Medicaid has strict asset rules that compel many applicants to “spend down” their assets before they can qualify for coverage. It is important to know what you can spend your money on without endangering Medicaid eligibility.
In order to be eligible for Medicaid, applicants must have no more than $2,000 in “countable” assets (the dollar figure may be slightly more, depending on the state). In addition, Medicaid also has strict asset transfer rules. If an applicant transfers assets for less than fair market value, the applicant will have to endure a penalty period, during which he or she will be ineligible for Medicaid. Applicants for Medicaid and their spouses may protect savings by spending them on non-countable assets.
A Medicaid applicant can spend down money on anything that would benefit the applicant. Following are examples of what a Medicaid applicant may be able to spend money on:
- Make repairs to a home. Generally, a homestead is an exempt asset and does not count against you for the purpose of Medicaid qualification. If you already own a home, you can spend money to fix the roof, make the house handicapped accessible, buy new carpet, etc.
- Replace an old automobile. An automobile is an exempt asset and does not count against you for the purpose of Medicaid qualification.
- Prepay funeral expenses. An irrevocable, pre-need burial contract allows you to purchase funeral goods and services before you die without the value of such goods services counting against you for the purpose of Medicaid qualification.
- Medical care and equipment. Purchase items that aren’t covered by Medicare or Medicaid. See a dentist or get your eyes checked if those items aren’t covered by your insurance.
- Pay for more care at home. Make sure you use a home health care agency if you live in Texas as paying family members to provide personal care will result in a penalty period during which an applicant will be ineligible for Medicaid. If you live out of state you should seek the advice of an elder care attorney in your domicile state before hiring a family member as a caregiver as this may result in a Medicaid penalty period.
- Pay off a mortgage, car loan, or credit card debts. You can pay off the debt fully or make partial payment.
- Update your personal effects. Buy household goods or personal comfort objects. Buy a new wardrobe, electronics, or furniture.
Each state has different requirements for Medicaid eligibility. Before taking any action, consult with the elder law team at JHS.