Medicaid Planning in North Carolina: How to Protect Your Assets Before It’s Too Late

The Medicaid Clock Is Ticking: How Early Planning Protects Your Assets and Options

When it comes to protecting your home, savings, and future care, timing is everything — especially when Medicaid is involved. In my work with families across Garner and the surrounding communities, I’ve seen how quickly life can change and how devastating the financial consequences can be when families don’t plan ahead. This blog dives into what you need to know about Medicaid’s complex rules — including the five-year lookback period — and how early planning can be the key to preserving your assets, your choices, and your peace of mind. Whether you're caring for an aging parent or thinking ahead for yourself, now is the time to act — before the clock runs out.

“We Thought We Had More Time.”

That’s what Lisa whispered through tears as she stood at her mother’s hospital bedside. Her mom, a retired teacher from Clayton, had been sharp as a tack just months earlier. But now, after a sudden stroke and a few weeks of rapid decline, Lisa was being told her mother needed full-time nursing care — immediately.

What Lisa didn’t realize was that Medicaid — the government program that helps cover long-term care costs — has strict eligibility rules. And her mom, who owned her modest family home and had a few retirement accounts, didn’t qualify. Worse, Lisa learned that trying to “spend down” or transfer assets quickly could trigger a five-year lookback penalty, disqualifying her mom from benefits just when she needed them most.

Lisa isn’t alone. Every week, I hear from North Carolina families caught in this same storm: scared, overwhelmed, and forced to make impossible choices in crisis mode. Often, they ask me, “Why didn’t someone tell us we needed to plan ahead?”

Here’s the truth: when it comes to Medicaid, the clock is always ticking — and most people don’t hear it until it’s almost too late.

Crisis Mode: Why Waiting Too Long Can Cost Everything

When families like Lisa’s wait until a crisis hits, their options shrink drastically. Hospitals discharge quickly. Rehab facilities set short deadlines. And nursing homes — many of which cost over $7,000–$10,000 per month in North Carolina — often demand proof of payment or Medicaid eligibility before accepting a new resident.

That’s when panic sets in.

People start scrambling: Should we sell the house? Can we transfer the savings? Will Medicare cover this? (Spoiler alert: it won’t.) And just when you think you’ve found a solution, you run into the Medicaid lookback period.

In North Carolina, Medicaid has a five-year lookback rule. That means if your loved one has transferred or gifted any assets in the last 60 months, Medicaid can impose a penalty period — time during which they are ineligible for benefits, even if they medically qualify.

Let’s break that down with an example:

If your mom gifted you $50,000 three years ago to help with a down payment on your home, Medicaid will consider that a disqualifying transfer. In North Carolina, the 2024 Medicaid penalty divisor is $10,317 per month — meaning Medicaid divides the amount of the gift by that number to calculate how long she’ll be ineligible for benefits.

So, $50,000 ÷ $10,317 = 4.84, which Medicaid rounds up to 5 full months of ineligibility.

That means your mom would not qualify for Medicaid coverage for five months, even if she meets all the medical criteria. During that time, your family would be responsible for paying the full cost of nursing home care — potentially $50,000 or more out-of-pocket, depending on the facility.

Understanding Medicaid's Asset Limit in North Carolina

To qualify for Medicaid in North Carolina, an individual must have no more than $2,000 in countable assets. Countable assets include cash, bank accounts, stocks, bonds, and other resources that can be readily converted to cash.

Certain assets — such as a primary residence (with equity under a certain threshold), personal belongings, and one vehicle — may be considered non-countable under specific conditions. However, without careful planning, most middle-class families will find themselves over the limit.

This $2,000 threshold underscores just how critical early planning is. Without the right legal tools, individuals may be forced to "spend down" their assets quickly — risking financial instability and compromising the care they deserve.

The Most Common Medicaid Myths (That Get Families in Trouble)

In my conversations with families across Johnston and Wake Counties, I’ve found that many people believe one of the following myths:

1. “Medicare will cover nursing home care.”
   Medicare only pays for short-term rehab, and only under specific conditions. It does not cover long-term care.

2. “I’ll just give away the assets if we need to qualify.”
   That triggers the lookback period and can cause a significant penalty — even if the gift was years ago.

3. “We’ll figure it out when we need it.”
   By the time you “need it,” it’s often too late to protect the family home, life savings, or to choose where your loved one will receive care.

4. “We’re not rich — Medicaid won’t look at us.”
   Even modest savings, a small pension, or home ownership can disqualify someone from Medicaid without proper planning.

Planning Ahead: The Smart Way to Protect What You’ve Built

Here’s the good news: with the right guidance, early planning can protect your assets, preserve your choices, and keep your loved one at the center of the decision-making process — not the government.

There are Medicaid-compliant strategies that work — but they need time.

• Irrevocable Medicaid Asset Protection Trusts (MAPTs) can shelter the family home and other assets, starting the 5-year clock well in advance.

• Income and resource structuring through proper legal tools can ensure eligibility when the time comes.

• Care agreements and promissory notes (used correctly) can help repay family caregivers for years of support without triggering penalties.

• Lady Bird deeds (available in North Carolina) can help protect the home from estate recovery while allowing the elder to retain control during life.

These tools aren’t one-size-fits-all. That’s why I sit down with each family to create a customized plan based on their unique assets, goals, and timelines.

The Power of Planning Ahead: A Different Story

Let me tell you about James and Martha, a couple from Fuquay-Varina who came to my office five years ago. At the time, James had just been diagnosed with early-stage Parkinson’s, and they were understandably overwhelmed. But instead of waiting, they decided to act.

We put a plan in place.

They transferred their home into a Medicaid Asset Protection Trust. We reviewed and updated their powers of attorney and health care directives. We ensured Martha would have full control over their finances if James’ condition worsened. We even built in instructions for the kind of care James wanted—and where he wanted it.

Last fall, James’s health declined. He needed skilled nursing care. But unlike Lisa, Martha wasn’t scrambling to move money or sell their home. She wasn’t losing sleep over whether he’d qualify for Medicaid.

Because they had planned early, James received the care he needed. Their family home was protected. And Martha stayed financially secure.

That’s the difference early elder law planning makes. It gives you time, control, and peace of mind when you need it most.

You Deserve Better Than Last-Minute Decisions

Here’s the hard truth: Medicaid is not designed to protect your legacy. It’s designed to help only when you’ve run out of resources.

That’s why proactive planning is so important. It lets you protect what you’ve worked for — your home, your savings, your independence — and still qualify for care when the time comes.

At my firm, we help families across Garner, Raleigh, and surrounding areas make empowered decisions before a crisis hits. Whether you’re helping a parent age with dignity or thinking ahead for your own future, now is the time to act.

Don’t Wait for the Crisis. Start the Clock on Your Terms.

If you or someone you love is over 60 — or owns a home and is concerned about long-term care — the Medicaid clock is already ticking. The earlier you start, the more we can protect.

Let’s talk about your options. I offer elder law consultations to help you understand where you stand, what planning tools may help, and how you can move forward with confidence.

📞 Call my office at (919) 336-4219 to schedule your elder law consultation today.

The best time to plan was yesterday. The second-best time is today.