Blog

As you likely already know, Medicaid is a federal and state program that helps people of limited means and income pay their health care costs, including nursing home costs. What you may not know, however, is that the Medicaid qualifications are very stringent.

If you apply for Medicaid as a single person, you must have no more than $2,000 in assets. If you and your spouse apply together, the two of you must have no more than $4,000 in assets. In other words, owning a vehicle or two, let alone a home, can disqualify you. In such a situation, you will need to pay for your nursing home costs, which likely will quickly deplete your savings and other assets.

Medicaid spend-down

US News reports that many people solve this dilemma by making use of an estate planning strategy known as a Medicaid spend-down.

As its name implies, this strategy consists of using various means, such as an irrevocable trust, to divest yourself of your assets while still retaining their benefits. A spend down is perfectly legal, but you must do it properly to comply with all state and federal laws.

Look-back period

If you think that a Medicaid spend down is something you would like to pursue with your estate planning attorney, be aware that this is something you should do sooner rather than later. Why? Because when you apply for Medicaid, the agency in charge of granting authorization has the right to “look back” at all of your financial transactions during the past five years. If officials find any transaction that smacks of deliberate impoverishment or other fraud, they will deny your application.