What is the Medicaid Spend-Down?
The “Medicaid spend-down” refers to the process of reducing one’s excess countable assets in order to qualify for Medicaid benefits and obtain financial assistance to pay for long-term care, like the care received in a nursing home.
Many families are told the only way to reduce assets and qualify for Medicaid is to continue spending their money on the nursing home bill until the assets have been depleted. However, there are many other options available to spend-down assets in a way that is more advantageous to the Medicaid applicant, including protecting those assets for a healthy spouse or the children.
How to Spend-Down for Medicaid
Buy Exempt Assets: The primary residence, a vehicle, and personal property are excluded assets for Medicaid qualifying purposes. As such, you can purchase or improve exempt assets to spend-down excess funds without triggering a penalty period. This could include making improvements to the primary home, upgrading the primary vehicle, or purchasing other personal items to make the Medicaid recipient or healthy spouse more comfortable.
Pay Off Debts: If the Medicaid recipient has any outstanding debts, such as credit cards, car loans, or mortgages, this is a good time to pay those bills off. This is an allowable expenditure for Medicaid purposes, and it ensure the liability does not become the responsibility of the spouse or the next generation when the person needing care passes away.
Buy a Funeral Plan: When properly structured, an irrevocable preneed funeral plan is an exempt asset for Medicaid purposes. This includes a funeral plan for the Medicaid applicant and the applicant’s spouse. These plans set aside money that can specifically be used for funeral services and burial expenses and save the family from scrambling for funds at the time of need.
Medicaid Compliant Annuity: A Medicaid Compliant Annuity is a special tool used by Medicaid planning professional to help people qualify for Medicaid while also preserving assets for the spouse or the children. This special annuity is an insurance product that converts otherwise countable assets into an income stream. If properly implemented, it can help applicants preserve up to 100% of their excess spend-down amount.