When a person is facing the prospect of paying for long-term care, that person may eventually turn to Medicaid to cover those costs after running out of money.
Medicaid is correctly understood as a payor of last resort. Generally, this means that the ability to collect from other sources like long-term care insurance, veterans benefits, and a patient’s personal monthly income are exhausted before Medicaid will cover long-term care costs.
To qualify for Medicaid, a person must generally be medically eligible and financially eligible by having only $2,000 in assets. For married couples, an at-home spouse (“Community Spouse”) may retain additional assets.
Even when couples and individuals have adequately planned for long-term care before turning to Medicaid, many families are faced with the prospect of having to spend down money in order to qualify. However, a lot of families have questions on how that money can be spent.
During a Medicaid spend-down, individuals and couples may consider spending money on these items:
- Updating the home. Medicaid applicants may permissibly spend money by repairing and updating the home for the Community Spouse. The concept here is to fix the house so that, hopefully, no other home repairs are needed during the lifetime of either spouse. This is important because, in many cases, after a spend-down, the Community Spouse may no longer have available resources for large, unexpected, future expenditures.
- A new vehicle. Use caution if purchasing a new luxury vehicle, however.
- Pre-paid irrevocable funeral plans.
- Medical care and nursing home care for either spouse.
- Household goods or personal effects for either spouse. The Community Spouse may purchase items necessary to keep the household running without future, major expenditures. These same personal items could be purchased for an Institutionalized Spouse’s needs in a facility like a television or extra clothing.
- Debt repayment. The key here is to make sure that the debts are repaid only after the Medicaid snapshot date has been established.
There are other expenses that would also qualify as part of a legitimate spend-down. Ideally, whatever goods or services are purchased must be for fair market value to avoid the appearance of a gift, which could be penalized by Medicaid.
Significantly, the timing of a Medicaid spend-down can be critical in determining how much a spouse can keep. Where families might consult a CPA for tax preparation advice or a financial planner for investment advice, when preparing for long-term care, families should seek help from an attorney who has significant experience with Medicaid laws.