The cost of long-term care can be overwhelming.
A parent may enter an adult family home, adult foster home, assisted living community, memory care facility, or nursing home believing they have enough savings to pay for care.
Then the months pass.
Savings begin to disappear.
The cost of care increases.
And eventually, a family realizes:
“Mom or Dad is going to run out of money. What happens then?”
It’s a frightening question — especially when your loved one is already settled somewhere, receiving care, and depending on others for daily needs.
But running out of private funds does not automatically mean your parent will be left without care.
Depending on their financial situation, care needs, state, and current provider, Medicaid or another program may help pay for long-term services and supports.
The important thing is to begin planning before the money is gone.
Here’s where to start.
Step 1: Figure Out How Long the Money Will Actually Last
Before making any decisions, get a clear picture of your parent’s finances.
Start by gathering information about:
• Checking and savings accounts
• Retirement accounts
• Social Security income
• Pension income
• Investments
• Property
• Life insurance policies
• Long-term care insurance
• Veterans benefits, if applicable
• Other income or assets
• Current monthly cost of care
• Other recurring expenses
Then estimate how many months of private-pay care your parent can realistically afford.
Don’t wait until the account is nearly empty.
If you can see that your parent may run out of funds in the coming months, start researching options now.
Medicaid eligibility and long-term-care planning can take time, and having time gives your family more choices.
Step 2: Understand the Difference Between Medicare and Medicaid
This is one of the biggest sources of confusion for families.
Medicare and Medicaid are not the same thing.
Medicare is primarily health insurance. It may cover qualifying short-term skilled nursing or rehabilitation care under certain circumstances, but it generally does not pay for ongoing custodial long-term care simply because an older adult can no longer live independently.
Medicaid is different.
Medicaid can help eligible individuals pay for long-term services and supports, including services delivered at home and in certain residential settings.
Eligibility depends on factors that can include finances and the person’s need for care.
If you’re unsure which program applies to your parent, don’t assume Medicare will eventually take over the monthly cost of long-term residential care.
Related Ovella Resource: Medicare vs. Medicaid: What’s the Difference — and Which One Pays for Long-Term Care?
Step 3: Find Out Whether Your Parent May Qualify for Medicaid Long-Term Care
Medicaid is a joint federal-state program, which means eligibility and long-term-care programs can vary by state.
Generally, qualifying for Medicaid-funded long-term services involves more than simply being a certain age.
The state may evaluate both:
Financial eligibility — including applicable income and resource rules.
Functional eligibility — whether the person has a level of care need that qualifies for the applicable program.
For example, Washington describes its long-term-care Medicaid application process as having three main parts: submitting an application, completing a financial review, and completing a personal-care-needs assessment.
That means a parent doesn’t necessarily qualify simply because their savings are getting low.
Start investigating eligibility before private funds are exhausted.
Step 4: If You’re in Washington, Start With DSHS
For Washington families, the Washington State Department of Social and Health Services provides information about Medicaid-funded long-term services and supports.
Use the official Washington DSHS — How to Apply for Long-Term Care Medicaid page to understand the application process.
Washington says applicants may need to provide information such as proof of income and documentation of resources, including bank statements, property information, and life-insurance information. The process also includes an assessment of personal-care needs.
You can also use the state’s Washington DSHS — Medicaid and Long-Term Care resource to learn more about Medicaid-funded services.
Washington explains that Medicaid can pay for qualifying services in someone’s own home or in a residential care facility that participates in Medicaid.
That last part is important:
Not every residential provider accepts Medicaid.
Step 5: If You’re in Oregon, Start With ADRC and Oregon ODHS
Oregon families can start with the state’s Oregon Long-Term Care Options and Medicaid Resources.
Oregon’s Aging and Disability Resource Connection — ADRC — has trained staff who help older adults and families understand long-term-care services and options.
Oregon ADRC: 855-673-2372
Oregon currently allows people to begin the Medicaid long-term-care application process by phone, online, or through a local benefits office.
If you’re overwhelmed and don’t know which program applies, start by explaining the situation plainly:
“My parent is currently paying privately for long-term care, but their money is running out. I need to understand whether they may qualify for Medicaid long-term care and what we should do next.”
You don’t need to understand the entire system before making that first call.
Step 6: Ask the Current Care Provider About Medicaid Now
This conversation is extremely important.
If your parent currently lives in an adult family home, adult foster home, assisted living community, memory care facility, or another residential setting, ask the provider:
“What happens if my parent eventually needs Medicaid?”
Then get specific.
Ask:
• Do you accept Medicaid?
• Do you accept Medicaid for residents who initially entered as private pay?
• Are there conditions or limitations we should understand?
• Would my parent potentially be able to remain here?
• Is there anything we should begin doing now?
• Who should we speak with about the financial transition?
