Can the children of a nursing home resident distribute his assets as a "spend down" to qualify for Medicaid?
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?
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.
If your goal is to use the money for better care for your father then you should look into a special needs pooled trust. A SNPT allows the assets to be used for your fathers care. If your goal is for heirs to get the assets upon your father's death an SNPT may not be a good fit. A trust will allow your fathers assets to be used for his benefit while allowig him to qualify for medicaid.
A pooled trust must be managed by a non-profit organization and unless the funds are retained by the organization mediaid is paid back before heirs. The non-profit organization will use the funds to support other disabled individuals.
One also needs to heed the Filial Responsibility Laws in each state allowing facilities and each state to legally require families to repay care costs exceeding benefits after the patient has made transition.
I have more of a question than an answer. And it will not be a popular one. Why is it that families want the money that should be being used for the care of their elder one? These folks worked all their lives, why shouldn't their money go into their own care, and not stressing them out over having to leave money to others?
And further, if the families want that money, then they will have to arrange for home care, and yes, it will be burdensome. But YOU ARE THE FAMILY! If you want to reap the financial reward of that, you need to be willing to share the work. Or am I too old-fashioned?
When my father was alive, he looked into the distributing to me. The reason why he did so was to ensure the funds would be there for his basics should he find himself in the spend-down phase and I wouldn't go into debt paying for his needs that were not covered by insurance, medicad, or medicare. Unfortunately, his health deteriated faster than he anticipated. I'm still paying off the debt.
Some parents prefer to go this route not because they want to leave their children a little something. Rather, to ensure their children don't go into debt taking care of them. Some children look into this for the exact same reason.