Elder spend down

[FinallyRetired]

DW and I are now in a situation we've not been before, maybe some of you have and can provide your experience. In brief, 90yo MIL is now living with us and is in good mental faculty but poor physical health. She has a pension income of around $2000 month, and assets totaling around 100k.

We're OK with caring for her at home for now, but are concerned if the situation changes and she needs a nursing home, with avg cost in our area over $100k/yr. So we want to be ready to qualify her for Medicaid. Fortunately, our state kicks in Medicaid nursing home costs in excess of income once all assets are drawn down to $2000. We realize we have to spend down her assets, and are already doing so through justifiable expenses such as mobility devices, day care, etc.

We're not so sure what to do about her pension income. Here are the options we're looking at:

1. Do nothing, we pay for her expenses, her savings continue building, at the end Medicaid takes it all and we're out of pocket. No brainer, bad option.

2. She writes checks to pay for her own expenses (day care, groceries, clothing, etc), which uses up the bulk of her 2k a month. Her savings stay constant or draw down, Medicaid gets what's left, seems reasonable. Her income is tax free, so no tax consequences.

3. She pays us rent and expenses, a set amount per month, and we put that money into our account and use it to pay for her expenses. Same as option 2 but seems we would have to declare that money to the IRS as income. If so, bad deal for us.

Am I missing anything? For example, does Medicaid require her spend down to be done a certain way, as through rent payments? Any and all experiences/suggestions/comments welcome.

 

[lazygood4nothinbum]

sorry but don't know about the income/tax thing. maybe you could gift from one to the other and use that money for expenses? i believe the "look back" period on gifts is 5 years but then you'd be able to show expenses. don't know tax implications of all that. anyway, what i really wanted to comment on was to consider not spend down all her funds too early. you might get mom into a better facility by using her own money to be admitted and then have medicaid take over once money has been depleted.

at least i think that would give you more options down the line.

 

[chinaco]

Yes, medicaid will require a spend down,

MY opinion would be to spend her money down with care coming in the home rather than taking her to the nursing home is at all possible.

Not sure of your total situation. We went through the same thing with a parent, I know most options.

• Is she dying or just having problems getting around? What is the nature of her illness?
• Is someone at home with her during the day? Spouse??

 

[FinallyRetired]

Not sure of your total situation. We went through the same thing with a parent, I know most options.

• Is she dying or just having problems getting around? What is the nature of her illness?
• Is someone at home with her during the day? Spouse??

Her main issue is diabetes that has wasted her legs, so she can only get around with difficulty with a walker, and can't cook or bathe for herself. Other than that, her mind is sharp and she doesn't need any other care, but we can't leave her alone for very long for fear she might fall. One or both of us are in the home with her all day/night, but will be looking for day care help so we can go out on occasion - we feel like we have young kids again and need a sitter.

I like what lazy said, not to spend down too fast in case I need to qualify her for a better NH out of pocket before medicaid sets in.

What we're doing is beginning the spend down and get down to maybe a couple of months out of pocket in a NH if we need it. Even though she's in pretty good health right now, she could have a stroke or something tomorrow and here comes a NH.

What we need to do is spend down in a way that makes Medicaid happy, without triggering tax income for ourselves. We've already spent around 10k for mobility devices to allow her to move around the home and use bathrooms, and we find food, electric, etc, to be more costly for us. Don't get me wrong, we love her and want to care for her as much as we can, just trying to do things the best way financially.

 

[spncity]

Suggest calling or visiting a Medicaid rep - just as you would were she entering a nursing home. They will give you an information packet and explain it.

She could "gift" her savings, but there is a "look back" period of at least three years, probably more. If she gifts the savings and then lives with you longer than the look back period (all the while spending her income for rent, food, services such as daycare) she can qualify for Medicaid upon admission to a skilled nursing facility. This requires being medically qualified for skilled nursing.

Once she's on Medicaid, the pension goes to the nursing home to offset the costs (except for a small monthly amount - maybe $60 - that she can keep for personal spending).

