Health Insurance Blog

Unlike Medicare, Medicaid provides extensive benefits for long-term care. But the Medicaid program was created to pay for care needed by the poor, and only those who meet the program’s definition of poverty can receive these benefits.

Some people who are not poor when they first need long-term care are eventually able to rely on Medicaid to cover the costs of their care. They spend their assets and income on care until they have very little left, at which point they meet Medicaid’s definition of poverty and qualify for benefits. This practice is called spending down. It is a viable means of meeting long-term care needs, but it has significant drawbacks, some obvious and others not so obvious.

Spending down of course results in the loss of financial independence, as a Medicaid recipient is left with extremely limited assets and income. An elderly person who has worked hard and been self-supporting her whole life becomes indigent and must depend on the government for her needs. Spending down also means that hard-earned assets cannot be used for such purposes as helping grandchildren go to college, and they cannot be left to heirs.

The types of long-term care available to a Medicaid recipient are often limited. Benefits for home and community-based services are not offered by all state Medicaid programs, eligibility for them may be restricted, and funding is generally limited. And only a few state programs pay benefits for care in assisted living residences. Consequently, some Medicaid recipients who could be cared for at home are forced to enter a nursing home.

Finally, a Medicaid recipient may have a limited choice of long-term care facilities, and the facilities generally considered the most desirable may not be available to her. This is because in most states facilities receive less for caring for Medicaid recipients than they do from private patients. For this reason, some nursing homes that have a superior reputation and can easily fill their beds do not accept Medicaid recipients. Most nursing homes that do admit Medicaid patients allocate only a limited number of beds to them, and the most popular of these facilities often have long waiting lists for Medicaid recipients. As a result, Medicaid recipients often end up in facilities that, while certified by Medicaid and perfectly adequate, are found by others to be less desirable for various reasons. Another consideration is that, if fewer facilities are open to a Medicaid recipient, she may have to go wherever a bed is available, which might be distant from her family and friends.

In summary, those who rely on Medicaid to meet their long-term care needs lose their assets and their financial independence and have limited choices of types of care and facilities.