Spending It ALL Down to Qualify for Medicaid

We see many people spend their estate all the way down (close to zero) before they apply for Medicaid assistance to help pay their Nursing Home Expenses. Why do they do this? Many have been told this is just the way it is. The belief is, they must spend down to less than $2,000 before they get assistance. Some really don’t understand how it works; just paying out of pocket seems to be the logical thing to do. Some believe that it is their patriotic duty to spend it all for the care of their loved one – spending even to the detriment of themselves or other beloved family members for whom they have saved.

The Full Story (That Many Don’t Know)

It is true, of course, that before Medicaid will pay anything, you have to qualify for Medicaid benefits. At our law practice, we primarily focus on assisting those needing Nursing Home care to qualify for Medicaid benefits. In addition to helping them to qualify, we try to protect as many of their assets as possible. Medicaid planning is sort of like tax planning. You can take the standard deduction and save just a little OR you can go to a CPA. They will help you all of the exemptions, credits, and deductions the law allows. The first “method” is not really planning at all. This method just accepts the small amount the government allows for those who don’t like to be bothered with planning. The second method is claiming ALL that the law allows.

Judge Learned Hand was an Appellate Court Judge who served in the early part of the 20th century. Judge Hand is famous for many quotes but one that I love the most was his quote about taxes. He said, “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. public duty to pay more than the law demands.”

The Same Point Could Be Made for Medicaid Planning

Congress passed laws establishing the Medicaid program. Likewise, certain exemptions and ways of protecting assets for those who care to diligently search or seek the assistance of an Elder Law Attorney were built in. However, just like most accept the standard deduction when doing their taxes, very few people will take the time or effort to discover ways that they can protect a large portion of their estate – or their parent’s estate. If you are reading this, I trust that you may be one of the few searchers who is looking for a way. Hopefully, you will discover a few worthwhile ideas within the paragraphs of this and other posts on this site.

Prevent Spousal Impoverishment

Congress passed laws to prevent spousal impoverishment. Spousal impoverishment laws protect the well spouse at home. These laws prevent them from having to spend everything to pay for the care of their sick spouse in a nursing home. However, it seems that very few people know that these protections are in place. Almost every week we see a situation where one spouse goes to a nursing home and the other spouse has spent everything for the care of their sick and beloved spouse in the Nursing Home.

I understand. This is your husband or wife. Naturally, you will do anything necessary to help them get the care that they need. However, it doesn’t have to be this way. If you are the well spouse at home, you can take advantage of the laws that Congress has put in place to protect assets for your benefit. At the same time, ensuring that your Loved One in the Nursing Home gets the care they need.

Honoring Your Parent’s Legacy

There are also methods that allow you, the adult child, to honor your parent’s legacy by preserving part of their assets for the use and benefit of their intended beneficiaries. Please understand this this is far from automatic and is possible only with advanced planning. However, protecting some of your parent’s hard-earned family assets is often very important to family integrity. This is a bigger issue than just saving money or giving something to the kids. It is about passing along a Legacy that honors the parent and keeps assets in the family for another generation.

Take Action Before it is Too Late

If you are writing a check for the care of your spouse who is in the nursing home every month, know that it probably does not have to be this way. It is very likely that, with advanced Medicaid Planning, you could preserve a substantial amount of your assets. All the while, allowing your spouse to receive the same good care that they are receiving now. Residents receive the same quality of care whether private pay or Medicaid funded.

If you are one of the adult children with a parent in a Nursing Home and have been told that they need to spend down to less than $2,000 in assets before Medicaid will pay anything, you would be well-served to seek another opinion. Contact us or another Elder Law Attorney today to see what options that you have to protect and preserve assets for your family.

Free Resources and Assistance

To see a much more detailed description of the Medicaid application process click here to view our How to Get Medicaid to Pay blog post. This post goes into much more detail as to how to the Medicaid process works and gives you more specific ideas as to whether it may be beneficial for your Loved One. Also click on our Crisis Planning link to view a video that Cindy and I did where we talk about Crisis Medicaid Planning. This is the type of planning that we do at the last minute to help people preserve assets while qualifying for Medicaid benefits for the benefit of their Loved Ones.

Finally, this week we have provided a great resource that will help you locate the best and most appropriate Nursing Home for your Loved One and will give you additional tips on ways to pay for their care. Click here to download the “How to Find & Pay for the Best Nursing Home for Momma Tip Sheet.”

Best wishes as you work to help your Loved One get the best care possible during their remaining years. If we can assist you, please feel free to contact us.