Medicaid has income driven requirements in order to qualify for their services. This guide highlights how you can "spend down" your assets in order to qualify.
A single person may have countable resources of less than $2,000 to qualify for Medicaid services. A married couple can have up to $56,726. The department looks at the assets of both spouses regardless of who actually owns it. Countable resources include all liquid assets and any assets that can be converted to cash such as a pension plan.
How Can I "Spend Down"?
There are several ways to "spend down" your assets in order to reach the $2,000 or $56,726 limit. This just means that these assets do not count towards your countable resources. These include your home, car, household goods, prepaid funeral costs, spousal annuities, and transfers to disabled children
A single person's home is exempt up to $550,000. For married couples any home is exempt and does not count towards your limit. You can also just pay off your home or make improvements to further spend down your assets.
Each single person or couple is allowed one car. If you have more than one car you can pick which one you would like to be exempt. Tip: pick the more expensive car to be exempt or even purchase a new one.
All of your "stuff" is exempt. None of your personal belongings count against you.
Prepaid Funeral Costs
You can prepay any or all of your funeral expenses without being penalized by Medicaid. This can include a burial plot, cremation costs, funeral expenses, etc. However, the plan has to be irrevocable and must be the going rate for funerals in your area. You cannot pay for Barbara Streisand to sing at your funeral just to spend more money.
Married couples can purchase what is called a "spousal annuity." It is kind of like a trust. You put however much money you want into the annuity for at least 5 years. The spouse not seeking Medicaid receives chunks of money each month of the term in equal installments, like a paycheck. Spousal annuities are nice because there is no limit to how much money you can spend.
The downside is that annuities are irrevocable. If your spouse dies before the term is up you do not automatically get your money back, you will still be given your monthly allotment until the time is up.
Transfer Assets to a Disabled Child
There are limits to how much money you can simply gift away in order to qualify for Medicaid. There is a penalty for any gifts of more than $285 per month. It is possible to appeal the penalty if you can show that the gift was not made in order to qualify for Medicaid. However, you can put as much money as you want into a trust for a disabled child. Tip: be aware of any potential consequences for the beneficiary of the trust.
Additional resources provided by the author
For more information see a qualified Elder Law attorney in your area.
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