. It closes because years pass and the look-back period catches up to assets that were never moved.

Maryland nursing homes cost between $110,000 and $130,000 per year for a private room. The national average stay for someone who requires long-term care is just over two years — but many stays are considerably longer, particularly for conditions like Alzheimer's and Parkinson's disease where decline is gradual and long-term.

A three-year nursing home stay at current Maryland rates runs roughly $360,000. Five years is over $600,000. For most middle-class families, that's everything: the house, the retirement account, the savings.

A MAPT funded today, before any crisis, costs a fraction of that to establish and can protect the bulk of those assets permanently — assuming five years pass before a Medicaid application becomes necessary. The earlier the planning, the more it protects.

Most families wait. They tell themselves they'll think about this later. They're healthy right now. Long-term care feels abstract. There's always another year.

What they don't realize is that the planning only works with time. A MAPT signed today starts the five-year clock today. A MAPT that doesn't get signed until a diagnosis arrives — or until a fall puts someone in a rehabilitation facility and the doctor says they can't go home — may not provide any protection at all, because the five-year window will still be open when the Medicaid application gets filed.

This is not a scare tactic. It's just how the clock works.

We don't charge for the first call. There's no intake paperwork, no commitment, and no legal advice given in that 15-minute introductory conversation. We listen to where you are, describe what planning might look like for your situation, and give you a clear sense of whether this is something worth pursuing further.

If you have a home, some savings, and a family you want to protect — and you haven't yet had a conversation with an elder law attorney about Medicaid planning — that conversation is worth having. Not someday. Now.

Johnson Law LLC serves families in Annapolis, Severna Park, Bowie, Kent Island, and throughout Anne Arundel and Prince George's County, Maryland.

Call 410-570-1671 or schedule your introductory call.

Johnson Law LLC is an estate planning and elder law firm based in Annapolis, Maryland. Jason C. Johnson serves clients throughout Anne Arundel County, Prince George's County, and the surrounding Maryland communities. This article is for general informational purposes and does not constitute legal advice. Every situation is different — contact our office to discuss yours.