Do not assume that because a provider accepts some Medicaid residents, your parent’s transition will automatically happen.
Likewise, don’t assume that your parent will necessarily have to move.
Ask the provider directly.
Step 7: Don’t Wait Until the Last Month of Private-Pay Funds
This may be the most important practical advice in this entire article.
If you know your parent’s money is declining, start planning early.
There can be paperwork to gather.
Financial eligibility has to be determined.
Care needs may have to be assessed.
The current provider’s Medicaid participation needs to be understood.
And if the current setting cannot continue caring for your parent under Medicaid, your family may need time to research another appropriate provider.
Starting early gives you time to ask questions instead of making another major care decision during a crisis.
Step 8: Be Very Careful About Giving Away or Moving Assets
Families sometimes hear advice like:
“Just put the house in someone else’s name.”
“Give the money to the kids.”
“Move the savings somewhere else.”
Do not make major transfers simply because someone tells you it will help your parent qualify for Medicaid.
Federal Medicaid rules include provisions governing transfers of assets for less than fair market value for people seeking certain long-term services and supports. Medicaid describes a five-year period preceding the Medicaid application that can be relevant when reviewing such transfers.
There are also rules involving spouses, trusts, homes, and other circumstances.
You can review the federal government’s current Medicaid Eligibility Policy and Asset-Transfer Information.
But this is one of those situations where a website — including this one — should not tell you what to do with a particular house, bank account, trust, or other asset.
If significant assets or property are involved, consider getting individualized advice from an attorney or other qualified professional who understands Medicaid long-term-care rules in your state.
Washington DSHS itself notes that its employees can explain current Medicaid eligibility rules but cannot provide individualized financial or legal advice.
Step 9: What If Your Parent Owns a House?
Owning a home does not automatically answer the question of whether someone can qualify for Medicaid long-term care.
Medicaid’s treatment of a home can depend on the program and circumstances.
For example, factors involving a spouse, ownership, residency, transfers, estate recovery, and other circumstances can matter.
This is another reason not to sell, gift, transfer, or retitle property based solely on informal advice.
Instead, ask the state Medicaid agency how the property affects your parent’s specific application and consider professional advice when appropriate.
Step 10: What If Your Parent Is Married?
If one spouse needs long-term care while the other remains in the community, don’t assume the spouse at home must become impoverished before the other spouse can receive Medicaid-funded long-term care.
Federal Medicaid policy includes spousal impoverishment protections intended to protect a spouse of someone seeking Medicaid long-term services and supports from becoming impoverished in order for the spouse needing care to qualify.
The details matter, however.
If your parent is married, make sure you tell the eligibility worker that there is a spouse living in the community and ask specifically how the applicable spousal rules affect income and resources.
Step 11: Understand That Medicaid Doesn’t Necessarily Mean a Nursing Home
This is another common misconception.
Families sometimes hear “Medicaid long-term care” and immediately picture a nursing home.
But Medicaid-funded long-term services and supports may be provided in different settings depending on the state, program, person’s eligibility and needs, and participating provider.
Washington, for example, states that Medicaid can pay for services in someone’s own home or in a residential care facility that accepts Medicaid residents.
Oregon likewise explains that Medicaid long-term-care services can be provided in a person’s home or in a facility.
Depending on your parent’s circumstances, residential options may include smaller care settings as well as larger facilities.
The goal should be to determine:
What level of care does my parent need?
Then:
Which providers that can meet those needs participate in the appropriate payment program?
Step 12: If the Current Provider Doesn’t Accept Medicaid, Start Looking Before Funds Are Gone
This is the scenario families understandably fear.
Your parent likes their home.
The caregivers know them.
They’re comfortable.
But the provider does not participate in the Medicaid program your parent may need.
If that happens, don’t wait until there is no money left to begin searching.
Start asking:
• What type of care does my parent currently require?
• Which providers can meet those needs?
• Which appropriate providers participate in Medicaid?
• Are there openings?
• Will an assessment be required?
• What information will the new provider need?
• How can we make a transition as smooth as possible?
A move can be difficult, particularly for someone who is frail or living with dementia.
More planning time gives families a better opportunity to find a setting based on fit and care needs rather than simply taking the first available option.
Step 13: Ask About Other Benefits and Resources
Medicaid may be one major piece of the long-term-care puzzle, but it isn’t necessarily the only resource.
Depending on your parent’s circumstances, investigate whether they have or may qualify for:
• Long-term care insurance benefits
• Veterans benefits
• State or local aging programs
• Home and community-based services
• Support for family caregivers
• Other public benefits or assistance
If you’re in Oregon, ADRC can help families navigate long-term-care services and resources.
In Washington, DSHS provides long-term-care Medicaid information as well as resources for finding other places to live and receive care when remaining at home is no longer possible.
