Can the children of a nursing home resident distribute his assets as a "spend down" to qualify for Medicaid?

A fellow caregiver asked...

My father’s insurance will cover 90 days in the rehab he is in. After that, his assets will be used until they are exhausted. We are not sure if he’ll be able to go home again. Is there anything we can do to prevent exhausting his assets? My brother has a durable Power Of Attorney. Can he distribute the money between my father’s children, as the will dictates now? Do current Medicaid spend down rules prevent this?

Expert Answer

Medicare and private insurance strictly limit the amount of nursing facility care they'll cover. If your father moves into a long-term care nursing home after Medicare and private insurance run out, he'll have to depend on his own or your family's assets to pay for care. If he spends down his assets to a few thousand dollars by paying for this care, and if he has a low income, Medicaid can fully cover his nursing home stay from then on. (For a discussion of Medicare and Medicaid rules having to do with nursing facility care, take a look at our article Will Medicaid or Medicare help pay for my mother's long-term care?.

Medicaid is a program to cover people who have very little money. Simply giving his money to the children is the equivalent of keeping it under Medicaid rules. If your brother distributes the money within 60 months -- that's five years -- of applying for Medicaid, Medicaid will disqualify him from nursing home coverage. How long he'd be ineligible would depend on the amount distributed, when, and how much nursing homes cost in his state.

Your father could use up the money in a legitimate way to pay for his care, and then qualify for Medicaid. For example, he might come home for as long as his funds would pay for home care, and only move to a nursing home when his funds run out. He would then be eligible for full Medicaid coverage of the nursing home costs. Unfortunately, either way, he'd have to exhaust his assets.