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If you earn too much to qualify for Medicaid, can you "spend down" by paying the cost of Assisted Living out of pocket until your assets are down to the point that you are no longer be able to pay these costs and you can become eligible for Medicaid? Or does the 5 year look back rule makes that impossible? (If it takes less than 5 years to do so.)

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Paying for AL is an ok spend down.

But before you get too too deep into all this, please, please find out IF and HOW your state pays for AL under Medicaid.

Most states Medicaid do not pay for AL, it’s only NH/skilled nursing care that is covered under LTC Medicaid. Some states have Medicaid “waiver” programs for other services like AL, MC or community based programs. But what’s available is totally up to your state to do and funnel Medicaid LTC $ into. Often if there’s even a AL waiver, the # of medicaid waiver beds is small and it’s an average 2 yr of private pay before a bed might be available. And if your needs change within that 2 years, you may not be suitable for AL anymore but now need a NH.

If your elder could possibly be determined to be medically “at need” for SNF/NH, it might be a better plan to have them go now into a NH that has Medicaid beds and go in now as private pay and then segueway to apply for Medicaid once impoverished.
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Reply to igloo572
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Yes, assisted living is acceptable spend down. Just make sure it is documented thoroughly.
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Reply to gladimhere
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My Mom was in an AL for 8 months. Since her house hadn't sold money was running out. I paid 2 months of NH care and then Medicaid took over. As long as the money in spend down is for her, then its OK. She just can't give away money in the 5 year look back.
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Reply to JoAnn29
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Yes. If you think a Medicaid application is in your future, it would be a very (Very!) good idea to consult an elder care attorney familiar with the Medicaid rules in your state.
Keep good records of how all the future Medicaid applicant's money is spent. It can absolutely be used to pay their living expenses, though. Be able to prove that is what you did.
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Reply to Marcia7321
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