Can Nursing Homes Take Your Savings Account? Medicaid Look-Back

No, a nursing home cannot take money out of your savings account. Federal law bars any facility from demanding a personal payment guarantee from your family or requiring you to hand over assets as a condition of admission. What actually drains savings is simpler and harder to stop: the national median cost of a semi-private nursing home room is $9,581 per month,¹ and if you eventually need Medicaid to cover the bill, you’ll have to spend down to as little as $2,000 in countable assets before the program pays a dollar.

What a Nursing Home Legally Cannot Do

A nursing facility cannot require a third-party guarantee of payment as a condition of admission or continued stay.² Your adult child cannot be forced to promise to pay your bill from their own money. A facility can ask someone who already has legal access to your funds, like an agent under a power of attorney, to sign a contract agreeing to pay the facility from your resources, but that person takes on no personal liability.³

Facilities also cannot require you to waive your right to apply for Medicaid or Medicare, and they cannot demand gifts or extra payments from Medicaid-eligible residents beyond what the state plan covers.² If an admission packet includes what looks like a personal guarantee from a family member, that clause likely violates federal law.

How Your Savings Actually Get Spent

The money isn’t seized; it’s billed. When you enter a nursing home, you sign an admission agreement that spells out the daily rate and what services it covers. During the private-pay period, before any government coverage begins, you use your own money to pay that bill each month. Checking, savings, CDs, and other liquid accounts all get drawn down.

The speed is what surprises people. A private room runs a national median of $10,798 per month,¹ and in higher-cost areas the bill can top $15,000. Someone with $200,000 in savings paying out of pocket has roughly 20 months before the account is empty. That’s the same mechanism as paying rent, just at a rate most household budgets weren’t built for.

The Medicaid Asset Limit

Most people who stay in a nursing home for more than a few months eventually apply for Medicaid. To qualify for long-term care coverage, a single applicant’s countable assets cannot exceed $2,000 in most states.⁴ A few states set the limit higher, but $2,000 for an individual and $3,000 for a couple has been the federal baseline since SSI began. Getting below that figure is what “spending down” means.

Countable assets include savings and checking accounts, CDs, stocks, bonds, mutual funds, and any real estate beyond your primary home. A vacation cabin counts. A rental property counts. Certain assets are exempt and don’t count toward the limit:

Your primary home, exempt up to an equity limit that ranges from $752,000 to $1,130,000 in 2026 depending on your state, provided it remains your intended residence.⁵
One vehicle, generally exempt regardless of value in most states.
Personal belongings and household furnishings.
A small life insurance policy, typically exempt if the face value is $1,500 or less.
Prepaid burial arrangements and burial plots, with state caps that commonly fall between $10,000 and $15,000.

Anything above the limit has to be spent on your care before Medicaid begins paying. That’s the real answer to how a savings account gets emptied. Nothing is taken involuntarily, but if you need ongoing nursing home care and have no other coverage, the math doesn’t leave room for a balance.

The Five-Year Look-Back

Giving money to family before applying doesn’t work. When you apply for Medicaid long-term care, the state reviews your financial transactions for the previous 60 months.⁶ Any asset you transferred for less than fair market value during that window can trigger a penalty period during which Medicaid will not pay for your care.

The penalty is calculated by dividing the value of what you gave away by the average monthly cost of nursing home care in your state. Gift $80,000 in a state where care averages $10,000 a month, and you face eight months of ineligibility. The penalty doesn’t start on the date of the gift. It starts on the date you would otherwise have qualified for Medicaid, meaning a transfer made four years ago can create a penalty that lands right when you need coverage. That’s the worst possible position: no assets left, and no Medicaid yet.

Certain transfers are exempt from the penalty:

Transfers to a spouse or to a trust for a spouse’s sole benefit.
Transfers to a child who is blind or permanently disabled, or into a trust for that child’s benefit.
A home transferred to an adult child who lived with you for at least two years and provided care that kept you out of a facility.
A home transferred to a sibling who already has an ownership interest and lived there for at least a year.
A home transferred to a minor child.

Each exception requires documentation. The caregiver-child exception in particular demands proof that the child actually lived in the home and provided care substantial enough to delay institutional placement. Families who assume they qualify without records often find out at the application stage that the state disagrees.

