If your parents have reached the age and state of health where moving to a nursing home is a definite future possibility, you and they need to start planning for this eventuality now. Why? Because unless your parents are quite wealthy and can afford to pay for long-term nursing home care out of their own pockets, they likely will have to apply for Medicaid. And this, in turn, means that they must meet stringent income and asset guidelines in order to qualify for Medicaid assistance.

In Virginia, these guidelines call for the following:

  • If only one of your parents needs to apply for Medicaid so as to be able to move into a nursing home, his or her monthly income must not exceed $2,313 and (s)he must own no more than $2,000 in assets, with his or her spouse owning no more than $126,420 in assets.
  • If both of your parents need to jointly apply for Medicaid, their joint monthly income must not exceed $4,626 and together they must own no more than $4,000 in assets.
  • If your parent is a widow or widower at the time (s)he applies for Medicaid, his or her monthly income must not exceed $2,913 and (s)he must own no more than $2,000 in assets.

Given these exceedingly low eligibility figures, US News suggests that your parent(s) consider engaging in a Medicaid spend down in order to legally and legitimately reduce their income and/or assets.

Asset spend down

To reduce the amount of assets your parents own, they may wish to consider establishing an irrevocable trust of which they are the beneficiaries and into which they transfer their assets. At this point the trust owns the assets rather than your parents. Keep in mind that Virginia has a five-year look back period. This means that your parents must have transferred ownership of their assets at least five years prior to applying for Medicaid.

Income spend down

To reduce your parents’ monthly income, look to their current medical expenses. The amounts they pay each month for prescription medications, doctors’ visits, co-pays, etc. all qualify as income-reducing expenditures. Or if they have outstanding hospital bills, any monthly payments they make on these bills likewise qualify.