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The Medicaid Spend Down: Do’s and Don’ts

If you were surprised by the news that you or a loved one has to enter a long-term care facility such as a nursing home, you need to get on Medicaid right away. Medicaid can step in and pay for the majority of the expenses associated with long-term care, which can be very significant. In order to qualify for Medicaid, however, your total amount of assets and income must be below their thresholds.

Those who took long-term Medicaid planning steps in the past will likely have their finances set up in such a way as to ensure they can qualify for this program without trouble. If you haven’t taken these steps, however, you will need to engage in what is known as a Medicaid Planning. This is a process where you legally reposition your assets to reduce those assets to a level to qualify for Medicaid, which protects you from having to pay for the full cost of long-term care until your money is gone. The following are some key do’s and don’ts of how to perform your Medicaid spend down.

What You Should Do

There are quite a few ways that you can either spend, or reposition, your assets to ensure they don’t count toward the Medicaid threshold. Some of the most common things that you can do include the following:

  • Purchasing Assets – Certain assets are considered “non-countable” when it comes to qualifying for Medicaid. These major purchases include vehicles, furniture, appliances, and more. If you need these items anyway, now may be the perfect time to make these big purchases.
  • Paying Ahead on Bills – If you have too much cash in your liquid accounts to qualify for Medicaid, you can pay ahead on your bills. If you have a mortgage, consider making several principal payments. The same can be done for automobiles. Even paying a few months ahead on gas, electric, and other monthly bills can be helpful.
  • Set Up Monthly Payments – If you have any type of debt, including medical debt, you can set up monthly payment arrangements to reduce your monthly available income levels.

What You Shouldn’t Do

The above mentioned items are great ways to spend down and qualify for Medicaid. The following options, however, may seem smart but are actually prohibited by Medicaid and can cause you lots of financial problems.

  • Take No Action – Some people just assume they will have to pay the long-term care facility each month until their assets are below the cutoff from Medicaid. This is absolutely not the case and can cause you to burn through tens of thousands of dollars unnecessarily.
  • Give Your Money Away – One of the most tempting options is to just give money to loved ones. People often think of this as a pre-inheritance, but Medicaid will see it as potentially fraudulent activity.
  • Add to an IRA – IRAs can be a great investment option for many people in many situations. You can’t, however, put money into IRA and hope that Medicaid won’t require you spend it. IRAs, and most other retirement accounts, are considered countable assets by Medicaid.

Don’t Face This Alone

Performing a Medicaid spend down is something that needs to happen quickly, but also carefully. People who try to do it on their own often end up losing thousands of dollars through mistakes or delays. We can help maximize your savings and get you the care you need. Contact us to speak with us or to set up a free consultation.