If You Are Married, Your Spouse Is Protected

A common fear is that a nursing home stay will wipe out both spouses. Federal law prevents that. When one spouse enters a nursing home and applies for Medicaid, the community spouse (the one still at home) keeps a share of the couple’s countable assets under the Community Spouse Resource Allowance. In 2026, the protected amount ranges from a minimum of $32,532 to a maximum of $162,660 depending on the couple’s total assets and state rules.⁵ Typically the community spouse keeps half of the combined countable assets, subject to those floor and ceiling amounts.⁷

The Minimum Monthly Maintenance Needs Allowance protects the community spouse’s income. For 2026, the floor in most states is $2,643.75 per month and the maximum is $4,066.50 per month.⁵ If the at-home spouse’s own income falls short of that allowance, the shortfall is drawn from the nursing home spouse’s income before any of it goes to the facility. A couple with $300,000 in countable assets, for example, would see the community spouse keep $150,000 under the half-of-assets rule while the nursing home spouse spends down to $2,000.

Ways to Protect Savings Before You Need Care

Planning years ahead is the only reliable way to shield savings. Each option has trade-offs, and most only work if set up well before a Medicaid application.

Medicaid Asset Protection Trusts

An irrevocable trust designed to hold assets outside your countable estate can protect substantial savings, but you have to give up control. You typically cannot serve as trustee, and you cannot pull the principal back out. The trust must be funded at least five years before you apply for Medicaid; anything transferred within that window still triggers the look-back penalty. This is a strong tool for early planners and useless in a crisis.

Medicaid-Compliant Annuities

An annuity converts a lump sum of countable assets into a stream of monthly income. Because the payments count as income rather than as an asset, the technique is often used to help the community spouse retain more resources. The annuity must be irrevocable, non-assignable, and structured to pay out in equal monthly installments within the owner’s life expectancy. In most states, the state Medicaid agency must be named as primary beneficiary to recoup benefits if the annuitant dies before the term ends. Getting a term wrong can cause the whole amount to be counted as available.

Irrevocable Prepaid Funeral Trusts

These trusts set aside money for burial and funeral costs in an account Medicaid doesn’t count. State caps commonly fall between $10,000 and $15,000 per person. A married couple can each set one up. The trust has to be genuinely irrevocable; you cannot cancel it and take the money back.

Long-Term Care Partnership Insurance

Qualified long-term care insurance partnership policies allow you to protect a dollar of assets from Medicaid spend-down for every dollar the policy pays out in benefits.⁶ A policy that pays out $200,000 in nursing home benefits lets you keep $200,000 in assets when you apply for Medicaid, and those assets are also shielded from estate recovery after death. Only about one in ten adults carries any long-term care insurance, and premiums have risen sharply in recent years.

What Happens After Death: Estate Recovery

Federal law requires every state to seek repayment of Medicaid long-term care costs from a deceased recipient’s estate.⁶ This applies to anyone who was 55 or older when they received Medicaid-covered nursing home care, home and community-based services, or related hospital and prescription drug services.

The primary home is the main target. It is exempt during your lifetime but recoverable after death. The state can place a lien on the property or file a claim against the probate estate, and some states define “estate” broadly enough to reach assets that bypass probate, such as jointly held property or living trusts.⁸

Recovery is blocked while a surviving spouse is alive, regardless of where the spouse lives. It is also barred if a child under 21 or a child who is blind or permanently disabled survives the recipient.⁸ A sibling with an equity interest who lived in the home may also be protected. Without one of those exceptions, the state will attempt to recover what it spent, and for someone who spent years in a nursing home at $10,000 or more per month, that claim can exceed the home’s value.

1
CareScout. Cost of Long Term Care by State
2
Office of the Law Revision Counsel. 42 USC 1396r – Requirements for Nursing Facilities
3
eCFR. 42 CFR 483.15 – Admission, Transfer, and Discharge Rights
4
Social Security Administration. 2026 Cost-of-Living Adjustment Fact Sheet
5
Centers for Medicare and Medicaid Services. 2026 SSI and Spousal Impoverishment Standards
6
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries
7
Office of the Law Revision Counsel. 42 USC 1396r-5 – Treatment of Income and Resources for Certain Institutionalized Spouses
8
U.S. Department of Health and Human Services. Medicaid Estate Recovery