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Posted July 18, 2006

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Finances: Navigating Spend-Down Rules for Nursing Home Care

Q. We have cared for my mother for the past eight years as she has progressed with dementia. She recently had another minor TIA that has affected her ability to walk. We therefore had to put her into a nursing home.

We are now faced with having to pay the nursing home bills and paying down her assets, which will probably run out in less than three or four months. At that point, she will still have a small pension and her Social Security, and we understand that we can apply for a Medicaid grant to cover the balance.

But we are just not sure of the laws concerning her finances. What can the nursing home take? Over the past several years, she has given money to my brother who is battling cancer and has his own financial needs. She also gave a grandson a gift of money to purchase a new home. How far back can they go, and will some of this money that she has given out have to be repaid to her estate? Are there limits to the amounts that she can give away per year?

My other brother has a joint account with her. Can they take the full amount out of this account or does the law recognize that part of this money is his money too? We just don't know where to turn to get the answers that we need.

Pam B., Levittown, PA

A. In order for your mother to qualify for Medicaid, she will have to pay privately for her nursing home stay until she spends down her assets to about $2,000 (in Pennsylvania). Also, to qualify for Medicaid, she will have to meet income, resource (in most cases), and other eligibility requirements. See this Pennsylvania state government website for more information on this aspect. 

You say that her money will run out in three or four months. I assume she does not own a home? If she does have a home worth more than $500,000, she would be ineligible for Medicaid under the new Medicaid Law.

Once your mom spends down her assets, she can apply for Medicaid. This application requires that she provide financial information going back five years. They are interested in large transfers of assets made for the sole purpose of qualifying for Medicaid. They are not going to consider the innocent and routine transactions you describe for her son and grandson to be for that purpose. The money she spent will not have to be returned to her estate.

Of course, you should consult an elder law attorney in Pennsylvania before applying for Medicaid. An attorney also can advise you on how to reduce the estate you have left, before you apply for Medicaid.

Applying for Medicaid is a complicated matter and requires the assistance of a professional such as an elder law attorney or a geriatric care manager in your area.

These additional sources should be of interest to you: 


This answer is provided by Jack Halpern, MPS, LNHA, an eldercare advocate and a licensed nursing home administrator. Halpern, a nationally recognized expert on eldercare issues, is the author of many articles on eldercare and nursing home abuse, and is the CEO of My Elder Advocate. His website is

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