Medicaid spend down is the process by which a nursing home client is forced to spend down their assets, until they are poor enough to qualify for Medicaid. Medicaid then helps pay for long term care expenses, but you must meet their stringent financial eligibility requirements first. If you go into a nursing home and you have the money to pay for it, Medicaid law stipulates that you must spend all of your money down to the level where you can become eligible for Medicaid benefits.
Long Term Care is Expensive
Who wants to spend all their money on things they don’t need? Most people would rather save that money. This is the biggest issue that middle class seniors face, because should they become ill before they pass away, they may need long term care. If that means going to a skilled nursing facility, in Pennsylvania the average cost is almost $15,000 per month or $180,000 per year, and nobody can afford that.
If people don’t take action to protect their assets before they go into a nursing home, eventually they go broke paying for care. People work hard most of their lives to create a financial nest egg. When faced with the possibility of long term care, the nest egg gets depleted quickly. It is not the nursing home’s fault; Medicaid makes the rules.
How we can help
We typically meet with the healthy spouse or the children of the person in the nursing home. We offer a full analysis to figure out how we can best protect assets. Often, we can help by using legal maneuvers and financial strategies to protect resources. Even after somebody enters the nursing home, there are options to help mitigate financial devastation.
How much Money is allowed for Medicaid Eligibility?
If a single person goes into a nursing home, they need to spend all of their assets down to $2400 or $8000 depending on their income amount. Retirement accounts and bank accounts need to be liquidated and other policies converted into cash and given to the nursing home. All this needs to be completed before the person becomes eligible for Medicaid.
And that’s not all…
A person is only allowed a primary residence, a car and $2400. The family home can still be lost after the nursing home resident passes away. The Estate Recovery Act prompts the sale of the home in order to pay the state back for the funds paid out via Medicaid. There are strategies to keep that home in the family, call us to discuss them.
Married Couples Medicaid Eligibility
The case with a married couple works differently. Let’s assume dad is in the nursing home and mom is the healthy spouse living in the community. Mom is allowed to retain some of her assets, especially retirement accounts. She is also allowed to protect half of their available money. Assuming it’s $200,000 of available money, mom’s protected share is $100,000. If dad is only allowed to keep $8000, this family would have to spend $92,000 on long term care. This is before dad is even eligible for Medicaid. Even if the available money is $500,000, mom’s allowable amount is capped at about $137,000, instead of mom keeping half the amount which is $250,000. Mom now loses out and is financially insecure.
Medicaid Annuities
One way we can protect money is through planning with Medicaid Annuities. If a married couple has $200,000 available money, dad can keep $8000, and mom is allowed $100,000. Given that mom’s income is not subject to the long term care costs, while dad’s income is, mom can purchase Medicaid Annuities. These annuities will become an income stream for her. We can also move assets between spouses without a problem, so we can put $200,000 in mom’s name and purchase a Medicaid annuity. This would be like purchasing an income stream, so they wouldn’t lose $92,000. Since it is mom’s income, the money is protected, and dad would become eligible for Medicaid almost immediately. Mom may live another 20 years and with proper planning, have adequate resources the rest of her life.
Contact Us
If you or somebody you know is in a situation where a Medicaid spend down is needed, please consult with an attorney. This is not a DIY project – you really want to avoid making costly mistakes and we can help you. You can schedule a free consultation with one of our attorneys. We will strategize a Medicaid spend down plan for your unique circumstances. Attempting this complicated process on your own can result in financial ruin. Be cautious of taking advice from the nursing home billing office, as they may not have knowledge of all your options. The admission to a skilled nursing facility is not just a health issue, it is a legal issue as well. Please call us on 724 841 1393.
