Many seniors need help with daily tasks such as dressing, bathing, eating, or using the toilet. Medicare doesn’t cater to this custodian care, yet most people turn to Medicaid, the largest public payer covering long-term services. More so, it finances some assisted living facility residents.
However, many aging adults find out they don’t qualify for Medicaid since their held assets or income is too high. This is where Asset Spend Down becomes paramount.
What is Asset Spend Down
To qualify for Medicaid, the applicant must have resources or assets worth less than the specified Medicaid limit. It’s also important to note that some assets are not counted or exempted from the asset limit, so you might be over the asset limit and still be eligible for Medicaid benefits.
If you’re over the asset limit, you’ll have to spend down the assets to meet the stringent Medicaid rules. Therefore, you need to proceed with care when doing so.
Assets are categorized into countable and non-countable assets. Countable, commonly known as non-exempt assets, are included in the asset limit. These liquid assets can easily be converted into cash, for example, vacation houses, mutual funds, cash, bonds, bank accounts, certificates of deposits, and stocks.
The non-countable assets, also known as exempt assets, are not included in the asset limit. Non-countable assets include one’s home. The home equity value varies from state to state, but should not exceed the Medicaid limit.
Medicaid Spend Down
The spend-down strategy is convenient when a senior has too high of an income and doesn’t qualify for Medicaid. You must, therefore, spend down for eligibility. You can spend down money in the following ways:
- Buy a new home – A personal residence is an exempt asset not included in the asset limit.
- Pay off debts – Ensure you pay all car loans, mortgages, or other debts in full.
- Update Your Personal effects – Upgrade your personal life by buying household items or unique products like lift chairs, grab bars, long-term care beds, or power mobility for added comfort. Doing this will also enable you to avoid strict Medicaid qualifications.
How to Spend Down Assets Safely
There are myriad ways to spend down assets without violating the strict rules of Medicaid. Here are some strategies to use:
- Medicaid Exempt Annuities – Medicaid-compliant annuities convert a massive amount of money into monthly income, lowering your countable assets. The annuities can be for a certain period, and each state has its own rules. But you must proceed with caution.
- Home Modifications – You can use assets in excess to qualify for the Medicaid limit. Replace old plumbing systems, make bathrooms and bedrooms more accessible, widen doorways, and install wheelchair ramps.
- Life Care Agreements – The caregiver agreements are excellent financial strategies for spending down excess assets. These are legal contracts between an aging adult and a caregiver. The contract includes the type of care to be given and the date when services begin.
Spending down assets can be a complicated process. Before making any plans, consult with a professional for further assistance. And remember, every state has its own set of rules. Refer to the Medicaid website for further questions/concerns.