Medicaid "Spend-down." What is it?
When a person needs long-term care (think, nursing home), the most common funding source is Medicaid. However, Medicaid is a resource-based benefit, meaning that the recipient can only have a certain amount of "countable" resources to qualify. However, there is a common misconception that Medicaid "sells" personal and real property. This is not actually true, but Medicaid spend-down does require the sale of assets and all of the funding must be used for the disabled person's support. MOST IMPORTANTLY - there are assets that are considered "countable" for this purpose and "non-countable" or exempt assets that don't apply. Further, a person can plan and eliminate assets from the "countable" category and protect them.
We all like to think, "it can't happen to me." The problem is, when or if it does, it is too late to change things to avoid spend down and asset loss is almost assured. Medicaid has a 5 year look back period that identifies any asset or resource shifting. Best to think about this early on and plan to protect your assets as part of an overall estate plan.
