Spending down Medicaid assets safely
By Hook Law Center
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.