It is crucial that aging persons and their loved ones to think ahead as far as possible to plan for a time when they may need to enter a nursing home. Nursing home care is so expensive that it can eat up a person’s life savings in no time. In Massachusetts and Rhode Island, you normally will not qualify for MassHealth or Medicaid unless you own less than $2,000.00 in assets at the time you enter the nursing home. If you have more than $2,000.00, you want to spend them, or transfer the excess to trusted persons – such as your children, so that MassHealth or Medicaid will not count them as your assets when it comes time for you to enter a nursing home.
“Spending Down” on Debts
So what are the best ways to “spend down” your assets to qualify for MassHealth or Medicaid? Before you consider giving assets away to family or friends, the most obvious way is to pay your debts. MassHealth/Medicaid does not mind these past transfers precisely because they are not gifts, since you receive a quid pro quo for the payments.
“Spending Down” on Home Improvements
If you are a married couple, spend some of your money to make home improvements, MassHealth/Medicaid allows your spouse to remain in your home when you enter a nursing home. In other words, it will not count your home when deciding if you own more than $2,000.00. Therefore, you should consider spending your cash to make any home improvements. It increases the value of your house, and “spends down” your cash.
“Spending Down” on Prepaid Funeral Arrangements
The other way to “spend down” is to prepay your funeral expenses, which nowadays are a significant expenditure. When you die, your family will have to make these expenditures anyway, so you might as well “spend down” your assets now to qualify for MassHealth/Medicaid.
“Spending Down” by Gifts Made More Than 5 Years Ago
Finally, any gifts that you within 5 years will be counted as your assets when it comes time to enter a nursing home, even though you no longer have the assets. If possible, therefore, you should make gifts well in advance of any anticipated need for nursing home care.
If you are approaching an age when you think you may need nursing home care, consult an estate planning and elder law attorney to see how best to protect your assets. See also Agingcare.com and ElderLink.