How Does a Medicaid Spend-Down Work?
Medicaid is a federal government health care program for low-income Americans, and it is administered by individual states. Each state can set its own rules on income limits and assets, and New Jersey residents are limited to $2,523 in monthly income and $2,000 in total assets in order to qualify for Medicaid benefits. If you need to spend down your assets to qualify for the Medicaid program, it’s important to speak with an estate planning lawyer first.
What Is Included in Assets?
If you, your spouse or your elderly parent need to go to long-term care or have in-home nursing at the end of life, Medicaid coverage could offset the costs of this care. Medicaid eligibility limits individuals to $2,000 in assets and married couples who are both applicants to $3,000 in assets. Assets include rental income, money in a savings or checking account, second homes, stocks and bonds and 401(k) or other retirement accounts that are not yet payable. Assets not counted for a Medicaid spend-down include a primary residence, retirement accounts that are paying out and personal belongings, such as a wedding ring or a collection of baseball cards.
A quick way to do a Medicaid spend-down is to transfer assets to an irrevocable trust or to a family member. This is a good way for a person who is living at home and not yet receiving their retirement or Social Security benefits to do their spend-down. The irrevocable trust can become the owner of a second home, investments and cash assets. The trust administrator can be the individual who is applying for Medicaid, an attorney, or a family member or friend.
Pay Healthcare Expenses
A person who needs care in a nursing home or in their own home could use their countable assets to pay off healthcare expenses. Hospital or doctor’s bills can be paid for with cash assets in the spend-down process. If a person’s income exceeds that maximum for Medicaid eligibility, their monthly spend-down can be used for recurrent medical bills, such as prescription drugs or doctor’s office co-pays. Hearing aids, dentures, mobility aids and assistive devices can be purchased as part of the Medicaid spend-down process.
Make Home Improvements
If you need home improvements in order to stay in your home and to qualify for Medicaid, this is also an acceptable way to do your spend-down. Some home improvements you could make include removing a bathtub and having a handicap-accessible shower installed. A stairlift or ramp is also an example of acceptable home improvements for a Medicaid spend-down. You could even do a home remodeling project to make your entire house handicap-accessible.
Pay Off Debts
Paying off debts is a fast way to spend down your countable assets. Credit card, tuition and mortgage debt can be paid off with the proceeds of selling a second home, investments or cashing out a savings or checking account. You could also use your resources to pay off old medical debts, lines of credit, a car loan or any other debt you owe.
Countable assets and excess monthly income can be used in a spend-down for your routine transportation needs to get to and from your medical appointments. For example, if you need a handicap-accessible shuttle to pick you up and take you home from the doctor, dentist, ophthalmologist or other specialist twice per week, paying for these transportation services counts toward your spend-down.
If you or your loved one has assets that could disqualify you from Medicaid eligibility, it’s important to have knowledgeable counsel. To learn more about spend-down strategies for applying for Medicaid, schedule a consultation with our estate planning lawyers at The Knee Law Firm. Call our Hackensack office at (201) 996-1200. You may also visit us online to complete our contact form, and we will reach out to you as soon as possible to schedule a consultation.