Spend Down to Medicaid Eligibility
When your loved one gets sick and requires full-time skilled care, a nursing home could be the best solution. Skilled care is expensive, however, and you may find that your limited resources are not enough to cover the nursing home costs and your other expenses. You must qualify for government Medicaid benefits, a safety net program with low income and asset thresholds for eligibility. Since the Medicaid program is the payer of last resort, you must meet stringent spend-down requirements. Properly spend down assets to the eligibility levels to qualify for government Medicaid benefits.
Instructions
1. Total the value of your countable assets (resources). Countable assets are items such as checking and savings accounts, IRAs, 401ks, brokerage accounts, second vehicles, cash value life insurance (with some exceptions), certain real estate, oil and gas interests, and other liquid assets.
2. Convert countable resources into non-countable resources for Medicaid eligibility purposes. For example, purchase pre-need irrevocable funeral contracts or buy a burial plot.
3. Pay off all debts to reduce liquid cash and assets to below $2,000, the federal Supplemental Security Income resource standard limit. Pay outstanding medical bills and nursing home bills first. If you have assets remaining, pay any consumer debts for which the applicant is legally responsible.
4. Make reasonable repairs to your homestead. Reasonable repairs include fixing a leaky roof or replacing flooring. Expansions to the home are generally considered unreasonable, however making a homestead wheelchair accessible may be approved.
5. Prepay up to one year of property taxes, car insurance and other upcoming known expenses (as allowed by your state Medicaid rules).
6. Purchase a new vehicle to replace an old car. One automobile is exempt if the nursing home applicant is married and the spouse lives at home. If the nursing home resident is single, the applicant may have one automobile with a value of up to $4,500, or a vehicle of unlimited value if it is medically equipped to transport the applicant.
Tips Warnings
The Medicaid program is a joint federal and state program and each state's rules may vary in their spend-down rules. Your state appoints a governmental entity to establish and enforce that state's particular Medicaid rules within the federal framework.
Consult an experienced Medicaid lawyer in your state to help advise you on the qualification rules. Generally, the Medicaid rules and regulations are convoluted and often policy interpretations may change weekly. Consider hiring an elder law attorney who emphasizes Medicaid planning as part of his/her practice.
If you give your assets away improperly it may result in a penalty.
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