 

[Nords]

She could "gift" her savings, but there is a "look back" period of at least three years, probably more. If she gifts the savings and then lives with you longer than the look back period (all the while spending her income for rent, food, services such as daycare) she can qualify for Medicaid upon admission to a skilled nursing facility. This requires being medically qualified for skilled nursing.

If it's OK with her, if it doesn't destroy family harmony, and if it makes her feel like she's contributing, then I'd start charging market rent now. Unless you're charging her more than $2000/month, if it becomes an issue later you could always gift it back to her.

The income taxes you'll pay are the government's fee for enabling you to draw down her net worth.

 

[EngineeringMyFinances]

Is there any reason that she couldn't pay at least her share of the utility bills and the food she eats? Also pay for a certain amount of day care for herself? I don't see why Medicaid would expect you to pay for this, just because she's under your roof. It doesn't make sense for you to pay her living expenses so that she has a larger nest egg to spend down before Medicaid takes over. Have her make the payments directly to the utility company, grocery store, etc and not to you.

And if you're goal is a spend-down, how is a little bit of taxes on a fair rental charge going to hurt? You could set whatever's left over after taxes aside and use it to help her out with actual needs once she does go on Medicaid.

You option #2 is best, with added charges of a reasonable amount for utilities and rent. Maybe not the rent if you think her health will not decline further in the few years that it would take to gradually pull down her nest egg.

 

[Brat]

Seek advice from an attorney specializing in elder issues.

 

[chinaco]

Her main issue is diabetes that has wasted her legs, so she can only get around with difficulty with a walker, and can't cook or bathe for herself. Other than that, her mind is sharp and she doesn't need any other care, but we can't leave her alone for very long for fear she might fall. One or both of us are in the home with her all day/night, but will be looking for day care help so we can go out on occasion - we feel like we have young kids again and need a sitter.

There are a number of personal decisions to make.

IMHO - Do not put her in a NH if at all possible. We did that for a short period of time and went to other alternatives for in-home care. I will not describe the nightmare here...

My comments are based on some assumptions about her state and condition.


My advice. Use her assets for day-care and eventually in-home care. Talk to social workers to see what types of financial support is available and other help.


Medicare will pay for her to have a Wheel Chair if she cannot walk and stays home. Be sure to get one that has a transport option. Also, get one that is comfortable if she is sitting in it all day. You can spend several thousands (2 or 3 or 4k) on it. Do not worry about that, if she needs it just do it!!! her comfort is more important. Plus, you need to plan for when she is worse... and that will happen. Do not use her condition today to judge the purchase. Might as well get one for an invalid. This issue cannot be stressed enough. You will find that facilities do not have comfortable wheelchairs. IF she cannot walk, they will put her in the chair all day for their convenience. Imaging her sitting in a transport chair for 12 hours with no one attending to her. Plus she will probably get worse. Consider getting one with a headrest, leg supports and that can recline to change the angle (recline) will help her to not get pressure sores... and she will be subject to getting pressure sores. You need to remember, if she goes to a NH, medicare/medicaid will not pay for a wheel chair at that time... it will be too late. You need to purchase that well before she goes to a NH! These chairs can be expensive, but medicare will pay 80%. Can she stand up with help? Medicare may pay for other equipment to help in the home also. My advice is to take to a Physical therapist for an evaluation on her needs. A doctor would need to sign the order.

If she has $100k plus $2k/month you have a fair amount of resources as long as you are careful.

Day care is a great alternative. It can range from $50 -$60/day (this depends on the area). You might one to look for one that provides hygiene. Some will do grooming and bathing for a small additional charge. Some charge less for 1/2 day. Again, just make sure you get her that wheel chair and do not scrimp. I will repeat... IF she cannot walk, they will put her in the chair all day for their convenience. Imaging her sitting in a transport chair for 12 hours with no one attending to her. Whatever medicare will not pay use her money. Brace yourself for the cost... (non-motorized).

Good luck. If you have specific questions, PM me. We have gone through this with 2 parents. A lot of lessons learned.

 

[FinallyRetired]

Thanks to all who replied.

