Spend Down

This is a process of spending an individual’s savings on long-term care services and supports until their assets are depleted enough to qualify for Medicaid, the medical welfare program. Single individuals must have no more than $2,000 in assets (in most states - not including primary home, a car, personal effects, and burial expenses) before Medicaid will pay long-term care benefits.

Before the law prevented the practice, some families gave away or transferred money and assets in order to qualify for Medicaid’s Long-Term Care benefit. The Deficit Reduction Act of 2005 dramatically changed the rules adding longer “look-back periods” to prevent those with means to access Medicaid. The exception is when an individual purchases a qualified Long-Term Care Partnership Insurance policy which provides “asset disregard”. This allows a person to shelter part of their estate, based on the amount of benefits paid by their policy, and still access the Medicaid Long-Term Care benefit.