Again, there are exceptions to this rule. Again, this figure varies by state. Elderly individuals or married couples who are uncertain if their assets or income exceed the allowable limits may want to contact a Medicaid Planner.
When one is over the Medicaid asset limit, it becomes imperative to spend down excess, non-exempt assets in order to qualify for Medicaid. It should also be mentioned that one should not spend down non-exempt assets by purchasing other non-exempt assets. Because those newly purchased assets would still be counted. It is suggested one contact a Medicaid expert before undertaking any of the following purchases. Subtleties exist that can result in ineligibility for the program.
Home improvements include:. For example, one might put on a new muffler, fix the air conditioner, or purchase new tires. Or one could simply sell their old car and purchase a new one. However, remember that only one vehicle is an exempt asset.
Uncovered Medical Devices Examples include hearing aids, dentures, and eyeglasses. Pay Off Debt One can pay off credit card debt, their mortgage loan, their automobile loan, etc. This is a way to compensate a relative or close friend on a monthly basis in order to provide care. While this type of arrangement is most common for an adult child to care for an aging parent, other types of arrangements can be made.
Make note, the pay must be reasonable for the area in which one resides. Create a Life Care Agreement Life Care Agreements, also called Personal Care Agreements, are formal contracts between an elderly individual and, generally, a family member or close friend.
Generally, the caregiver is paid a lump sum for agreeing to care for the senior for their life expectancy. Learn more here. Purchase an Irrevocable Funeral Trust An irrevocable funeral trust is a contract between an individual and, in most cases, a funeral home.
This might include:. The amount one can put in an irrevocable funeral trust depends on the state in which one resides.
Purchase an Annuity Annuities are a way to convert non-exempt assets into a stream of income. Basically, an individual pays a lump sum of money. In exchange, they or their spouse will receive monthly payments for a set period of time or the duration of their life.
A Medicaid applicant can make any needed payments to maintain or improve a noncountable asset. An example is to make home improvements or repairs to an exempt home. Plumbing repairs, home improvement projects, repairs to a roof, installation of a new roof, landscaping, and additions to a home are all allowable expenses for an exempt home. Likewise, repairs to an automobile are allowable expenses.
Most states will allow for the pre-payment of certain funeral and burial expenses. This can be a complicated issue, however, since individual states have their own rules about what can be purchased and how much can be invested in these expenses.
Check with your individual state Medicaid program or an estate planning or elder law attorney for detailed information. When you spend a lump sum of money on an annuity for your spouse, your spouse is guaranteed a fixed income for a certain number of years. Your spouse's income is not counted toward Medicaid eligibility.
This is a great way to spend down assets if you're married. But in order for an annuity to work as a way to spend down resources, it must meet certain requirements; for example, the annuity must be nontransferable and your state's Medicaid agency must be listed as the primary beneficiary after the death of your spouse. For more information, see our article on using annuities for Medicaid long-term care planning.
Most states will allow for a Medicaid applicant to make payments for caregiving services, especially when this helps keep the applicant at home or out of a more expensive nursing facility.
This is true even when the caregiver is a child or sibling. Every state has their own set of rules that must be complied with, but usually they require the applicant to have a written agreement with the caregiver. As a general rule as mentioned earlier , keep in mind that prepayment for future caregiver services will not be allowed.
There is, however, a way to safely transfer your house to your child if the child is your caregiver who lives with you. For more information, see our article on Medicaid asset transfers. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.
The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. To qualify for Medicaid, you may have to first spend down some of your assets. Non-Countable Assets First, you should know that some assets do not have to be spent or sold to qualify for Medicaid, so these don't need to be spent down.
Permissible Expenses Spending down your money and assets on the following expenses is ordinarily acceptable by most states' Medicaid programs. If you have medical expenses that significantly reduce your usable income, you may qualify for a Medicaid spend-down. Below is a general guide to the Medicaid spend-down process.
Contact your local Medicaid office to learn if a spend-down program is available in your state, and the rules for applying.
Update your browser to view this website correctly. Update my browser now. Remember me. Your spend-down amount will be the difference between your income and the Medicaid eligibility limit, as determined by your state over a given length of time one to six months.
Some states require you to submit receipts or bills to Medicaid to show your monthly expenses. Spend-down income limits may be lower than the Medicaid income limits for people who do not have a spend-down. Each period that you have enough medical expenses to meet your spend-down, you will have Medicaid coverage.
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