Senior citizens have to meet the eligibility requirements for Medicaid to qualify. They must need care and have limited assets and income. The specific limits that your loved one might have will depend on his or her state and marital status. If your loved one otherwise qualifies for Medicaid other than his or her assets or income, he or she may still be able to receive it through a spend-down. The professionals at Elder Care Direction can explain spend-down and help you to plan so that your loved one might qualify for Medicaid to pay for long-term care.
What is spend-down?
Spend-down is a program that allows otherwise eligible people to spend down the amount of income or assets that exceed their states’ Medicaid eligibility requirements. The excess income can be spent on medical bills each month, and Medicaid will kick in once the limit is reached. Assets may also need to be sent to reach the limits, but not all assets count.
Different states have countable asset limits as well as exempt assets. The exempt assets are not counted towards the asset limit. In general, most states let single applicants for Medicaid to keep up to $2,000 in countable assets. If a married couple is applying, they are able to keep $3,000. Couples who have only one spouse applying for assets have different rules. The applicant will be able to keep $2,000 while the other spouse will be able to keep up to $120,900 in countable assets. It is important to check with your own state to find out what the countable assets limits are.
Calculating the amount of spend down
There are exceptions to the general rule of $2,000 in assets for individuals and $3,000 for married applicants who are both applying. Some states have lower limits while others have higher limits. The states also vary in the asset limits for married couples who have only one spousal Medicaid applicant. Elder Care Direction can help to explain the limits of your loved one’s state. There are also different special rules that apply.
50 percent rule states
Some states have a special rule in which the non-applicant spouses are able to keep up to half of the combined assets of the couple to a maximum of $120,900. If the combined assets are less than $24,180, the community spouse will be able to keep everything. This is in addition to the amount the applicant spouse is able to retain.
100 percent rule states
Some states allow the healthy spouse to keep as much as 100 percent of the combined assets of the couple in addition to the $2,000 kept by the applicant spouse up to the maximum of $120,900.
100 percent special rule states
Two states, including South Carolina and Illinois, set different maximum amounts but allow the healthy spouse to keep up to 100 percent of the assets in addition to the $2,000 retained by the applicant spouse. Illinois sets a maximum of $109,560, and South Carolina has a maximum of $66,480.
Spend down strategies
If your loved one has too many assets, it is important for him or her to spend down the assets that exceed the limit so that he or she can get Medicaid. If the assets are given away, they will be subject to the five-year look-back period. If they were given away within those five years, your loved one will not be eligible for Medicaid for a specific amount of time. Non-exempt assets also should not be spent to purchase more non-exempt assets because assets that are newly purchased will be counted. Some common ways that people spend down their excess assets are detailed below, but it is important to talk to a professional before making purchases so that your loved one will not become ineligible for Medicaid.
Your loved one’s primary home is not countable. Some people make home improvements to spend down their excess assets.
Vehicle purchase or repair
Your loved one’s vehicle is exempt. Some people spend down their excess by paying for repairs. Others sell the old vehicle and buy a new one, but they should understand that only one vehicle will be considered to be exempt.
Some people buy uncovered medical devices such as eyeglasses, dentures and hearing aids to spend down their excess.
If your loved one has debt, he or she can pay the debts off to spend down his or her excess.
Hire family members as caregivers
Older adults can form family caregiver contracts as a way to pay a relative to provide care. The pay has to be reasonable for where your loved one lives, and the care must be actually provided. Your loved one may also draft a life care agreement under which the caregiver is paid a lump sum to provide care for him or her for his or her life expectancy.
Irrevocable funeral trust
Your loved one can buy an irrevocable funeral trust with a funeral home. The money that is placed in the trust for the funeral and burial services will not count.
People can pay a lump sum to an annuity and then receive monthly payments up to the remainder of their lives.
Cancel life insurance
Life insurance policies that have cash values of more than $1,500 are countable assets. They can either be canceled, or the amount can be decreased to $1,500 or less. IF this is done, the additional cash value will be given to the policy owner and will need to be spent.
Contact Elder Care Direction
Your loved one won’t be automatically denied for Medicaid if he or she is over the limits. It is important for you to talk to one of the professionals at Elder Care Direction for help with navigating spend down. Call us today to schedule your consultation.