It is never too late to protect assets from nursing-home costs, especially in the state of New York, where we have multiple protections even on the eve of needing a nursing home.

No one wants to live in a nursing home, but the need may arise, not only when we are older with failing health, but unexpectedly when younger, either due to serious illness or injury.

Nursing homes in our area cost between $12,000 and $18,000 per month. Following are legal protections in New York to shelter assets from astronomical nursing-home costs.

If one spouse needs a nursing home and applies for Medicaid to pay the cost, the applicant spouse may only keep $15,150 in assets. The spouse at home may keep the house up to an equity value of $858,000 and a range of assets worth between $74,820 and $123,600. If the couple’s assets exceed the limits, the law of “spousal refusal” allows the spouse at home to keep the excess assets and “refuse” to pay the nursing home. Although the Department of Community and Family Services (DCFS) may make a claim for repayment, those claims are usually settled and the couple save possibly substantial amounts from going to nursing home costs.

Only three states - New York, Connecticut and Florida - have spousal refusal. It is a rare and valuable protection.

A single applicant for Medicaid in a nursing home may only keep $15,150 in assets. Some people give up at this point and liquidate assets for the “spend down,” using the applicant’s assets to pay the nursing home bills down to the limit, then apply for Medicaid. A better option is the “gift and loan strategy.” Half of the applicant’s money goes to a child as a gift, and the other goes to the child as a loan. When you give money away in the past five years, the government assesses a “penalty period,” when you have to pay your own nursing home costs throughout the penalty period.

With this strategy, the loan payments, along with the applicant’s income, pay the nursing-home bill every month. At the end of the penalty period, the loan is depleted, the penalty period has expired, and the child keeps the gift. We save half of the assets from nursing home costs. You need an “elder law power of attorney,” with unlimited gifting powers, to use this amazing tool. Not all states allow the gift and loan strategy.

If two spouses need a nursing home at the same time, they are each considered single applicants. We may use the gift and loan strategy for each spouse, if needed.

Also in New York, the principal of qualified funds, such as an IRA, 401(k), 403(b) and deferred compensation, are protected as long as you are taking income distributions when applying for Medicaid. Not all states allow this protection either.

Despite our New York protections from nursing-home costs, Plan A is to buy long-term care insurance. If you cannot afford or qualify for long-term care insurance, Plan B is the Medicaid Asset Protection Trust (MAPT) that protects assets from nursing-home costs after the assets are in the trust for five years.

The key takeaway is this: When faced with a nursing-home situation, a consultation with an elder law attorney may reveal asset protection strategies that are unknown to other advisers.

Bonnie Kraham is an attorney practicing elder law estate planning with Ettinger Law Firm, 75 Crystal Run Road, Middletown. She can be reached at 845-692-8700, ext. 119 or bkraham@trustlaw.com. This column is intended to provide general information, not legal advice.