A Medicaid 'spend down' may get an older person long-term care coverage but isn't a DIY strategy

Many older Americans end up relying on Medicaid for long-term care because Medicare rarely covers daily help like bathing or eating

The U.S. Department of Health and Human Services estimates that more than half people over age 65 will need help with daily activities such as bathing, dressing or eating at some point, either for an extended period or the rest of their lives. Some research suggests that share may be as high as two-thirds.

Yet relatively few older Americans have private long-term care coverage. AHIP, a trade association representing the U.S. health insurance industry, estimates that only 3% to 4% of Americans over 50 have an active policy that covers extended care. Medicare, the main health insurance program for older Americans, generally does not pay for continuing support services in a nursing home or assisted-living community.

As the youngest baby boomers approach their mid-60s, many families, couples and individuals may be planning to rely on savings, unpaid caregiving arrangements or Medicaid, the joint state and federal assistance program for the poor. The first two options can prove inadequate, while qualifying for residential care under Medicaid is difficult due to the program's low income and asset limits.

Eldercare experts say an approach to consider, especially if the person needing care is middle-class or of modest means, is to deliberately, but systematically, put yourself or a relative into poverty so Medicaid picks up the costs of a nursing home or assisted living services sooner than later.

This is known as a Medicaid “spend down” strategy.