Understanding a Medicaid spend-down

If your parents have reached the age where the possibility exists that they may one day need to live in a Pennsylvania nursing home, you and they need to start thinking about Medicaid. Why? Because few people have the money necessary to pay for long-term nursing home care, and applying for Medicaid benefits may be the only viable option.

The problem with Medicaid, however, is that stringent eligibility rules apply. Under the Medicaid rules, the spouse applying for Medicaid may have no more than $2,400.00 or $8,000 in countable assets, depending on their gross monthly income.  Further, the community spouse (the spouse that is not applying for Medicaid) will be allowed to keep one-half of the countable assets up to $126,420.00, called the Community Spouse Resource Allowance.

So what can you and they do? The best thing to do is plan ahead to protect assets. However, where planning was not done, the answer may well become a Medicaid spend-down.

How the spend-down works

A Medicaid spend-down is a complicated process that must scrupulously adhere to both federal and state law. Consequently, this is not a DIY project that you and your parents should undertake on your own. You need advice from an elder law attorney.

A Medicaid applicant can spend down money on anything that would benefit the applicant. Following are examples of what a Medicaid applicant may be able to spend money on:

1. Prepay funeral expenses. A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die.
2. Pay off a mortgage, car loan, or credit card debts. You can pay off the debt fully or make partial payment.
3. Make repairs to a home. Fix the roof, make the house handicapped accessible, buy new carpet, etc.
4. Replace an old automobile. This can be useful for the healthy spouse.
5. Update your personal effects. Buy household goods or personal comfort objects. Buy a new wardrobe, electronics, or furniture.
6. Medical care and equipment. Purchase items that aren’t covered by Medicare or Medicaid. See a dentist or get your eyes checked if those items aren’t covered by your insurance.
7. Pay for more care at home. Make sure you get any caregiving agreements in writing, especially if family members are providing the care.
8. Buy a new home. A home can be an exempt asset, so it may be possible to purchase a new home.

In the case of married couples, it is often important that any spend-down steps be taken only after consulting with an Elder Law Attorney because you want to make sure that the spend-down does not negatively impact the amount of money the community spouse can keep.