Elder Law Report: Spend Downs

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What do you do when you have too many assets?

Having too many assets can stop you from qualifying for Long Term Care Medicaid for nursing home care or Special Assistance Medicaid which pays for assisted living care here in North Carolina. There is a three year look back period for assisted living care, and a five year look back period for nursing home care. This can be very troubling for people who haven’t planned ahead.

So, what do you do?

Below are eight standard spend down options.

  • Pre-Paid Funeral Plans.
  • A New Car
  • Nursing Home or In-Home Care Expenses
  • A New Home
  • Home Improvements
  • Households Goods or Personal Effects
  • Debt Repayment
  • A Vacation


These eight options are in no particular order and are Medicaid’s rules. So, let’s talk about each one.

  • Pre-Paid Funeral Plans

For example: You could put $10,000 towards future funeral costs. You can purchase a life insurance policy or place money in a trust account of the funeral home. Just pick a reputable funeral home.

  • Purchasing a New Car

Medicaid doesn’t specify whether you buy a car worth $2000 or $50,000. A person getting long term care Medicaid can have one house and one car in their name.

  • Payment of Nursing Home Expenses

You can pay nursing home, medical and even in-home and assisted living care expenses.

  • Purchase a New Home

You can purchase a new home and still qualify for nursing home or assisted living Medicaid. You can have a residence in your name. This is why Ladybird Deeds are so important. Let’s say you’ve bought a new house or have an existing home and you place a Ladybird Deed on it. That home will then not pass through the probate estate and is not subject to a Medicaid lien. Medicaid knows this, it is their policy. The state of NC has done a great job in allowing seniors and the family of seniors to save their homes and still collect a Medicaid benefit to provide for nursing home and assisted living care. You could place a Ladybird Deed on your home now, and next month or next year if you need the benefit to pay for nursing home or assisted living care, it would be okay under Medicaid policy. You would not be subject to that three year look back period for assisted living Medicaid, or five year look back period for nursing home Medicaid.

  • Making Home Improvements

This doesn’t mean you can put a new wing on your house, but you can maintain the existing structure. Your house may need a new roof, an updated kitchen, or new flooring, so you can upgrade your house.

  • Household Goods or Personal Effects

The definition of personal goods is ‘privately owned items (clothing and jewelry) normally worn or carried on the person.’

  • Debt Repayment

This could mean paying off credit card debt, Visa, Mastercard, household bills, or even a mortgage. If you owe $50,000 on your mortgage, you could pay that off or pay it down. That’s a value savings allowed in the Medicaid rules right now. It allows you to transfer over from a bank account or retirement account directly to your house. The benefit of this is, hopefully, over time, the value of your house will appreciate, but the asset isn’t as liquid than a bank account.

  • Vacation

What does this mean? My thoughts about why this is in the rules is, sometimes you may have a spousal caregiver, (and it would be the community spouse taking the vacation), who has been caring for a loved one at home for a long time. If you Google, ‘Spousal Caregivers’ or ‘Family Caregivers’, you will see evidence that the role of caregiver can diminish that caregiver’s lifespan. This is what respites are for; to recharge, rest, relax and unplug by getting away from everything you have been going through, every day with your spouse. So, you are allowed to take a one or two week vacation under the Medicaid rules.

The eight spend downs above may appear simple but can be quite complicated. There are also many other options than a spend down to protect your hard-earned money and property. For instance, you could use a General Durable Power of Attorney or Ladybird Deed (they are allowed in NC). A Ladybird Deed can protect your home and surrounding property up to a value of $572,000.

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If you would like to know more about Medicaid spend downs, look back periods or these other options, you can contact me, Greg McIntyre by calling our Shelby office at 704-259-7040, or our Charlotte office at 704-998-5800. We are also developing an e-course on advanced issues of Medicaid spend downs, which will be available soon, so sign up for our e-newsletter at to get all the updates.


Greg McIntyre

Elder Law Attorney

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