The Distinction Between Seizure and Asset Spend-Down
When considering if a nursing home can take your CDs, it is crucial to understand the legal distinction between a facility seizing assets and a resident using assets to pay for care. A nursing home does not have the legal authority to simply take a resident's funds. Instead, the high cost of long-term care—which can exceed six figures annually—means that residents are required to pay for services rendered.
For residents who rely on Medicaid to cover long-term care costs, state and federal regulations mandate a financial "spend-down". This process requires individuals to exhaust most of their personal assets, including financial instruments like CDs, before they can qualify for government assistance. While the nursing home doesn't seize the money directly, a resident's financial resources are effectively funneled to the facility to cover bills until those resources fall below the state's Medicaid eligibility threshold.
Medicaid's Role and the Spend-Down Process
Medicaid is the primary government program that covers long-term nursing home care for low-income individuals. The eligibility process is strict and includes asset limits that require careful financial planning. Assets like checking accounts, savings accounts, and Certificates of Deposit are all considered "countable" and must be used to pay for care until the individual is impoverished enough to qualify for Medicaid benefits.
Common Countable Assets:
- Savings and checking accounts
- Certificates of Deposit (CDs)
- Money market funds
- Stocks and mutual funds
- Second vehicles and non-primary residences
Common Exempt Assets:
- Primary residence (with some limitations)
- One vehicle
- Household goods and personal belongings (up to a certain value)
- Some life insurance policies and burial funds
Protecting Personal Property and Valuables
Beyond financial assets, nursing home residents have a federal right to retain and use their personal belongings, as long as these items don't infringe on the rights or safety of others. Facilities are required to have policies to protect personal property from loss, damage, or theft and must maintain an inventory of a resident's possessions. Despite these protections, personal items—particularly smaller, valuable ones—can go missing.
To safeguard personal belongings, families should take proactive steps. A detailed inventory, complete with photographs and serial numbers, is an important first step. Labeling all items, especially clothing, can help prevent mix-ups during laundry. For valuables like expensive jewelry, it is often best to keep them with a trusted family member rather than risking loss at the facility. Many nursing homes offer lockable storage spaces for small items, which residents can and should request.
Options for Asset Protection and Long-Term Care Planning
For families concerned about losing their assets to long-term care costs, several legal strategies can be employed, though they require careful, advance planning with an elder law attorney.
| Strategy | Description | Primary Consideration |
|---|---|---|
| Irrevocable Trust | Transfers assets (like a home or funds) into a trust, legally removing them from the resident's ownership for Medicaid purposes. | Must be established at least five years before applying for Medicaid to avoid penalty. |
| Medicaid-Compliant Annuity | Converts a lump sum of assets into a monthly income stream for a healthy spouse, which is not counted toward Medicaid eligibility. | Must be set up correctly to comply with state and federal laws; often used in crisis planning situations. |
| Financial Gifts | Gifting assets to family members to reduce the size of the estate. | Subject to Medicaid's five-year "look-back" period, meaning gifts made within this timeframe can lead to a penalty period of Medicaid ineligibility. |
| Long-Term Care Insurance | A policy that covers the costs of long-term care services, reducing or eliminating the need to spend down personal savings. | Premiums can be high, and coverage can vary. Better to purchase well in advance of needing care. |
Conclusion
While a nursing home cannot outright seize your certificates of deposit, the financial reality is that assets like CDs will be used to pay for care before a resident can qualify for Medicaid. This process, known as the spend-down, can feel like the facility is taking your money, but it is a legal requirement for government assistance. Protecting both financial assets and personal belongings requires proactive planning and a clear understanding of resident rights and financial regulations. Consulting an experienced elder law attorney is the best way to navigate these complexities and create a strategy that safeguards your savings and other property. For more information on your rights as a nursing facility resident, resources like the Centers for Medicare & Medicaid Services offer detailed guides.
What To Do If Assets Are Mismanaged or Stolen
If you believe a nursing home has misused a resident's funds or that belongings have been stolen, you have a right to act.
- Report the Issue: Inform the nursing home administration in writing about any missing items or financial discrepancies.
- Contact the Ombudsman: The Long-Term Care Ombudsman Program is a free and confidential resource that can investigate and help resolve complaints on behalf of residents.
- File a Police Report: For suspected theft, insist that the facility files a police report. If they refuse, you can file one yourself.
- Legal Action: If problems persist, and especially in cases of consistent negligence or theft, you may need to consult with a legal professional specializing in elder law.
By taking these steps and being an informed advocate, families can help protect the resident's rights and assets during their stay in a long-term care facility.
