Are Nursing Homes Able to Access Our Savings? A Couple with $350,000 in IRAs Seeks Answers

Are Nursing Homes Able to Access Our Savings? A Couple with 0,000 in IRAs Seeks Answers

A $350,000 account could be depleted in just a few years if both members of a couple needed semi-private rooms in skilled nursing facilities. However, this is not necessarily what would happen. On the one hand, most people don’t have to pay nursing home bills of this magnitude. Additionally, you may be able to get government assistance to pay for nursing home costs while keeping your IRA intact. Long-term care insurance and other financial tools offer other ways to pay for a nursing home without draining your savings. If you’re concerned about paying for long-term care, consider discussing it with a Financial Advisor.

Paying for long-term care

Long-term care costs are undeniably catchy. In 2021, the Genworth Financial Cost of Care Survey put the average daily cost of a semi-private room in a skilled nursing facility at more than $94,000 per year. At this rate, if both members of a couple needed a similar level of care, $350,000 in IRAs would only cover about two years of costs.

This doesn’t mean your retirement account will suffer the same fate. According to the federal Administration on Aging, approximately 35% of people spend time in a nursing home and the average length of stay is approximately one year. People are more likely to use other types of long-term care, such as assisted living and in-home assistance, which cost less.

The government also intervenes. Health Insurance, the national health care program available to most people over 65, in most cases covers up to 100 days of nursing home care. If you need more time in long-term care, Medical helpthe federal state health program intended for people with limited financial means will cover stays in retirement homes of indefinite duration.

Get matched with up to three financial advisors free to discuss your retirement costs, risks and options.

Medicaid Basic Rules

You must have very limited financial resources to be eligible for Medicaid. States oversee the program and the rules vary, but in some you can only have about $2,000 in assets other than your home. Income limits vary but are also strict.

Some states do not include IRAs when determining Medicaid eligibility, so if you live in one of these countries, your IRA is safe. However, most include IRAs as assets and in these you may have to spend almost all of the money in your retirement fund before Medicaid will pay for nursing home care.

Responding to Medicaid Eligibility Tests

If you have too many assets, you may be able to meet the Medicaid means test by donating assets to a family member. However, you generally must do this at least five years before applying for Medicaid. If you do not respect the five-year reflection period, Medicaid may include transferred assets when determining your eligibility. If this happens, you may have to spend money in your IRA to pay for nursing home costs until your assets decline enough to meet the Medicaid means test.

If your income is too high, a qualified income trust might be able to help. This is a type of trust specifically defined for Medicaid. It designates a portion of your income intended solely for medical purposes. You can deduct this portion of your income to meet Medicaid income limits.

Other ways to cover nursing home costs

In addition to Medicaid, long-term care insurance can provide financial protection against nursing home costs. This coverage can be expensive and difficult to obtain. But if you have an insurance policy, the benefits can cover all or most of the costs of a nursing home stay, allowing you to leave your IRA intact.

Other ways to pay for a nursing home include annuities, life insurance and health savings accounts. Your home can also be a source of money through home equity loans and reverse mortgages.

Talk to a financial advisor about developing a plan to reduce your retirement risks.


A long stay in a nursing home could deplete your IRAs, but there are ways to avoid or minimize this risk. If you qualify for Medicaid, the government will pay all or most of the nursing home costs. Long-term care insurance offers another possible option, as do home equity loans, reverse mortgages, health savings accounts and other tools.


  • A financial advisor can help you find a way to protect your retirement savings from risks, including long-term care costs. The free SmartAsset tool connects you with up to three financial advisors in your area, and you can survey your advisors for free to decide which one is best for you. If you are ready to find an advisor who can help you achieve your financial goals, start now.

  • You probably won’t have to pay for a nursing home, but you will certainly have to pay for food, housing, and other essentials of ordinary life. Smart assets cost of living comparison calculator shows you how much you could save by moving to a less expensive location.

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