Understanding Medicaid spend-down strategies

Seniors in Michigan and around the country may be concerned about their ability to afford long-term nursing care in the future. Even those with Medicare and associated supplement plans may find themselves at loose ends if they need residential or at-home nursing care. Costs for full-time care can reach up to $150,000 annually, and long-term care coverage is not provided through the Medicare system. While Medicaid provides coverage for nursing home care, there are strict eligibility guidelines based on assets and income. Even people who cannot afford to pay for nursing care may have too many assets for Medicaid eligibility.

Which assets are counted by Medicaid?

Because Medicaid has a look-back period of five years, planning for future long-term care needs is important for many seniors who expect to need nursing care in the future. By spending down Medicaid’s “countable assets,” seniors can help to prepare for their future needs. Countable assets include bank accounts, cash, retirement funds and investments, although they do not include a primary residence, primary vehicle, prepaid funerals, furniture, and personal jewelry like wedding rings.

Planning for Medicaid eligibility

Spending down Medicaid assets in a way that lines up with a senior’s financial needs and future goals can help them to qualify for Medicaid without running afoul of the look-back period. They may choose to improve their homes or invest in accessibility needs, especially if they hope to use Medicaid to cover in-home care. They may repair their vehicle, pay for medical expenses not covered by insurance or pay down debt. By working with an elder law professional, seniors may also create Medicaid protection trusts or medical trusts to protect assets for loved ones while retaining Medicaid eligibility.

Without Medicaid, necessary long-term care may be outside the financial reach of many seniors. Planning and a careful spend-down strategy may help people prepare to receive the care that they need.