Most of us will require nursing home or other long-term care at some point in our lives. What’s worrying is how expensive it is. Medicare coverage for long-term care is very limited; private health insurance policies generally do not cover long-term care; and few people have private long-term care insurance policies. While overall costs vary, Texans needing nursing care will quickly find their financial resources depleted unless they qualify for Medicaid.
To be eligible for Medicaid, you cannot have assets greater than a certain limit, and only those with a low income and limited financial resources will qualify for coverage. According to the American Council on Aging, when you apply for Medicaid long-term care coverage in Texas as a single person, your non-exempt assets in 2022 cannot exceed $2,523. For couples, the limit is $5,046 — if both spouses are applying.
This is especially problematic in situations where there is a healthy spouse whose husband or wife needs long-term care**.** If the couple receives too much income to qualify for Medicaid, the remaining spouse worries that they will have to spend down all the assets they have for the spouse’s care—leaving the healthy spouse penniless.
It’s no wonder that many older adults look for the possibility of reducing assets before this time comes and wonder how to spend down assets in Texas to qualify for Medicaid. There are ways that you can protect your income and arrange assets so they are not countable when Medicaid eligibility is determined. However, this needs to be done correctly or you will not only lose out on the possibility of qualifying for Medicaid, but be faced with possible penalties.
A consultation with an elder law attorney can help you determine the best way to handle your individual situation so you can qualify when the time comes.
Seniors who know that they will soon need care often divest themselves of cash, stocks, bonds, and real estate holdings. However, Texas has a “look back” period of five years during which it will examine what you did with your assets. When applying for Medicaid, you must disclose the amount of your assets and when you made the asset transfers. Medicaid can question any transfer within the look-back period. If you didn’t get something of at least equal value in return for a transfer, you’ll be ineligible for Medicaid and may receive a penalty.
The penalty period or ineligibility period for transferred assets is the date when the person applies for Medicaid – generally when the person enters a nursing home. If it is determined that you gave away assets, transferred assets to others, or sold them for less than fair market value in order to meet Medicaid’s asset limit during this period, you could be penalized. All money and property, and any item that can be valued and turned into cash, is a countable asset unless it is listed as exempt.
A nursing home spend down is a financial strategy used when your income is too high to qualify for Medicaid. To be accepted into the program, some of your income must be spent down to get it low enough to qualify for Medicaid.
To qualify for a Medicaid spend down in Texas, your monthly income limit must be less than the amount allowed at the time you apply. If you are over 65 and make more money but spend the excess on medical bills, you may still be eligible if you can prove that the extra funds went toward medical care health care costs such as . . .
You could also spend money on accrued debt, such as a mortgage, a vehicle or credit card balances.