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Medicaid Articles of Interest:

Medicaid Program: What do I need to know?

Medicaid Eligibility: How do you know for sure?

Apply for Medicaid: 5 Important Decision Points

Medicaid Law: Protecting assets while qualifying for Medicaid

Medicaid Law and Protecting Your Parent's Assets Page #2

Medicaid Spend Down to Eligibility

Medicare Articles of Interest:

Medicare

Medicare Insurance: What are the facts?

Original Medicare Plan

Medicare Prescription Coverage

Medicare Assignment

Medicare Advantage Plan

Medicare Part A

Medicare Part B

Medigap Insurance

Medicare Supplement Plans

Medicare Supplement Plans: 10 Important Shopping Tips

Additional Retirement Related Articles:

Retirement Plan: The Basics   

Can You Retire Before You Die?

Can You Retire Before You Die? (Page #2)    

Don't Wait Too Long For Incapacity

Advice For Seniors: Working Your Way Through Retirement    

Social Security Disability: How do you apply?

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Medicaid Spend Down to Eligibility

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                                      

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