Whether it is you or your spouse preparing to enter a nursing home, or both of you are planning to enter long-term care together, a top concern is usually how to pay for care and what will happen to all of the things you’ve worked your entire life to acquire – your cars, your house, your savings, etc. If you know you have too many assets now to qualify for any financial assistance, then you will have to do what is known as the Medicaid spend down. Spending down is essentially paying out of pocket for long-term care until the money you have left is low enough to qualify you for Medicaid. As you’re going through this process, you want to protect your assets in the meantime, so what do you do? Although situations vary and states have different rules and regulations for this situation, there are a few key steps to take in preparing for Medicaid spend down.
How to Protect Assets from Medicaid Spend Down and Nursing Home Care
Seek Legal Council
Finding someone who understands the ins and outs of Medicaid spend down in your state is the best thing you can do when preparing to enter a nursing home. A lawyer can help you with things like drafting a life estate to protect your property, sheltering your money in an irrevocable trust, and putting your liquid assets into an annuity. Let me guess – you’re reading this and wondering what all those terms are that I just used? That is exactly why you should get yourself a lawyer.
Protect your Spouse
If you and your spouse are not going to the nursing home at the same time, you want to make sure that whichever of you is going to go on living at home has enough money to do so. There are ways to protect your spouse so that not all of your money disappears with the Medicaid spend down. For example, federal law allows people to set up a monthly maintenance needs allowance, which is referred to as MMNA for short. Basically, the MMNA allows you to set a certain amount of money aside each month for your spouse to cover shelter, utilities, real estate taxes and health insurance premiums – whatever monthly bills they have to pay. Your lawyer should be able to help you with this as well, as there are financial limitations to the MMNA.
Another important thing to do in preparation for Medicaid spend down is not to wait until the nursing home starts evaluating your assets to start distributing things of monetary value to your children and other family members. Fund transfers and other monetary transactions just before making an investment in long-term care can look misleading in a financial evaluation that will be conducted by the nursing home, so it’s best to do gifting before you start the nursing home application process. Legal counsel can give you a timeline of how far in advance this should happen, but an estimated time frame from multiple sources is to complete all financial transactions at least five years prior to entering the nursing home.