Step 14: Understand Medicaid Estate Recovery
Families may also hear the phrase “estate recovery.”
This is something worth understanding — but not panicking about based on something you’ve heard secondhand.
Medicaid estate-recovery rules can apply to certain benefits and circumstances after a recipient dies.
Washington, for example, states that it may recover certain Medicaid or state-funded long-term-care costs from a recipient’s estate under applicable law.
If your parent owns property or other significant assets, ask specifically how estate recovery could apply to their situation before making financial decisions.
Again, individualized legal or financial questions deserve individualized advice.
Step 15: Make a Plan Before It Becomes an Emergency
If your parent is currently private pay and you know their savings won’t last indefinitely, your family can begin preparing now.
Start with these questions:
How much longer can they afford their current care?
Does their current provider participate in Medicaid?
Could they potentially qualify for Medicaid-funded long-term care?
When should we apply?
What documents will we need?
Will their current provider be able to continue caring for them?
If not, what other appropriate providers should we begin considering?
You don’t need to have every answer today.
But you do want to start asking the questions while you still have choices.
What to Do When Your Parent’s Money Is Running Out: Quick Checklist
If you don’t know where to start, begin here:
1. Calculate approximately how many months of private-pay care remain.
2. Gather financial documents, income information, insurance information, and information about property and other assets.
3. Ask the current provider whether they participate in Medicaid and what happens when a resident transitions from private pay.
4. Contact your state’s long-term-care Medicaid program before funds are exhausted.
5. Ask whether your parent appears to need an eligibility assessment and when you should apply.
6. Don’t gift, transfer, sell, or retitle significant assets solely to try to qualify for Medicaid without understanding the consequences.
7. If your parent is married, ask about protections for the spouse who remains in the community.
8. If the current provider won’t be an option under Medicaid, begin researching appropriate participating providers early.
9. Investigate other benefits your parent may have.
10. Keep copies of financial, medical, insurance, and care records together.
Frequently Asked Questions
What happens when an elderly parent runs out of money for assisted living or residential care?
The answer depends on the person’s eligibility for assistance and whether their current provider participates in an applicable program such as Medicaid. Families should contact the provider and their state’s long-term-care Medicaid agency before private funds are exhausted.
Does Medicare pay for long-term care when someone’s savings run out?
Generally, Medicare does not become the payer for ongoing custodial long-term residential care simply because someone’s savings have been depleted. Medicare may cover certain qualifying skilled nursing or home-health services, while Medicaid can fund long-term services and supports for eligible individuals.
Can Medicaid pay for an adult family home or adult foster home?
Medicaid may fund qualifying long-term services in residential settings depending on the state, program, person’s eligibility and care needs, and whether the provider participates in the applicable Medicaid program. Washington specifically notes that Medicaid can pay for services in participating residential care facilities.
Should my parent give away their money before applying for Medicaid?
Do not transfer or give away assets simply to try to qualify without understanding Medicaid’s rules. Federal Medicaid policy includes rules concerning transfers for less than fair market value during the applicable five-year review period for certain long-term-care applicants.
Can my parent own a house and still qualify for Medicaid long-term care?
Potentially. A home’s treatment depends on the applicable Medicaid rules and the person’s circumstances. Ownership of a home should be discussed with the state eligibility agency, and families with significant property or assets may benefit from qualified legal or financial advice.
What happens if the care home doesn’t accept Medicaid?
Your parent may need another payment source or may eventually need to transition to a provider that participates in the appropriate Medicaid program and can safely meet their care needs. This is why families should ask about Medicaid participation well before private funds are exhausted.
When should we apply for Medicaid long-term care?
Don’t assume you need to wait until the bank account reaches zero. Contact your state’s long-term-care Medicaid program early enough to understand eligibility, timing, documentation, assessments, and how the transition may affect the current care arrangement.
The Bottom Line
Watching a parent’s savings disappear while they still need care can be frightening.
But don’t wait for the final payment to ask:
“What happens now?”
Start earlier.
Understand the finances.
Talk to the current provider.
Learn whether Medicaid may be an option.
Contact your state’s long-term-care resources.
And don’t make major financial or property transfers based on informal advice.
Most importantly, remember that the financial question and the care question need to be considered together.
Your family isn’t simply trying to find a way to pay for care.
You’re trying to find a sustainable way for your loved one to continue receiving the right care in the right setting.
Ovella Living helps families explore residential care options, compare providers, and better understand their choices when planning for long-term care.
This article is for general educational purposes and is not legal, financial, Medicaid eligibility, insurance, or benefits advice. Medicaid programs, eligibility requirements, covered services, provider participation, and estate-recovery rules vary by state and individual circumstances and may change. Verify current information with the appropriate state agency and seek qualified professional advice for decisions involving assets, property, trusts, transfers, or estate planning.
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