While waiting for mom to be accepted for Medicaid is it a law that none of her money can be taken out of her account? I was told by the nursing facility to not pay any of her bills. The only thing they said I could do was to pre-pay on cremation for her. She only has $2400 (pension & social security) coming in. No savings, No property, No life insurance. When we applied for Medicaid last week her bank balance was $1100. No other assets. With a new month comes a bigger balance $3500. Should we spend this down?

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I’m assuming mom is in the NH as under “Medicaid Pending” admission. If so, Medicaid requires them to do a copay or SOC (share of cost) of all their monthly income (SS, pension, other retirement) to the NH less smallish PNA (personal needs allowance). PNA varies by state, for my mom in TX it was $60. Your mom must do her copay.

If the NH did not mention this & require the copay,  I’d be concerned that there’s a reason why & she’s not a “Medicaid Pending” admission. If her monthly income is $2400, she could be over your states Medicaid income maximum. Most states have monthly income max around $2100. Pls, pls, try to find out ASAP on this cause mom will need to do something, like a Miller Trust, to get around being over income limit. The extra $1900 could pay for the elder atty to set up Miller. 

Review all pages of her admissions document. It should read as to what the payment schedule is if not Medicaid or Medicaid Pending. If you did not get a copy of it, you need to get it. 

Now under Medicaid, she is allowed up to 2k in nonexempt assets. Mom has $1900 assets. Her assets can be kept in her bank account. If the plan is for her to continue to have her monthly income continue to be direct deposited to her checking account & she or you as DPoa write a check to the NH each mo for the SOC or Miller, to me, you kinda want to have her assets under $1700 so there no worry about being over the asset limit if the PNA builds up. Based on what others have posted, often if a Miller is done, all income is direct deposited to NH as they become the payee; if that’s what ends up being done, then, keeping a bank account not be worth it due to required service charge. The NH will set up a personal needs trust account that gets the PNA and you can put in $ whatever is left from old bank account. It just has to always be under 2k. Often they are put on weekly beauty shoppe visit which spends the whole PNA. My moms NH sent out a PNA statement to me every 90 days. 

For my mom, there was an annual Medicaid recertification which required 4 months of bank statements along with a detailed questionnaire. Had mom been over 2k, her eligibility could have been suspended. If your state does a recertification, you need to keep a binder going with her info to do the annual questionnaire. 
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You will have to spend down so that there is no more than $2,000 on hand and in her account. (I think various states may different numbers for the max on hand. Check for your state.) Let's say mother needs to spend $1500 to stay under the limit next month. Will she need some of that for food and rent, etc.? The one thing she cannot do with any of the money is give it as gifts. But she could buy a super deluxe wheelchair, or prepay toward her funeral, or update her wardrobe with sturdy, easily-washable cheerful clothes, or anything else for her own needs.

She does not have to keep the maximum amount allowed in her checking account -- but most people like to have that much in reserve in case a special need arises. For example, we used some of our mother's reserve to hire a medi-van to take her to and from a special family party.

I don't know who in the nursing facility was giving you Medicaid advice, but I think you might be better off calling the Medicaid office for answers to questions like this.
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