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Spending down Medicaid assets safely

By Hook Law Center

“Spending down” your assets is the term used to describe the reduction of your assets in order to qualify for Medicaid.

There are some assets that are not required to be sold or spent in order to be eligible for Medicaid. These are called noncountable assets, and they include the home, a car, household goods and furnishings, personal effects, prepaid funeral and burial expenses and cash limited to $3,000 for a couple. However, the decision to exempt certain assets is made based on the factors of each case. The Medicaid program for your state will consider the laws of your state, your marital status, living arrangements and other circumstances.

Following are some of the expenses for which it is usually permissible to spend down your money or assets. But since there are differences in each state, it is recommended that you seek advice from an estate planning attorney. When applying for Medicaid, you can spend down your assets on any legitimate debt belonging to you or your spouse. Such debts include mortgage payments, medical bills, rent, utilities, car payments, taxes and credit cards. Full or partial payments of the afore-mentioned expenses, as well as prepayments of loans, are also acceptable.

However, prepaid amounts to caregivers are disallowed for services that have not yet been rendered. Such a prepayment will be considered a gift, and will cause the applicant to be ineligible for Medicaid for a period of time. Similarly, prepayment of any expense prior to the time at which the service is rendered or the applicant receives the benefit, is also disallowed.

A Medicaid applicant can purchase noncountable assets, such as an exempt home or car if the applicant or his or her spouse will be operating the car. In addition, payments made for the maintenance or improvements of a noncountable asset, such as a home, are permitted.

Posted on Saturday, October 31st, 2015. Filed under Medicaid, Senior Law News.

How to spend down Medicaid assets (safely)

By Hook Law Center

Spending down your assets is the term used to describe the reduction of your assets in order to qualify for Medicaid. There are some assets that are not required to be sold or spent in order to be eligible for Medicaid. These are called noncountable assets, and they include the home, a car, household goods and furnishings, personal effects, prepaid funeral and burial expenses and cash limited to $3,000 for a couple. However, the decision to exempt certain assets is made based on the factors of each case. The Medicaid program for your state will consider the laws of your state, your marital status, living arrangements and other circumstances.

Here are some of the expenses for which it is permissible in most states to spend down your money or assets. When applying for Medicaid, you can spend down your assets on any legitimate debt belonging to you or your spouse. Such debts include mortgage payments, medical bills, rent, utilities, car payments, taxes and credit cards. Full or partial payments of the aforementioned expenses, as well as prepayments of loans, are also acceptable. However, since there are differences in each state, it is recommended that you inquire about the laws of your state or seek advice from an estate planning attorney.

However, prepaid amounts to caregivers are disallowed for services that have not yet been rendered. Such a prepayment will be considered a gift, and will cause the applicant to be ineligible for Medicaid for a period of time. Similarly, prepayment of any expense prior to the time at which the service is rendered or the applicant receives the benefit, is also disallowed.

A Medicaid applicant can purchase noncountable assets, such as an exempt home or car if the applicant or his or her spouse will be operating the car. In addition, payments made for the maintenance or improvements of a noncountable asset, such as a home, are permitted.

Due to drastic changes in the Medicaid program, those who are members of the middle class will also be eligible. And those who are not disabled or in long-term care facilities, will not have to spend down their assets as long as their Modified Adjusted Gross Income (MAGI) complies with income requirements.

Posted on Thursday, October 29th, 2015. Filed under Medicaid, Senior Law News.

The new reverse mortgage rules: Are they right for your retirement plan?

By Hook Law Center

The new reverse mortgage rules that became effective on Aug. 4, 2014 should allay any fears or concerns held by married couples who are contemplating taking out such loans. Reverse mortgages, which are also called Home Equity Conversion Mortgages (HECM), are home loans for those who are age 62 or older that allow them to convert the equity that they have in their home into cash. They provide a way for homeowners to receive additional income during their retirement years. The loan is required to be paid upon the death of the borrower, a change in residence of the borrower or sale of the home.

However, one complication that has arisen is that when husbands have taken out reverse mortgages, upon their death, their wives were unable to pay off the loans, and were faced with foreclosure. As a result, the U.S. Department of Housing and Urban Development (HUD) was the defendant in a class action lawsuit filed by AARP, which alleged that HUD failed to protect the women.

Under the new rules, if one spouse takes out a reverse mortgage and later dies, the surviving spouse can keep residing in the home without any apprehension about foreclosure provided that she or he pays the tax and insurance, and maintains the home. The new rules also state that a couple can still obtain a reverse mortgage where only one of the spouses is 62 or older. And the younger spouse’s age will determine the amount of the couple’s payout even in the event that that spouse is not on the mortgage title. In this way, the amount of the loan will be smaller.

Reverse mortgages are complex financial products, and if you are considering one, you should consult an attorney or trusted financial adviser.

Posted on Monday, October 19th, 2015. Filed under Estate Planning, Long-Term Care.
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