What is “spend down”?
Nursing homes and assisted living facilities are EXPENSIVE! And MediCARE will only cover up to 100 days in a rehab facility, which means that most people wind up paying out of pocket for these medical services. Eventually, you run out of money, and the government steps in to pick up the tab. This happens through a program called MedcAID. (You can check out our Medicaid page, here) However, MedicAID will only pay those bills if you are considered poor, which means you’ll have to spend your life savings, not to mention sell your house before you can apply. You have to “spend down” all of your retirement accounts and savings in order to qualify. When you hear people talk about how they don’t want to put someone in a nursing home because the nursing home will take everything, this is what they mean.
I know what you’re thinking, “So I’ll just gift it away to my kids and grandkids, and then boom, I’m poor.” Not so fast, Medicaid has a FIVE year look back period. Meaning any substantial transfer of money within the past five years can be clawed back. So that $1,000 gift you gave to your grandson Timmy for his graduation? Yeah, Medicaid wants you to give that back before they start paying. The good news is, there are ways around this.
How do I protect my money?
There are a couple of ways to protect your money. If you plan ahead, you’re in luck, you can save almost all of it! Transferring your money into a trust protects it from both Medicaid and creditors. This is what is referred to as, “asset sheltering”. If you didn’t read this article in time and you need protection NOW, still good news. If you had come to us a year ago, we would have told you to kiss it all goodbye, but now we have devised a way to keep about half of the money safe. Half is better than nothing, right?
Come in and talk to us about what we can do to protect your money.