What is a Medicaid spend down?
There are two forms of government health insurance:
Medicare. Basically, age-based insurance for older adults (age 65+), regardless of income and assets. (Assets include money and belongings, such as a house or car.)
Medicaid. Income-based insurance funded with federal and state dollars. (The state where your relative lives may have a name different than "Medicaid.") This insurance is for individuals who have very little means. The financial asset threshold is often set at $2000 or less.
Medicaid will sometimes pay when Medicare will not.
The most common expense covered by Medicaid is long-term care in a nursing home. Speaking very generally, Medicare pays for the first 100 days after a hospitalization. If a person needs to stay longer—permanently move into the facility—they must cover the cost from their own savings. Once nearly all their resources have been exhausted, they can apply for Medicaid, which will pick up the tab.
How to become eligible for Medicaid
Essentially, one needs to eliminate assets. Paying for care will certainly do that! For many, it's tempting to dole out early inheritances in an attempt to "spend down" assets. Perhaps by giving the house to their children. Or passing their savings accounts to grandchildren. Beware! The government will look back for asset transfers in the past thirty months to five years. (It varies by state.) Persons deemed to have spent down by gifting are disqualified from Medicaid for an extended period of time. There is no wiggle room on this.
Get legal advice before taking action!
Spend-down restrictions vary by state and are astoundingly complex. If you think that Medicaid will be part of your loved one's financial strategy, consult an elder law attorney immediately! It's never too early. There are ways to protect assets, but they require planning and attention to detail. There are too many pitfalls to try this on your own.
Has Medicaid been your fallback?
We at Options for Aging have seen many families be surprised to learn what Medicare will not pay for and how difficult it is to qualify for Medicaid. As the North Shore and Chicago experts in family caregiving, we urge you to begin discussing the options with legal counsel now. Need a referral? Give us a call at 847-868-1445.