Long-term care Chicago area families often assume means a distant, someday concern. Then a parent has a fall, or a spouse gets a diagnosis, and the someday arrives all at once. At that point, the home a family has lived in for decades often becomes the single largest resource available. It can pay for the care that follows.
Understanding how home equity connects to long-term care makes a real difference. Working through this before a crisis forces the question tends to make every decision that follows far calmer.
What Long-Term Care Actually Costs
The numbers surprise most people the first time they see them. According to the 2025 CareScout Cost of Care Survey, a private room in a nursing home now runs a national median of $129,575 a year. Assisted living communities carry a median cost of $74,400 annually. Non-medical in-home caregiving, based on 44 hours a week, adds up to roughly $80,080 a year at the national median hourly rate.
These figures are national medians, and costs shift by region. Even so, the scale explains why so many families end up looking at home equity. A paid-off house is frequently worth more than every other asset a household owns combined.
If you’re trying to picture what long-term care actually looks like day to day, from assisted living to memory care to staying right where you are, sign up here for a short guide that walks through those options.
Three Ways to Tap Home Equity
Homeowners 62 and older can convert part of their equity into cash through a reverse mortgage, with no monthly payment required. The National Council on Aging notes that nearly 70 percent of people turning 65 today will need some form of long-term care during their lifetime. Many use reverse mortgage proceeds specifically to cover in-home care costs. The loan gets repaid when the homeowner sells, moves out permanently, or passes away.
A home equity line of credit works differently. It lets a homeowner borrow against equity as needed, paying interest only on what gets used. This tends to suit a family managing ongoing part-time care costs better than a lump sum reverse mortgage would.
Selling the home outright is the third path. Downsizing to a smaller property, or moving directly into a senior living community, converts equity into cash immediately. It can also lower ongoing costs like property taxes, insurance, and maintenance at the same time.
Every situation calls for a different fit. A homeowner planning to stay put for years leans toward a reverse mortgage or HELOC. One who is already considering a move often finds that selling accomplishes two goals at once.
Where Medicaid Fits Into the Picture
Many families worry that owning a home will automatically disqualify a parent from Medicaid coverage for long-term care. That worry is usually unfounded, at least at first. According to Medicaid Planning Assistance, a primary home is generally exempt from Medicaid’s asset limit. This holds true as long as the applicant lives there, or intends to return, and their home equity interest stays under the state’s limit.
In Illinois, that home equity interest limit sits at $752,000 for 2026. Home equity is calculated as the home’s current market value minus any outstanding mortgage. Most homeowners in the South Suburbs fall well under that threshold. The home typically stays protected even while a spouse or applicant receives Medicaid-covered care.
Matters get more complicated once a home is sold or transferred. Proceeds from a sale count as an asset once they land in a bank account, which can affect eligibility. Transfers to family members can also trigger Medicaid’s five-year look-back period. That penalty can mean a period of ineligibility if the transfer is not handled correctly. This is exactly the kind of detail worth reviewing with an elder law attorney well before any transaction happens, not after.
Timing Matters More Than Most Families Realize
Every option above works best when it happens on a family’s own timeline, not in the middle of a health crisis. A reverse mortgage requires HUD-approved counseling and takes time to close. Meanwhile, a HELOC application depends on credit and income documentation that only gets harder to gather during a hospital stay. Selling a home well takes weeks of preparation, not days.
Families who start this conversation early tend to end up with far more options. This works best while a parent is still healthy and able to weigh in on every decision, rather than waiting for an emergency to force the issue. Even a simple conversation about which of these three paths feels right changes the entire tone of what comes later. Having it over coffee beats having it in a hospital waiting room.
Bringing the Pieces Together
Financing long-term care through home equity touches legal, financial, and real estate questions all at once. That is exactly why no family should try to sort it out alone. An elder law attorney can address the Medicaid and estate planning pieces. A financial advisor can model out which equity option makes the most sense long term. As an SRES®, I focus on the real estate side of this equation. You can read more about the Seniors Real Estate Specialist designation here.
None of these professionals need to be found and coordinated during a crisis. The families who feel most at peace with their long-term care decisions are almost always the ones who built the team well before they needed it.
A Plan Beats a Guess
Home equity will not solve every long-term care cost on its own, and it should not be the only plan a family relies on. For most homeowners in Chicago and the South Suburbs, it represents real, usable resources. Those resources sit quietly in an asset most families never think to count. Understanding the options now, while there is still time to choose calmly, turns a frightening unknown into a plan with real choices attached to it.
Waiting rarely improves any of these options. Home values shift, health changes unpredictably, and Medicaid rules get revisited by lawmakers more often than most families expect. A plan built today, even a loose one, beats scrambling to learn all of this for the first time during an emergency room visit.
Where to Start
Even a short chat can go a long way toward clarity. How much equity actually sits in the home today, based on recent sales nearby rather than a guess? Would the homeowner prefer to stay in place with support, or would a move to a smaller, easier property make daily life simpler regardless of care needs? Is there a spouse or family member who would need to remain in the home, which changes several of the Medicaid rules discussed above?
None of these questions require an immediate answer. They simply give a family a starting point, something concrete to return to as circumstances change over the following months or years.
Why This Rarely Feels Simple
Part of what makes this topic hard is that it blends money with identity. A home is never just an asset on a balance sheet. It holds decades of memories, a familiar neighborhood, and a sense of independence that feels different from any other financial resource a family owns. Treating the equity conversation purely as math misses half of what actually makes the decision difficult.
Acknowledging that emotional weight, rather than rushing past it, tends to lead to decisions the whole family can live with. A homeowner who feels heard throughout this process is far more likely to embrace whichever path the family eventually chooses.
That, more than any specific number or program, tends to determine how the whole experience is remembered years later. Families who move through this decision together, with patience and honesty about what the home means beyond its dollar value, generally look back on it as a difficult chapter handled well rather than a crisis that simply happened to them. That difference is worth working toward from the very first conversation, whenever a family decides to have it.
When you are thinking about your next move, the free resource library has practical guides covering every aspect of later-life housing, from downsizing and aging in place to senior living options, care alternatives, and the resources you need to make confident decisions. And if you would like to understand how I work with homeowners over 50, the Homeowners 50+ page is the right place to start.
Prefer watching instead of reading? This auto-generated video summarizes the key points discussed in this article.
Disclaimer: This blog is for educational purposes only and does not constitute tax, legal, or financial advice. Every homeowner’s situation is unique. Please consult a qualified CPA, tax advisor, or estate attorney before making any decisions related to the sale of your home.
If you’re starting to think about what comes next, you don’t have to figure it out on your own. Sometimes it helps just to talk things through.
You can always take the next step at your own pace, with no pressure and no expectations. I’m always happy to help you get a clearer picture of your options.
Michelle Williams is a REALTOR® and SRES® serving Chicago and the South Suburbs, helping homeowners 50+ make confident decisions about their next move.