How to spend down Medicaid assets (safely)
By Hook Law Center
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.