What is Medicaid Spend Down? Franklin, Tennessee Estate Planning Attorney

I was recently speaking with a client who called my office to talk about her elderly mother. As it happened, she was planning to admit her mother to the nursing home. She spoke with a caseworker at the nursing home in order to apply for Medicaid assistance, and was informed that her mother would not qualify. When she asked why, the case worker said, your mother needs to go through Medicaid spend down first.

Confused about this, she called my office.

Medicaid qualification and Medicaid planning is a very confusing and often misunderstood concept and practice here in Tennessee. Medicaid Spend Down is a process that refers to a person who applies for Medicaid, but has too much assets to qualify. In order to qualify for Medicaid (TennCare as it is called here in Tennessee), a person can own no more than a home, a car, prepaid funneral, and no more than $2,000 extra assets (the rules are different for married couples when one spouse is in the nursing home and one is not in the nursing home). If you own more than this minimum amount, then you will not qualify for Medicaid. 

Medicaid Spend Down referrs to the concept when a person doesn't qualify and has to spend their assets down to that minimum amount (home, car, prepaid funeral and $2000) before qualifying for Medicaid.

For example, let's say John is going into the nursing home. He owns a house, a car, and $100,000 in extra cash. If John applies for Medicaid, he will be denied. John will be required to spend the extra $98,000 on his own nursing home care before he qualifies for Medicaid (TennCare) assistance. Given the expense of the nursing home at between $75,000 and $115,000 per year, it is likely that John will spend through this extra $98,000 in the first year to year and a half, and then qualify for Medicaid.

However, Medicaid is not free! After John dies, Medicaid will exercise a lien against his home and force John's adult children to sell the home so that Medicaid can be repaid for all the costs that Medicaid paid out on John's behalf during his lifetime when he was in the nursing home. In many cases, this can be substantial, and results in Medicaid (TennCare) eating up all the assets of the estate.

There are legal strategies that you can pursue to prevent long term care and nursing home costs from eating through all of your savings during your final years, but you must plan at least five years in advance of going into the nursing home.

If you have questions about Medicaid Spend Down, nursing home costs, and protecting your estate from Medicaid liens, please call our office and our attorneys would be happy to discuss these legal issues with you on the phone or in person.

As always, we are here to help!

Daniel A. Perry

Fidelis Law, PLLC

(615) 472-2482

[email protected]

Daniel A. Perry
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Focused on helping seniors, individuals with disabilities and small business owners make informed decisions.