Ask the Experts

How Do I Save My Dad’s Home from Medicaid Spend Down?

Learn how to protect your dad's home from Medicaid spend down and estate recovery efforts. Discover the rules and regulations of home ownership and family caregivers living in the residence. Seek the advice of an elder care attorney to understand the laws in your state.

Diane Carbo

Dec 12, 2022 — 27 min read

Medicaid spend down can potentially jeopardize my ability to retain the home

Kelly writes...

I am writing to ask how do I save my dad's home from Medicaid spend down?

Medicaid spend down can potentially jeopardize my ability to retain the home my father currently owns. After caring for my dad diligently for the past four years, the time has come when I can no longer provide him with the necessary care. As I search for a suitable nursing home for him, my own living situation has become a concern. I had always assumed that the house would become mine upon his passing. However, recent revelations suggest that the state might view it as an asset subject to potential liens by the nursing home for future expenses.

Medicaid spend down is the process individuals go through to meet the requirements for state medical assistance when their financial resources exceed the limits set by the state Medicaid program. The aspect of Medicaid known as "estate recovery" was established by Congress in 1993 as a response to the rising costs of the Medicaid program.

Each state is mandated to attempt to recover the expenses incurred from the estates of deceased individuals who received long-term care through Medicaid. This process involves placing liens on the deceased person's property or making claims on their other assets.

Thanks in advance for you attention to this matter.

Kelly

Response

Diving Deeper into Medicaid Spend Down

Dear Kelly,

I find myself engaged in daily conversations with family members who, like you, are grappling with the necessity of exploring Medicaid Asset Protection .There is a multitude of rules and regulations regarding homeownership and family caregivers residing in the same property. It is imperative to seek guidance from an elder care attorney who is well-versed in the laws specific to your state.

I strongly recommend that any time a family caregiver decides to move into the home of their aging parents, they seek legal counsel. Every state operates with a "look-back" period, which can vary from 5 to 7 years. It's important to note that these "look-back" periods may be extended as the aging population continues to strain state Medicaid budgets. Taking early action to address the ownership of the home and exploring various options, such as a "life estate" or establishing trusts, increases your chances of safeguarding the home from potential Medicaid estate recovery efforts.

I strongly recommend that every family caregiver investigate a Family Caregiver Contract. This is a legal way to spend down assets to qualify Medicaid. It is also important to look and see if the state you are living in has a filial responsibility law.

Of course, Advanced planning is the best approach to save the family home. Estate planning can help you to put the home in a family trust to avoid Medicaid spend down and avoid probate. Every state is different. It is important that you research your state laws on this topic.

I have provided you with expanded information for you to read at your leisure.

Warm Regards,

Diane Carbo RN

More information on Medicaid spending down process.

Unlock Medicaid Long-Term Care Benefits: Spend Down Your Assets

Want to qualify for Medicaid long-term care? You need to meet income and asset limits. But don't worry, you can become eligible by "spending down" your income or assets to the required threshold. Just be careful to follow the Medicaid spend down rules, as gifting is prohibited.

In this article, we'll focus on asset spend down. While income and asset limits vary across states, all Medicaid programs for the elderly require restricted income or assets. Whether it's in-home care, nursing home care, or assisted living, you need to meet the financial requirements.

Asset spend down means having assets below a certain limit. Some assets are exempt, but if you're over the limit, you'll have to spend down your assets to qualify. Just be aware of the Medicaid Look-Back Period, where past transfers are reviewed. Gifting or selling assets below market value during this time could result in a Penalty Period of Medicaid ineligibility.

If you have too much monthly income, don't worry. You can still qualify for Medicaid through spend down. It's known as the "Medically Needy Pathway". You can use excess income to pay for medical bills and expenses, and once you've reached the income limit, you'll be eligible for Medicaid. Learn more about the medically needy pathway and find out the income limits by state.

In some states, known as income cap states, the medically needy pathway is not available. But don't worry, you can still become income eligible with Qualified Income Trusts (QITs). These trusts allow you to deposit excess income and use it for limited purposes, like long-term care expenses.

Unlock the benefits of Medicaid long-term care by spending down your assets or income. Don't let financial restrictions hold you back from the care you need.

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