Medicaid Planning Strategies for Greenville Seniors: Protecting Assets from Nursing Home Costs

For many seniors in Greenville, the reward for a lifetime of hard work is a comfortable retirement and a nest egg to pass on to children and grandchildren. Yet, a single, common life event can threaten to wipe out that entire legacy: the need for long-term care. The thought of a nursing home is unsettling on its own, but the financial reality is what keeps many families awake at night. With costs in South Carolina running into many thousands of dollars each month, a lifetime of savings can be depleted at an alarming rate.

Many people are shocked to learn that their health insurance, including Medicare, will not cover this type of extended custodial care. This realization often leads to a panicked question: “Will we lose everything we have worked for?”

What Is the Difference Between Medicare and Medicaid for Long-Term Care?

This is the most common point of confusion, and the distinction is vital.

Medicare is the federal health insurance program for everyone aged 65 and older (and for certain younger people with disabilities). It covers hospital stays, doctor visits, and prescription drugs. It will only pay for short-term skilled nursing care following a qualifying hospital stay. For example, it might cover a few weeks of rehabilitation after a hip replacement. It does not pay for long-term “custodial” care, which is the type of non-medical assistance (like bathing, dressing, and feeding) most nursing home residents need.
Medicaid is a joint federal and state program, managed in our state by the South Carolina Healthy Connections program. It is designed to assist low-income individuals and families with healthcare costs. Unlike Medicare, Medicaid is the primary payer for long-term nursing home care in the United States, but to qualify, an applicant must meet strict financial limits.

For seniors who need long-term care, the goal is to legally and ethically structure their finances to qualify for Medicaid benefits while preserving their assets for their family. This is the essence of Medicaid planning.

The Staggering Cost of Long-Term Care in South Carolina

To appreciate the need for planning, it helps to look at the numbers. In South Carolina, the average cost of a semi-private room in a nursing facility can exceed $8,000 per month. A private room is even more expensive.

At a cost of $96,000 per year or more, a family’s “comfortable” nest egg of $300,000 or $400,000 can be completely exhausted in just three to four years. This process of paying for care out-of-pocket until all assets are gone is often called the “spend-down.” Without a plan, families are forced to spend down their life savings, leaving nothing for the healthy spouse at home or for the next generation.

What Are the South Carolina Medicaid Eligibility Requirements?

To qualify for long-term care benefits through South Carolina Healthy Connections, an applicant must be medically in need of nursing home care and must meet strict financial criteria. These criteria are broken into two categories: income and assets.

Income Limits

South Carolina is an “income cap” state. This means there is a hard limit on the applicant’s gross monthly income. As of 2024, this cap is $2,829 per month. If a senior’s income (from Social Security, pensions, etc.) is even one dollar over this limit, they are automatically ineligible for benefits.

This rule seems impossible to overcome, but there is a specific legal tool designed to solve this exact problem: the Qualified Income Trust (QIT), also known as a “Miller Trust.” We will explore this in detail later.

Asset (Resource) Limits

The asset limit is shockingly low. An individual applicant in South Carolina can have no more than $2,000 in “countable” assets to their name.

If the applicant is married and their spouse will continue to live at home (the “community spouse”), the asset rules are different. The community spouse is permitted to keep a much larger amount of assets, known as the Community Spouse Resource Allowance (CSRA), which can be up to $154,140 (in 2024).

This low $2,000 limit for the applicant is what makes asset protection planning so important.

Which Assets Are Countable and Which Are Exempt?

The key to Medicaid planning is knowing the difference between “countable” assets, which count toward the $2,000 limit, and “exempt” assets, which do not.

Countable Assets (Non-Exempt)

These are the assets that Medicaid expects you to spend down on your care before you can become eligible.

Checking and savings accounts
Certificates of Deposit (CDs)
Stocks, bonds, and mutual funds
Investment properties and vacation homes
The cash value of most life insurance policies (if the face value is over $1,500)
IRAs, 401(k)s, and other retirement accounts (though the distribution may be treated as income, the principal is often a countable asset)
Any additional vehicles beyond the primary one

Exempt Assets

These are assets that South Carolina Healthy Connections generally does not count when determining eligibility.

The Primary Residence: The applicant’s home is typically exempt, provided the applicant intends to return home or a spouse lives there. However, the equity in the home is limited to $713,000 (in 2024). Note: The home may still be at risk from estate recovery after the applicant’s death.
One Vehicle: One car or truck is exempt, regardless of its value.
Personal Belongings: Furniture, clothing, jewelry (like a wedding ring), and other household goods.
Pre-Paid Funeral Plan: An irrevocable pre-paid funeral and burial contract is exempt up to a certain amount.
Term Life Insurance: Policies that have no cash surrender value.

What Is the Medicaid 5-Year Look-Back Period?

This is the single most important rule in Medicaid planning. You cannot simply give your assets to your children to meet the $2,000 limit.

When you apply for Medicaid, the state has the right to “look back” at all of your financial transactions for the 60 months (5 years) immediately preceding your application date.

