When you are making your plans for the future, you need to prepare for the possibility that you are going to need nursing home care at some point in your life. According to the Office of the Assistant Secretary for Planning and Evaluation, 70% of adults who survive to the age of 65 will have “severe” long-term service and support needs prior to their death and 48% are going to require some kind of paid care over the remainder of their lives. Further, 15% of adults are going to spend more than two years in a nursing home.
Long-term care is very expensive and you may not be able to fund the costs of this care out of your pocket if you become one of the many who needs it. Sadly, your private health insurance will not pay for it. You also are not going to be able to rely on Medicare to pay for it since Medicare excludes coverage for custodial care. You will need to make plans for yourself.
You can do that in one of two ways. You can sign up for long-term care insurance. Or you can work with an estate planning attorney to make a Medicaid plan. The right course of action will depend on the specifics of your situation, but many people will find that Medicaid planning is a better approach.
How does long-term care insurance work?
Long-term care insurance is a type of insurance coverage that you can buy from an insurance company. There are dedicated companies that sell these kinds of policies. Getting covered can often be very expensive though, especially if you wait until you are at an advanced age before you buy long-term care insurance coverage.
When you buy coverage, your policy terms will dictate what the insurer actually pays for. Sometimes, there is a waiting period before you get your nursing home bills paid. There can also be a daily limit for how much the long-term care insurance pays for. This may mean that your policy does not allow you to go to your preferred home when you need to.
How does Medicaid planning work?
Medicaid planning is different than long-term care insurance. You do not buy coverage from an insurer if you opt for Medicaid planning. Instead, you work with an attorney and take strategic steps to make certain that you are able to qualify for Medicaid.
Medicaid is a government program. You funded it with your taxes when you paid into the system during your working life. It provides coverage for custodial care but it is a means-tested benefit. This means if you don’t make a Medicaid plan, you have to spend down your assets and impoverish yourself before you are able to qualify for coverage.
If you make a Medicaid plan, this is not an issue. You can structure the ownership of your assets so they do not count when determining if you qualify for Medicaid. You can get coverage when you need it without going broke and losing the chance to leave an inheritance. Medicaid doesn’t have the same restrictions or limitations long-term care coverage has and you don’t pay premiums for it.
The downside of Medicaid planning is that you have to do it in advance of the time you need nursing home care. There is a five-year lookback period that scrutinizes transactions you made in the five years leading up to the time you need Medicaid coverage. If you try to do Medicaid planning in that time-period, you won’t be able to get covered right away. You’ll need to be forward-thinking in order to make sure that you get the Medicaid coverage you need when you need it.
Of course, this is a downside for long-term care insurance too. You can’t just go and buy a policy when you find out that you need to go into a nursing home and expect it to pay for coverage for you the next day.
Which is right for you?
Many people who look into both long-term care insurance and Medicaid planning decide that they would prefer to put a Medicaid plan in place rather than to buy long-term care coverage.
Medicaid can offer better protection without loopholes and fine print like some long-term care policies have. You also won’t have to pay expensive premiums in order for Medicaid to cover your nursing home care if you need it. Plus, if you end up not needing to go into a nursing home, you won’t have wasted money on premiums for years just in case you do. Your Medicaid plans will be in place to protect your assets, but you won’t really have lost out on anything if it turns out that you don’t ever need nursing home care.
Ultimately, you need to think carefully about the specifics of your situation and about your comfort level with buying insurance or working with an attorney to protect your assets in case you want Medicaid coverage. This will dictate which choice makes sense for you.
An experienced Jacksonville estate planning lawyer can also help you to understand the specifics of Medicaid planning and to make a fully informed choice about whether putting a plan in place is feasible and advisable in your situation. If you do decide to make a plan, your lawyer will also help you through the process to ensure it is legally valid and offers you the desired protection for your assets.
The Edwards Law Firm has helped many people to make plans to ensure they are able to afford nursing home coverage if and when the time comes. The Edwards Law Firm services all of northeast Florida with offices in Jacksonville and St. Augustine. To find out more about the assistance available to you as you prepare for your elder years and the possibilities they bring, give us a call today at 904.672.7600. You can also contact us online to learn more about how a member of our legal team can assist you.
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