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Seven Ways To Spend Down for Medicaid

Seven Ways to Spend Down for Medicaid

The Medicaid resource level for an individual senior trying to qualify for long-term care or nursing home services is $15,750.00 throughout New York State. This article will address seven ways to spend down for Medicaid.

There are numerous legal strategies that can shield and protect assets, but one of the most basic pieces of advice is to “spend down,” or reduce your resources in ways that will not impair your Medicaid eligibility.

There are many acceptable ways to dispose of assets without penalty within the window of Medicaid’s five year look-back period. There are even some that you can employ on the nursing home doorstep.

Here are seven ways to spend down for Medicaid:

For those not currently in need of nursing care:

(1)        Pay Your Family Members (legally): Ask an attorney to draft a personal services contract, whereby you pay a family member to assist you with personal maintenance, healthcare, and financial matters.  Also, if you are living in a home owned by a family member, consider executing a lease and paying the family member rent.

(2)        Make purchases for your sole benefit: Remember that spending is not treated the same way as gifting. This means you can pay for virtually any goods or services, including restaurants, vacations, electronics, etc., so long as the purchases are demonstrably for you.

(3)        Pay for private aides and home health care attendants: Community Medicaid may provide many hours per week of valuable care in your home, but you can supplement it by paying out of pocket for extra care.

For anyone, including those who are going into a nursing home:

(4)        Prepay for a funeral: Ask a funeral home about a prepaid irrevocable funeral trust. It can be a challenging topic to discuss, but purchasing prepaid funerals for yourself and/or immediate family members is an acceptable use of funds while maintaining Medicaid eligibility.

(5)        Buy things to cover basic needs: Even nursing home patients require certain personal items, like clothes, blankets, and personal effects for comfort.

(6)        Retain an attorney: Paying legal fees is a strategic way to spend down because attorneys can advise you about tools and exemptions that can protect assets in ways you may not be aware of.

(7)        Consider paying enforceable debts: If you have borrowed money from family to pay for your care or other services (and it is documented), pay them back. If you have creditors or judgments, or other enforceable debts, ask an attorney to evaluate whether it would be advantageous to pay them prior to going into a nursing home.

The most important thing to remember is that any expense you pay must be documented and traceable. Retain copies of logs, receipts, contracts, and all other documentation that demonstrate how and when you spent your money. If you have the right documentary evidence to back up your transactions, you can sail through the process of applying for Medicaid.

This is not intended to be legal advice.  You should contact an attorney for advice regarding your specific situation.  This article appeared in the Times Herald Record 55 Plus on January 2o, 2020.

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Michael Wagner is senior counsel concentrating on elder law and estate planning, wills and trusts.  He conducts several Estate Planning Seminars throughout the year.
He can be reached by phone at 866-303-9595 toll free or 845-764-9656 and by email.
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