You don’t really have to spend down all your resources to qualify for nursing home Medicaid.  There are multiple ways to preserve funds.  One of those ways is through the use of what I call the Medicaid Spend Down Special Needs Trust.        

Usually persons who need nursing home care end up needing Medicaid to pay for that care.  Why? Because it is so expensive.  Nursing home care can cost between $6000 and $8000 depending on the specific market area in Alabama.  At $7000 per month, the average nursing home resident will spend $84,000 in a year. Under these circumstances, most persons will exhaust their resources at a rapid rate rendering them unable to pay for the care they need without the assistance of Medicaid. 

There are some funds a married couple can preserve for the spouse who remains at home, but there is still an amount that has to be spent down if a couple has countable assets over $25,000.  A single person has to spend all of his or her resources down to $2000 before he or she can qualify for Medicaid.  Using up the assets a person saved over a lifetime is known as the dreaded Medicaid “spend down.” 

But what many people do not know is that there is a way to qualify for Medicaid to pay for nursing home care in Alabama without the resident having to go through a complete “spend down.”  That is through the use of a pooled Special Needs Trust. 

There are many types of Special Needs Trusts (SNTs), including trusts for disabled younger persons, disabled children whose parents and grandparents want to provide for their future needs, persons on public benefits who recover money from personal injury lawsuits or who inherit money when a relative dies.  Each type of SNT has highly specific requirements.  But what they all have in common is the goal of protecting funds for a disabled person without those funds resulting in the loss of public benefits. 

With the Medicaid Spend Down SNT, instead of spending down the money required to be spent by Medicaid on nursing home care before eligibility can be established, the money is paid into a SNT and can then be used to pay for special needs not otherwise paid for by Medicaid for the disabled person once he or she becomes eligible.  Medicaid eligibility can be immediately established while these funds remain available to pay for special needs for the nursing home resident. 

The drawback to this type of trust is the requirement that, on the death of the person for whom the trust was established, Medicaid must be reimbursed from funds remaining in the trust up to the amount Medicaid has paid for the nursing home resident’s care.  Still, creating a pool of money to meet the special needs of the nursing home resident after being awarded Medicaid is far better than simply spending down those funds before qualifying for Medicaid and leaving the resident with no resources to pay for special needs. Since Medicaid allows a nursing home resident to keep only $30 of his or her income each month to pay for personal needs, you can see how that is not enough to have needs met without families pitching in to help pay for necessary items.     

An example of what the SNT funds can pay for is a private room in a nursing home since Medicaid will only cover a semi-private room.  Other special needs might be items and services that can improve the quality of life for the nursing home resident such as hair salon charges, manicures, telephone, newspaper subscriptions,  audiobooks, movies, recreation, medical and dental expenses not otherwise covered, special  equipment like wheelchairs or specially-equipped vans; therapy or rehabilitation services; training and education, travel, electronic equipment including computers and mobile devices.

With a little planning the quality of life for a nursing home resident can be improved, and the burden for a family’s out of pocket expenses decreased.

Do not be confused with an internet search.  The rules are different from state to state.  Most states allow a person 65 and older to create a pooled SNT but still penalize transfers into that trust.  That is not the case in Alabama.

Contact us for more information about establishing a Medicaid Spend Down SNT.