How Can I Best Implement a Nursing Home Spend Down?

 In Long-Term Care Planning
Medicaid spend down

Photo by Dr.Kanapon Phumratprapin on Unsplash


Can a nursing home bill a resident who is a prospective long-term care Medicaid applicant a sufficient amount (around $5,000) to reduce total cash resources to less than $2,000? The charge would be made before the first of the month (May) to permit an application to be filed on May 1st. This charge would be in addition to the regular monthly payment to the nursing home in April.


Yes and no. This would work as a spend down, but Medicaid eligibility would not start on May 1st. Instead, it would begin on the date when the services for the $5,000 payment ran out. For instance, if the facility charged $250 a day, the $5,000 would cover 20 days ($5,000 divided by $250 = 20) and the Medicaid eligibility would begin on May 21st.

This may be fine, but there may be better ways to spend down the funds. The $5,000 can be spent on anything for the nursing home resident’s benefit, whether clothing, entertainment, equipment, food or special therapy, not necessarily to pay the nursing home. However, timing can get complicated. The nursing home resident will become eligible for Medicaid on the date their resources fall below $2,000 and will have to pay privately for their care until that date. So, if you come up with a plan to spend the $5,000 for the nursing home resident’s benefit, but it takes you until May 7th to implement the plan, you’ll have to set aside enough funds to pay the facility for seven days of care, $1,750 in our example.

Since the timing of the purchases often can be difficult to pin down, calibrating the spending and payments to the nursing home can be bit difficult. The best approach in our experience is to make some outside expenditures on the nursing home resident’s behalf but not to attempt to use the last dollar. For example, if you could identify $2,500 of spending that would enhance their life, that would give you 10 days to implement the purchases and leave sufficient funds to pay the nursing home for 10 days in our example

Showing 3 comments
  • .

    If a person needing to be in a nursing home (if anyone is such) and said persons has assets above $5000 then spends the assets and does not leave any set aside thus zero assets and income insufficient to pay for the nursing home, there is then a 30 day waiting period (or in some cases a 5 year waiting period) before medicaid steps in to pay for the nursing home, what happens to the elder without any money during the 30 day or 5 year waiting period, does the government have the elderly die on the street?

  • .

    In the above comment assume the assets were spent their disqualifying assets in such a way that there is no clawback, not given to the kids etc, maybe the elder went on a cruise or exotic travel etc

    • Harry Margolis

      It’s fine for the the elder to spend their money on a cruise or exotic travel. Medicaid has a five-year “look-back” period for transfers of assets. When someone moves to a nursing home and applies for Medicaid coverage, they must report any transfers of assets made during the prior five years. If the transfers were uncompensated or do not fall under some limited exceptions, Medicaid imposes a penalty, which is a period of ineligibility for benefits based on the amount of the transfer. But there is no penalty for spending or any requirement that the spending be for any particular purpose, such as food, housing or medical care. Individuals can freely spend their funds for anything they would like, no matter how frivolous in some people’s eyes, as long as it’s for themselves rather than for someone else.
      In terms of the spend-down to the $2,000 asset limit (in most cases), there’s no 30-day waiting period. The individual will be eligible for Medicaid beginning on the date their assets fall below the $2,000 limit, whether or not that date is in the middle of a calendar month.
      Finally, as to your question about what happens if someone has made an uncompensated transfer resulting in a transfer penalty, that’s a big problem with the law. Often nursing homes are left caring for residents for a period of time for no compensation.

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