Skip to main content Back to Top


'Spending Down' by Nursing Home Residents May Come Under Scrutiny

Cheryl A. Thompson

Asset spenddown, which can lead to shifts in payers for nursing home services, may be coming under scrutiny this year if Congress again considers Medicaid reform.

Much of the research on asset spenddown, in which a person purposefully divests or hides assets in order to qualify for Medicaid coverage of nursing home care, is more than five years old, however, and may not reflect current conditions. Since 1993, states have had the power to place liens on real estate and other tangible assets when people request Medicaid assistance and to recover expenses from estates after death. 

The most recent report on Medicaid asset spenddown available from the Department of Health and Human Services dates from 1992. Analysts from SysteMetrics/McGraw-Hill and the University of Maryland Center on Aging summarized the then-recent research and concluded that "more research needs to be conducted on exactly what goes on during the process of Medicaid spend-down." 

According to the 1992 report, one in every four or five people who entered a nursing home as a private payer became a Medicaid beneficiary before final discharge, which could have been after multiple nursing home stays. Most people who spent their assets did so during the first year at the nursing home. The analysts also found that, once people spent their assets and became eligible for Medicaid, they paid a greater proportion of total nursing home costs than people who had been eligible for Medicaid when first admitted. These relatively greater payments came from residents' income. 

The analysts, while acknowledging speculation of many people purposefully spending assets to qualify for Medicaid coverage, called for better data on nursing home residents' out-of-pocket expenses for acute care services and prescription drugs—expenses that could speed up "falls to impoverishment."