As people live longer, more families are discovering just how expensive long term care can be. More than half of adults over age 65 will eventually need help with daily activities like bathing, dressing, or eating. Some will need this support for months, others for years. Yet only a small number of older adults, about 3% to 4%—have private long term care insurance to help pay for it.
That leaves many families facing a difficult reality: Medicare does not pay for long term nursing home or assisted living care. And the cost of care can drain a lifetime of savings very quickly.
A recent national survey found:
- A home health aide costs around $78,000 per year
- A semi private nursing home room averages about $111,000 per year
- The median retirement savings for adults age 65–74 is about $200,000
At these prices, many families run out of money long before the care ends.
What Is “Spend Down”?
For older adults with modest or middle class savings, one option is something called a Medicaid spend down. This is a legal, structured process of using a person’s assets on approved expenses so they can qualify for Medicaid sooner.
Medicaid is the only program that covers long term nursing home care, but it has strict income and asset limits. In many states, a person must have:
- Monthly income below roughly $2,800–$3,000, and
- No more than $2,000 in countable assets (not including a primary home, one vehicle, and personal belongings).
A spend down helps families use remaining assets in appropriate ways—such as paying for care, medical bills, clothing, or even prepaying funeral expenses—so the older adult can qualify for Medicaid without violating rules.
Why Planning Matters
Without planning, families often spend everything they have on care and still end up needing Medicaid later. A spend down simply helps families plan ahead instead of being wiped out unexpectedly.
But it must be done carefully.
Medicaid has a five year “look back” period, meaning the state reviews financial records to make sure assets weren’t given away or transferred improperly. Mistakes can delay eligibility and create costly penalties.
That’s why experts strongly recommend working with:
- An elder law attorney,
- A care manager, or
- A Medicaid planning specialist
These professionals help families avoid missteps and protect the older adult’s long term stability.
What Can Be Counted Toward Spend Down?
Families can typically use remaining assets for:
- Nursing home or assisted living costs
- Hospital or medical bills
- Personal items and clothing
- Paying down debt or a mortgage
- Prepaid funeral or burial arrangements
Every state administers Medicaid differently, so it’s important to understand local rules. Some states also offer “medically needy” programs that allow people with higher incomes to qualify once medical expenses are deducted.
Planning Ahead Makes All the Difference
The biggest message from eldercare experts is simple: don’t wait. Planning early—before a crisis—gives families more options and protects the older adult’s dignity, safety, and financial stability.
For those still years away from needing care, long term care insurance may be worth exploring in your 40s or 50s. For those closer to needing support, a spend down plan may help preserve resources and reduce stress on the family.