Women’s Independent Press

SPENDING DOWN FOR MEDICAID

By Hillary N. Snyder, Esquire

1384 Old Freeport Road

Suite 3B

Pittsburgh, PA 15238

Medicaid and Spend down.  Those terms just seem to be thrown out there together whenever a loved one falls ill, or there are concerns of dementia or Alzheimer’s.  But what do they really mean?

First it is important to note that Medicaid is only available those people who are not only monetarily needy but they must also be medically needy.  In order to be medically eligible for Medicaid, the individual must need skilled care.  Medicaid does not cover the cost of living in an independent living facility.

If indeed a person is medically eligible, meaning in need of skilled care, then the person must also be monetarily needy, and here is where the question of what to keep and what to “spend down” in order to qualify for Medicaid gets tricky.

In order to qualify for Medicaid, there are only so many assets that you can keep.  The basics of which are your residence, your car, your burial plots, life insurance policies not exceeding $1,500.00, and $2,000.00 in cash.  Depending on your income level you may be able to keep an additional $6,000.00 in cash.  There are also various exceptions, such as for businesses, rental income, farm land etc.

In the case where there is a spouse involved, the spouse that is entering the nursing home may be referred to as the institutionalized spouse and the spouse not entering the nursing home may be referred to as the community spouse.

Since the community spouse does need money to live off of and to keep up the residence, there is a spousal allowance as to the assets and the income that the community spouse can keep, while the institutionalized spouse may still qualify for Medicaid.  These calculations are complex and it is worth consulting an attorney to make sure that this is done properly so that the community spouse is not left impoverished.

Keep in mind that there is a five year look back period when trying to qualify for Medicaid. Meaning, the Department of Revenue may review five years of your bank statements and request the disclosure of information regarding transfers of assets for the five years preceding your application for Medicaid. 

With the average cost of nursing home care exceeding $70,000.00 per year, the sooner individuals plan the better.  Even if you have planned by purchasing long term care insurance, not all policies are the same.  Some policies for example, only cover three years and you may out live your long-term care insurance.

The laws are constantly changing in the field of elder law and medicaid eligibility.  The planning techniques used in the past may no longer work today.  Before making gifts or even beginning to “spend down”, contact an elder law attorney.  Many times the money they can save you by implementing the right plan and avoiding common mistakes and pitfalls outweighs the fees you pay.  In addition, the piece of mind from knowing that you are doing the right thing can be priceless.