They are looking for any assets that were gifted, transferred, or sold for less than fair market value. If the state finds an improper transfer, it will impose a penalty period. This is a length of time during which you are ineligible for Medicaid benefits, even though you are in the nursing home and have less than $2,000 in assets.

The penalty period is calculated by dividing the total value of the improper gifts by the state’s average monthly cost of care.

Example: A Greenville father gives his son $80,000 to help with a down payment on a house. Three years later, the father has a stroke and needs to move into a nursing home. He applies for Medicaid. The state’s look-back review discovers the $80,000 gift. If the state’s average cost of care is, for example, $8,000 per month, the penalty period will be 10 months ($80,000 / $8,000 = 10).

This means the father must pay for the nursing home out-of-pocket for 10 months after he has already spent down his remaining assets to $2,000. This can be a financial catastrophe.

Proactive Medicaid Planning: Strategies for Looking Ahead (The 5-Year+ Plan)

The best time to plan for long-term care is at least 5 years before you need it. This allows you to use the most powerful asset protection tools available, the primary one being an irrevocable trust.

The Medicaid Asset Protection Trust (MAPT)

A MAPT is a special type of irrevocable trust that you create while you are healthy. You (the “grantor”) transfer assets you wish to protect—such as your home or investments—into the trust.

Control: You name someone else, often a trusted adult child, as the “trustee” to manage the assets.
Income: The trust can be drafted so that you (the grantor) are still allowed to receive all the income generated by the trust’s assets (like stock dividends or rental income).
Principal: You cannot access the principal of the trust.
The 5-Year Clock: Once the assets are transferred to the MAPT, the 5-year look-back clock starts ticking. After 60 months have passed, those assets are completely protected and are not counted by Medicaid.
Other Benefits: A MAPT also protects the assets from lawsuits and, because the assets are owned by the trust, they bypass the probate process entirely. This strategy also protects the home from Medicaid estate recovery.

Crisis Medicaid Planning: Strategies for Imminent Need

What if you or a loved one needs care now and you are inside the 5-year look-back period? It is not too late, but the options are different. This is called “crisis planning.” You cannot make gifts, but you can legally and strategically reposition assets.

The goal is to convert countable assets into exempt assets or spend them on things Medicaid allows.

Pay off Debts: Pay off the mortgage on the primary home, credit card balances, or other outstanding loans.

Purchase Exempt Assets:

Buy a new, reliable vehicle.
Purchase an irrevocable, pre-paid funeral plan for yourself and your spouse.
Make necessary repairs or accessibility modifications to the home (like adding a ramp or a stair-lift).

Personal Services Contract: This is a formal, written contract between the senior and a caregiver (often an adult child) to pay for care services. This must be a bona fide agreement for future services at a fair market rate. It converts a countable asset (cash) into a non-countable payment for services, not a gift.

Medicaid-Compliant Annuity: This is a highly specialized financial product. In a crisis, a married couple can use a large portion of their countable assets to purchase a “single premium immediate annuity” for the healthy community spouse. This converts a lump sum of assets into a non-countable income stream for the spouse, allowing the applicant to become eligible for Medicaid immediately. These annuities have very strict requirements and must name the State of South Carolina as a beneficiary.

The Hidden Danger: Medicaid Estate Recovery

Even if you successfully qualify for Medicaid, there is one last hurdle: the Medicaid Estate Recovery Program.

Federal law requires South Carolina to seek repayment for the costs of care from the recipient’s probate estate after they pass away.

For most Medicaid recipients, the only asset left in their probate estate is their “exempt” primary residence. This means that while Healthy Connections will not force you to sell your home while you are alive, they can place a lien on the home and force its sale after your death to recoup their costs.

This is a devastating blow to families who thought the home was “safe.”

The only way to protect the home from estate recovery is to remove it from the probate estate. This is most effectively done with proactive planning, such as by placing the home into a Medicaid Asset Protection Trust (MAPT) long before care is needed.

You Do Not Have to Face This Alone

The rules for Medicaid are complex, counterintuitive, and constantly changing. A simple mistake, like writing a birthday check to a grandchild or moving money into the wrong type of account, can result in months or even years of ineligibility. This is one of the most complicated areas of law, and trying to navigate it without experienced guidance can have severe financial consequences.

A knowledgeable Greenville estate planning and elder law attorney can analyze your family’s unique financial situation, income, assets, and goals. They can design a legal and ethical plan to protect your life savings, ensure eligibility for benefits, and provide peace of mind for you and your spouse.

Secure Your Family’s Future in Greenville

Planning for long-term care is one of the greatest gifts you can give your family. It replaces panic with a plan and ensures your legacy is protected. At the DeBruin Law Firm, we are dedicated to helping families in Greenville and throughout South Carolina navigate these important and sensitive decisions. We can assist you in developing a proactive asset protection plan or implementing crisis strategies if the need for care is already here.

Protecting your family is the ultimate priority. If you are ready to build a comprehensive plan that provides true peace of mind, please contact us at (864) 982-5930 or send a message online to schedule a consultation.