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“Spending Down” To Qualify For Medicaid Legally


When an elderly person is at a point in their life where they may require nursing home care, they may simply have too many assets in their possession to qualify for Medicaid. However, they cannot simply give assets away all at once in order to meet the Medicaid means test – doing so is seen by some as inappropriate because in theory, wealthy people can pay for their own care. That said, there are options by which Westchester County and Putnam County residents can legally ‘spend down’ their assets in order for Medicaid to agree to cover their care.

Why Can’t I Just Sell Things?

The reason that it is not possible to simply give away one’s assets right before entering nursing home care is because Medicaid imposes what is known as a look-back period. New York State used to have no look-back period, but recently implemented one going back 60 months (5 years). What this means is that if your elderly loved one sold or gave away any asset at less than market value for the past 5 years, Medicaid will decline to cover care for a certain period of time.

Keep in mind that this only covers those who seek nursing home or other institutional care – those who are looking for in-home services (in New York, called ‘community care’) are not usually subject to such draconian limits on retaining assets and funds. It may be possible in your situation to investigate alternatives to nursing home care solely to retain more control over your property, though of course, this will generally not be possible for everyone.

Several Ways To ‘Spend Down’ Or Safeguard Your Assets

That said, there are several ways by which a person can ‘spend down’ their means during the look-back period. For example, gifts to certain family members are always acceptable, and even certain gifts and payments to other parties are permissible if specific criteria are met. Examples include, but are not limited to:

  • Paying off debts. It is permissible to pay off large debts like a home equity line of credit or a mortgage without penalty;
  • Transfers to a spouse, particularly if only one spouse is applying for Medicaid and the other will be staying in the home;
  • Transfers to disabled offspring. The statute states that specifically ‘disabled’ and ‘legally blind’ children under 21 may be the beneficiaries of trusts or transfers; and
  • Funeral trusts, where funds are set aside in an irrevocable trust for the sole purpose of funeral and/or burial expenses.

Another one of the best ways to safeguard your assets is to establish a Medicaid trust, if possible long before you apply for Medicaid. A Medicaid trust is one created where the assets are placed in the name of the trust, taking them out of the possession of the settlor (the one who created the trust). Since the assets are not in the settlor’s name, Medicaid cannot count them (in most cases) for Medicaid eligibility purposes.

Call A Putnam County Elder Law Attorney

It can feel overwhelming or even frightening for an elderly person to be faced with the choice of not receiving proper care or surrendering the bulk of their life savings. Contacting a Westchester County elder law attorney from Meyer & Spencer, PC may help illuminate other options for you and your family. Contact our office at (845) 628-0009 to schedule a consultation.

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