Medicaid spend down process:
Many people begin
by paying their nursing home bills with their own private resources,
but if is prolonged they quickly spend their resources and begin the
process of going through a Medicaid spend down. Many facilities
prefer that you pay privately for a period of time prior to going
through a Medicaid spend down. They seem to give preference to people
who can pay privately for while, but the reality is that many people
quickly run out of funds and eventually turn to Medicaid.
The process by
which you deplete your resources in order for Medicaid to pay for your
nursing home bills is referred to as a Medicaid spend out. However,
you cannot get Medicaid assistance until you've depleted almost all of
your assets. You may keep the house your dependent or disabled
children or your spouse resides in, the furniture, car, burial plot,
burial fund and a small amount of cash even after going through the
Medicaid spend down. In order to be eligible for Medicaid, you must
spend nearly all of your income from Social Security, interest, taxes,
dividends and so forth on nursing home care before Medicaid will help
pay the bills. Once you've spent down to the Medicaid limit and if
your income is not too high, Medicaid will begin to pay your bills.
Most states will allow you to keep $2,000 of liquid assets, some will
allow more while others may allow you to keep less. Also, you may
usually be allowed a small income allowance for your personal needs
($30 a month in many states). The more assets you have, the longer a
period of time it will take you to go through the Medicaid spend
down.
The following
example will show you how the typical Medicaid spend down works.
Imagine you're a widow living alone in New York City. Your annual
income is $15,000 or $1,250 a month. You also have $25,000 in
certificates of deposit. If nursing home costs in New York are $6,000
a month, your income will be insufficient to cover the cost. You will
then need Medicaid for help. At the time you enter the nursing home,
your income exceeds New York Medicaid limits-$600 in annual income and
$3,450 in assets for a single person. You enter the nursing home and
for awhile pay the bills out of your savings. You must spend $20,000
of the $25,000 before Medicaid will then begin to pay your nursing
home bills. (In 1999, New York would allow you to keep $4,950: a
$3,450 allowance plus $1,500 for burial expenses.) If you then turn
over all your monthly income to the nursing home (excluding the
personal needs allowance), you would then have to withdraw $4,750 from
your savings each month to cover the $6,000 monthly bill. At that
rate you would spend $20,000 in assets in a little more than four
months. After that you would then be eligible for Medicaid. After you
qualify for coverage, Medicaid will require
that you spend virtually
all of your monthly income for your nursing home care. You may be
able to keep $50 of your $1,250 monthly income for personal needs and
deduct medical expenses, including health insurance premiums if there
are any. The rest must go to the nursing home. You keep the $50
personal needs allowance and contribute $1,200 toward your care; the
State of New York pays the rest-$4,800 a month.
Some information
from Consumer Reports Complete Guide to Health Services for Seniors
Additional Information and
webpage by Paul Susic MA Licensed
Psychologist Ph.D. Candidate
