NEW YORK (MainStreet) — With the annual cost of a decent nursing home facility averaging almost six figures ($94,000, according to industry studies), more older Americans may be counting on Medicaid to cover long-term care bills later in life. That may not be a good idea, since you would basically have to put yourself in the poorhouse first.

"Medicaid benefits are not usually given much thought, but more than 12 million Americans are in need of long-term care," says Rocco Beatrice, managing director of Estate Street Partners, a Boston financial planning firm. "More than 40% of Americans who celebrate their 65th birthday will need long-term care services, particularly nursing homes. Since we are a population that is aging rapidly and living longer, we may as well get used to talking about financial planning in terms of long-term care."

A study from Boston College says 70% of older Americans plan to leverage Medicaid to handle their long-term care needs.

But Medicaid, struggling for funding as the nation's senior citizen demographic ages, just doesn't have the money to cover that many long-term care consumers.

Something has to give, and it looks like that could be your house and bank account, via what's called the Medicaid spend-down provision (and which the B.C. study calls a "considerable financial sacrifice").

"In essence, the spend-down provision means that Medicaid will not place you in a nursing home until you have nearly depleted your assets," Beatrice says. "You have to use up your money until a satisfactory level is reached. For a couple, this means about $3,000 in cash and not too much in the way of property. Medicaid does not want you to be poor as a pauper before they can admit you to a nursing home, but they certainly do not want you to have too many assets either."

That's not a lot of cash left and not much liquidity in your property to qualify for Medicaid financial funds, but many older Americans may not have a choice.

For those that do, the key is to decouple personal assets from the Medicaid mandate, and that's not always easy. Financial planners can help, but there's a ton of paperwork and planning involved and you have to start early (age 65 is a good measure, Beatrice says) to keep your assets and still qualify for Medicaid's help with long-term care.

— By Brian O'Connell for MainStreet