Chinaco: great advice about the wheel chair, had not thought of that. She has a simple one now, paid for by medicare, but after 30 minutes in it she gets very uncormfotable so we only use it to transport her from point to point. I'm told medicare will only pay for a wheelchair every five years, so we will look for a comfortable one and pay it out of her assets.

Question: For mobility devices like expensive wheelchairs, the stair lift, and other items we've already bought out of pocket (~10k worth), I plan to transfer money from her account to mine as reimbursement. I'm assuming this will be OK with medicaid as a fair transfer, and not be a gift with lookback. Is this correct?

spncity: Yes, I have called medicaid and they provide general answers, but whenever I ask a specific question I get a CYA bureaucratic response, no help at all.

Nords: I suppose I could charge her 20% above mkt value to cover the IRS fee, and worst could happen is they disallow the 20%.

Engr: There are two goals: spend down her assets and not spend down ours. This is why I want to minimize our own expenses, otherwise I can forget FIRE.

 

[Sandy]

One of the reasons you get no response from Medicaid eligibility staff is that the determination process is very complex. They would need to look at all her assets and income information as well as medical status in order to know for certain, and no state's eligibility staff is set up to run "what if" scenerios. You either apply or not.

While the exact rules differ by state, in general, you do not need to spend down all funds before getting eligibility. Income trusts and other arrangements are legal methods to preserve some funds for her needs. I addition, you may be able to "bill" for your current services, so that fund transfers are not gifts, which would prohibit Medicaid eligibility. The look back period for transferring assets as gifts is now 5 years.

Definately consult an elder law attorney NOW if you think she will need nursing home care in the future.

 

[Martha]

Seek advice from an attorney specializing in elder issues.

I agree wholeheartedly. This is an area filled with traps.

 

[FinallyRetired]

I agree wholeheartedly. This is an area filled with traps.

Actually, I've already consulted with an elder care attorney, and the questions I have are residual questions even after consulting with an attorney. There are other things he helped me with, such as a will, a power of attorney, etc. But specific medicaid spend downs, how to do it, what qualifies, etc, appears to be issues that fall between a legal specialist, an accountant, and a tax lawyer. That is, this lawyer seems good but deferred those questions to other specialists. So what I'm seeking is other experiences first, so I can focus on what has worked and what has not worked. I just placed a call again to the medicaid people, maybe I can ask them more focused questions. Aaarrgghhhh... it's hard enough to take care of the elderly without [-]all this other crap[/-] having to involve these other issues.

 

[Brat]

Actually, I've already consulted with an elder care attorney, and the questions I have are residual questions even after consulting with an attorney. There are other things he helped me with, such as a will, a power of attorney, etc. But specific medicaid spend downs, how to do it, what qualifies, etc, appears to be issues that fall between a legal specialist, an accountant, and a tax lawyer. That is, this lawyer seems good but deferred those questions to other specialists. So what I'm seeking is other experiences first, so I can focus on what has worked and what has not worked. I just placed a call again to the medicaid people, maybe I can ask them more focused questions. Aaarrgghhhh... it's hard enough to take care of the elderly without [-]all this other crap[/-] having to involve these other issues.

It sounds to me that you ended up with an estate attorney, not an attorney who specializes in elder care issues.

Your Mom's physician should have no problem writing an order for a PT to evaluate her needs. The advice by the earlier poster is spot-on.

Aggregate the bills you have paid to clearly meet your Mother's needs and pay yourself out of her assets, put all the documentation in an envelope for safekeeping for years should you ever put her on Medicaid.

It is important that she have a social life, explore adult day care in your community. Your transit system may offer lift services that can handle a wheel chair.

As she approaches the slippery slope access hospice. They provide all kinds of services.

Warning, based on my recent experience: If you use a power lift chair (they are wonderful) put the controller out of her reach if she cannot walk safely.

 

[F-One]

I agree with Brat and Martha, find a lawyer that specializes in elder/disable care and medicaid spend-down rules, appropriate expenditures for care. I know after talking to our lawyer recently, who does specialize in this area, there are some recent changes that are being pushed from feds to the states.
Not all states have adopted changes but all are modifying rules that impact alot on qualifications.