5 Ways to Reduce Long-Term Care Costs — Even If You Have Assets

Legal asset protection and long-term care cost strategies for New Jersey seniors aged 65 and older

---

If you have a reasonable amount in assets, government help is actually harder to get — because Medicaid can only be applied for when your assets are under $2,000. Does that mean you have to pay the full New Jersey nursing home cost ($12,775 a month) out of your own pocket? Fortunately, there are legal ways to protect your assets while reducing the burden of care costs. Here are five of them, explained simply.

Method 1: Set up an asset protection trust (MAPT)

One of the most powerful approaches is establishing a Medicaid Asset Protection Trust (MAPT). In plain terms, it is a way of placing your property into a special legal vehicle — a trust — where it is legally “yours, but not yours.”

Once five years have passed since you moved property into the trust, it is not counted in the Medicaid asset calculation. Your house can go into the trust, and you can continue to receive rental income or investment income generated by it. However, it is difficult to reverse once done, so you must work through it with an elder law attorney. The most important point is that this has to be set up five years in advance.

Method 2: Protect the spouse’s assets

When only one member of a married couple enters a nursing home, the spouse who remains at home is legally entitled to protect a substantial amount of assets and income.

• Asset protection: up to $162,660 protected (2026 figure)
• Income guarantee: a minimum of $2,644 per month in living expenses
• Right of residence: able to continue living in the current home

Many people are under the impression that if a spouse enters a nursing home, they will have to spend down all of their own assets as well. In fact, a considerable portion is legally protected. Making proper use of these rights requires professional help.

Method 3: Use hybrid long-term care insurance

A drawback of standard long-term care insurance is that the premium can rise every year. Hybrid products were designed to solve exactly that. These combine life insurance with a long-term care rider, and the premium is fixed from the outset.

There are two key advantages. If you need care, you use it for care costs; if you stay healthy and pass away without needing it, the death benefit goes to your family. There is also a single-premium version, where you pay a lump sum at once — an effective way to set aside part of your assets in advance as a dedicated source of funding for care.

Method 4: If you are a veteran, check VA benefits first

If you served during a period of war, you may be eligible for the Department of Veterans Affairs’ Aid & Attendance benefit. The asset thresholds for this benefit are far more generous than Medicaid’s, so middle-class seniors are frequently eligible.

• Single veteran: up to $2,424 per month ($29,093 a year, tax-free)
• Married (including spouse): up to $2,874 per month ($34,488 a year, tax-free)
• Asset threshold: net worth of $163,699 or less (2026 figure, excluding home and vehicle)

This benefit can be used not only for a nursing home but also for care received at home or in an assisted living facility. If you served in the Korean War or the Vietnam War, this is worth checking.

Method 5: Build a long-range gifting plan

Each year you can transfer up to $19,000 per child ($38,000 for a married couple combined) without gift tax. Done consistently over ten years, that can move several hundred thousand dollars to your children.

There is an important caveat, however. Property transferred more than five years before you apply for Medicaid is excluded from your assets, but property transferred within five years will trigger a penalty when you apply. So the key to this strategy is executing it steadily, starting at least five to ten years ahead.

The most important thing is starting now

All five of these approaches have one thing in common: timing is everything. A trust has to be created five years ahead. Long-term care insurance costs less if you enroll while you are healthy. And the longer you gift, the more you can transfer.

Once a health problem has already developed, the options available to you shrink dramatically. While you are still healthy, I strongly encourage you to sit down with an elder law attorney or a financial planner and build a plan that fits your situation.

---

This article is provided for general informational purposes. Medicaid rules, tax thresholds and VA benefit amounts can change every year, and how they apply will differ depending on your individual circumstances. Before making any significant decision, please consult a New Jersey elder law attorney.