Finances Archives

Medicaid spend down takes pre-planning and knowledge. Get 13 insights about choosing a care home when planning a Medicaid spend down.

Avoid the stress this family experienced.

A Medicaid spend down plan – you think you’re doing it right

A family friend called. Four years ago, she and her siblings found an adult care home for their aging mother. They agonized over making the right decision until they found one that seemed like a perfect match. The peer group, location, and care level fit their mom's needs.

The oldest son, Jeff, handled mom’s finances. She had money in the bank from the sale of her home and property. Mom was physically healthy but pleasantly confused. He knew she’d out-live her assets and would need Medicaid to pay for her care in the future. To qualify for Medicaid, she had to spend all her money on care and medical costs first until it was almost gone.

Jeff asked all the right questions and was honest with the provider about how much money his mom had.

The care provider assured them that when their mother ran out of money, he would accept Medicaid. The owner didn’t have a Medicaid contract at the time but said he’d be willing to sign one when the time came.

My friend’s family is large so every day someone visited mom in her beautiful new home. They enjoyed the birthday parties and outings the caregivers hosted for the residents. Families were always welcomed. The caregivers treated their mom with love and kindness.
My friend and her siblings sighed with relief, grateful for the care their mom received.

Jeff thought the monthly rate of $7500 was high but worth it. And besides, he believed mom could stay in the home on Medicaid. The owner had verbally promised.

Mom spent down. It's time to apply for Medicaid.

Now, after living in the home for 3 ½ years, Jeff told the owner he was applying for Medicaid soon. Mom was running out of money. They had spent $315,000. Only $25,000 was left in mom’s account. He reminded the owner that he'd promised to open a Medicaid contract.

Right away the owner began making excuses. He said the timing was bad for him. He wanted to open a second care home and couldn’t afford a Medicaid resident. He didn’t want to hassle with the extra Medicaid oversight and paperwork.

At one point, the owner hinted he’d consider a Medicaid contract if the family paid the difference. (Medicaid reimbursement is much lower than private pay open market rates).

My friend and her family panicked. They started searching online about what to do. They talked to friends, social workers, and the visiting nurse. Could they enforce the verbal Medicaid spend down agreement with the provider? If they could, should they? Would the providers become angry and treat mom poorly? How could they find a new home on such short notice? Were there any nice homes that would take Medicaid right away?

Jeff called a family meeting to discuss the situation. His brother yelled about the deceiving, cheating owner. His sisters cried. They worried about how to tell mom that she was moving. How would she react to a new home? Would another move cause more memory loss?

Get help choosing a care home that takes Medicaid

I recommended they call a registered local referral agent for help.

The referral agent understood all their concerns. She reassured them that there were available options. In fact, within a few days she had homes for them to visit.

All the care homes she referred were pleasant and clean. Perhaps a little more modest than mom’s current home. But the providers were friendly and had good references. Most importantly, they already had a Medicaid contract. So a short Medicaid spend down wouldn’t be an issue.

The good news! - my friend’s mom transitioned to her new place without any problems. She’s even made friends with another resident on her first day. Her family is grateful for that.

But they wonder how this stressful situation could have been avoided. How could the Medicaid spend down planning work better? They don’t want other families to go through this stress.

What is Medicaid and how do you qualify?

Medicaid is a Federal and State program for low income elders who need care. One must qualify and meet the criteria for both income and care levels.
When an elder qualifies, then Medicaid pays for housing, care, supplies, and medical costs.
Find OSRAA Medicaid & Elder Care Resources Here

How do you plan for Medicaid?

Medicaid takes a lot of pre-planning - the devil is in the details. Don’t find yourself disqualified, with no money, and needing care. Work with a Medicaid case worker at the Department of Human Services.

It’s also recommended you work with an elder law attorney to properly spend down.

Do all care homes accept Medicaid?

Homes are not required to contract with the State in accepting Medicaid. They must disclose if they have a contract or not
If a home has a Medicaid contract, they cannot ask a current resident to move out when the resident qualifies for Medicaid.
Conversely, if a home has a Medicaid contract, they are not obligated to accept new residents already on Medicaid. Also, if someone will qualify within a few months, a home may deny admission.
Do the math. Be clear about how much money your loved one has before they’ll need Medicaid. Be honest with prospective providers.
Never rely on a verbal promise for Medicaid spend down. Get it in writing. Make it part of the written contract.
Some families purposely choose a private pay only care home for spend down. They think these facilities are “better” and want an upscale setting for as long as possible. These families anticipate another move.
If you choose this plan, keep in mind that your options will be limited. Providers who accept Medicaid need private pay funds for as long as possible. Medicaid reimbursement is much lower than market rate.

How to choose a care home when planning a Medicaid spend down?

If you think you’ll need Medicaid in the future, select a home that has a current Medicaid contract. Or at least has had a contract in the past. Some homes really do honor their word. They open a Medicaid contract for long-term residents who need it. (get it in writing)
Never agree to “making up the difference” between private pay market rate and the Medicaid reimbursement. This is illegal Medicaid fraud. If a provider suggests it, file a complaint with DHS. Read more about filing complaints with Oregon DHS
Check with your referral agent about any past complaints or negative experiences with a care home. One benefit of working with a referral agent is their experience and all the networking they do. Word gets around when providers make “false promises”.
Situations do change. Some care homes have cancelled their Medicaid contracts with the State. They decided to accept private pay residents only. All the residents on Medicaid had to move out of the home. This doesn’t happen often but it’s something to be aware of.

What you can do when a provider makes false promises:

In a situation like my friend's, filing a formal complaint with the State won’t have much effect. There’s nothing a licensor can do about verbal agreements.

But you can file a complaint with OSRAA. Here's our Contact Us page

If you have a negative experience with a provider making false promises, we want to know. Our members will be cautious in referring that home. Especially to someone needing future Medicaid.

Finding the right care home for a loved one is stressful enough. Avoid the type of situation my friend and her family faced. Follow the advice above. Work with a registered OSRAA referral agent member.

Find an OSRAA member Referral Agent: Member Directory

Did you find this article helpful?

Let us know in the comments below.

You might also like this article and companion video:

There's a lot of confusion about Medicare and Medicaid. In this article we explain the differences between the two. Find out who qualifies for each program, what services are covered, and the qualifying steps needed to get started.