Your retirement savings represent decades of hard work, but an unexpected health crisis can quickly deplete those assets at a rate of $10,000 or more per month for nursing home care. With Medicare covering only limited short-term rehabilitation, many Pennsylvania seniors find themselves caught between paying privately until their savings vanish or qualifying for Medicaid.
Our Pennsylvania elder law attorney helps seniors develop viable asset protection strategies while meeting Medicaid eligibility requirements. Through proper Medicaid planning, it's possible to preserve significant portions of your life savings for a spouse who remains at home or to create a lasting legacy for your children and grandchildren.
Understanding Medicaid Eligibility Requirements in Pennsylvania
Pennsylvania's Medicaid program provides long-term care benefits for qualifying low-income residents who have limited income and assets.
Income Limits
Pennsylvania uses an income cap of $2,901 per month (as of 2025) for individual Medicaid applicants seeking long-term care coverage. For married couples, this limit doubles to $5,802 per month, combined.
If your monthly income exceeds the limit, you may still qualify through Pennsylvania's Medical Assistance spend-down program or by establishing a Qualified Income Trust.
Asset Limits
Single applicants must have countable assets valued at $2,000 or less. For married couples, the healthy spouse (also called the “community spouse”) can retain up to $157,920 in countable assets. If both spouses seek Medicaid, then their asset limits combine to $4,000 total.
Pennsylvania doesn't count certain assets toward the $2,000 individual limit, including your primary residence (with equity up to $730,000), one vehicle, personal belongings, burial plots, and prepaid funeral arrangements.
The Five-Year Look-Back Period and Penalties
Pennsylvania's Medicaid program examines all financial transactions during the five years before application. This comprehensive review examines bank statements, property deeds, tax returns, and other financial records to identify any transfers for less than fair market value, such as gifts to children or property transfers with retained life estates.
When disqualifying transfers are found, Pennsylvania imposes a penalty period calculated by dividing the amount transferred by the average monthly cost of nursing care in Pennsylvania.
Certain transfers during the look-back period don't trigger penalties, including transfers to a spouse, transfers to a blind or disabled child, and transfers of a home to a caregiver child who lived in the home for at least two years before the parent's institutionalization. These exceptions provide important Medicaid planning opportunities for families facing immediate care needs.
Legal Asset Protection Strategies
Our Pennsylvania elder law attorneys use several legal techniques to help seniors protect assets when applying for Medicaid.
Irrevocable Medicaid Asset Protection Trusts
These specialized irrevocable trusts hold assets that would otherwise count toward Medicaid eligibility, effectively removing them from consideration after the five-year look-back period.
For example, you may choose to transfer your vacation property and investment accounts worth $350,000 to an irrevocable trust seven years before needing nursing home care, successfully protecting these assets from Medicaid spend-down requirements.
This asset protection strategy requires surrendering direct control over property placed in the trust, which cannot be changed after implementation.
Medicaid-Compliant Annuities
When properly structured, Medicaid-compliant annuities are specialized financial products that convert countable assets into income streams that don't affect Medicaid eligibility. They must be irrevocable, non-transferable, and have a term not exceeding the purchaser's life expectancy.
For married couples, Medicaid-compliant annuities provide particularly valuable planning opportunities. When one partner needs nursing home care, their spouse can purchase a Medicaid-compliant annuity with their joint savings. The annuity creates additional monthly income for the community spouse while helping their partner qualify for benefits.
Strategic Asset Transfers
Transfers between spouses are exempt from look-back penalties, allowing married couples to reallocate assets to the community spouse. Payments to adult children as caregivers under formal care agreements are also exempt.
Using countable assets to purchase exempt items can reduce your countable assets while improving your quality of life. Examples include home repairs, vehicle purchases, and prepaid funeral arrangements. You could invest in necessary home accessibility modifications and prepaid funeral arrangements, qualifying for benefits while preserving your home's value.
Protecting Your Home From Medicaid Estate Recovery
Your home represents both financial security and emotional attachment to family memories. Pennsylvania's Medicaid program offers several protections for primary residences.
Residency Exemption
Your primary residence is exempt from Medicaid countable asset calculations if you intend to return home or if certain protected individuals live there, including a spouse, a child under 21, or a blind or disabled child of any age.
Recovery Limitations
After a Medicaid recipient's death, Pennsylvania can file claims against their estate to recover benefits paid. However, recovery is prohibited during the lifetime of a surviving spouse or while a blind or disabled child or a child under 21 lives in the home.
Life Estate Planning
Transferring your home while retaining a life estate gives you the legal right to live there for life while removing the property from your estate for recovery purposes. This strategy requires completing the transfer at least five years before applying for Medicaid to avoid look-back penalties.