Do I Have to Spend All My Money on Nursing Home Care Before I Qualify for Medicaid?

Many of our clients want to make sure they will have Medicaid benefits if they need to move into a nursing home. Because Medicaid requires that its beneficiaries have very low assets, our clients often believe that they must spend all of their assets on nursing home care before they will qualify for Medicaid. According to Medicaid rules, large amounts of money cannot be given away without triggering a “penalty period,” during which the applicant will not be eligible for Medicaid. Therefore, simply transferring your assets to your children in order to qualify for Medicaid would not be wise. However, there are many ways in which you can legally transfer money that will still allow you to be eligible for Medicaid benefits.

Of course, the fastest way to spend down your assets is through private pay nursing home care. However, this option is unattractive because it means your spouse will likely need that money in the future and would not have it available. A better way to spend down assets is to purchase things you may need, such as home repairs, automobiles, appliances, and clothing. These expenditures will allow your spouse to live comfortably in your home for as long as possible.

Another possibility is purchasing a Medicaid-compliant annuity or certain types of long-term care insurance, life insurance or health insurance. You may also be able to use a caregiver agreement to compensate one or more of your children for caring for you before you move into a nursing home.

There are a variety of ways to spend down your assets so that you qualify for Medicaid benefits. However, many of these options are risky because Medicaid has strict rules about how you may use these spend-down methods. Spending down your assets or giving them away in a way that does not comply with Medicaid laws could result in ineligibility for Medicaid or lengthy penalty periods that could cause significant financial hardship for you and your family. Because Medicaid laws can be confusing and complicated, it is important to meet with an experienced elder law attorney before you begin spending down your assets.