Medicaid/Medical Assistance Planning is something that your family may need to consider. As your parents become older and their health deteriorates, it can be helpful to begin thinking ahead to a time when they might need to take up residence in a Pennsylvania nursing home. No one wants to go into a nursing home; so, this can be one of the most difficult situations a family ever faces. It will become even more difficult when you discover the high costs of long-term care.
Even if your parents are reasonably well-to-do people, they likely have not accumulated the assets necessary to pay for long-term care and may not have long-term care insurance to help cover the expenses, which, in 2019, may be over $10,000 per month in Pennsylvania. Consequently, they may need to spend down their assets and apply for Medicaid. This is when you discover that, while Medicaid does indeed pay for long-term care, there are medical eligibility requirements as well as income and asset limits to qualify. Not everyone is eligible for Medicaid.
If your parents are like many of today’s aging married couples, they own considerably more than the limited amount of assets permitted to qualify one of them for Medicaid, but nowhere close to the hundreds of thousands of dollars they may need to pay privately for long-term care. They may not have long-term care insurance. What to do? The answer may well be a Medicaid spend-down.
How a spend-down works
As reported by U.S. News, Medicaid spend-down represents a perfectly legal way for your parents to reduce their assets so that the parent in the nursing home may qualify for Medicaid. This is not, however, a do-it-yourself project. You and your parents should obtain competent legal help to assist with Medicaid/Medical Assistance planning.
Bear in mind that you and your parents must accomplish this spend-down pursuant to the Medicaid rules, often well before the time they apply for Medicaid benefits. Why? Because when your parents apply for Medicaid, the Pennsylvania Department of Human Services will “look back” into their financial dealings for the previous five (5) years. The Deficit Reduction Act of 2005 gives it the right to do this. Gifting, transfers without fair consideration or anything that smacks of deliberate impoverishment, may disqualify your parent for Medicaid, which is why it is best to engage in Medicaid planning sooner rather than later.
This is general educational information and not intended to provide legal advice.