Can a Nursing Home Take Our $350,000 in IRA Savings?

The Genworth Financial Cost of Care Survey reported that the average daily cost of a semi-private room in a skilled nursing facility exceeded $94,000 in 2021. This means that if both spouses in a couple required such care, $350,000 in IRAs would only cover about two years of expenses. However, this does not necessarily mean the retirement account would be depleted.

According to the federal Administration on Aging, approximately 35% of people experience at least some time in a nursing home, with an average stay of about a year. Most people do not incur nursing home bills of this size. Government assistance can help pay for nursing home costs while preserving IRA savings. If financial resources are extremely limited, Medicaid may cover indefinite stays in long-term care facilities.

States have varying rules regarding asset limits and income thresholds for Medicaid eligibility. In some cases, IRAs may be exempt from Medicaid eligibility criteria. Strategies such as gifting assets to family members five years before applying for Medicaid, using qualified income trusts, or arranging for assets through home equity loans, reverse mortgages, or health savings accounts could help protect retirement savings.

Consulting with a financial advisor can help devise a plan to safeguard retirement funds against the risks of long-term care costs.