Benefit programs like Medicaid often include strict requirements and rules. To qualify for Medicaid, for example, an applicant must show a financial need by staying below Medicaid’s income and resource limits. However, some people need Medicaid benefits but exceed the amounts Medicaid allows. In this article, we will look at those limits, and, more importantly, how to spend-down your assets and monthly income to meet them.
Medicaid Limits on Income and Resources
A nursing home resident typically can possess no more than $2,000 in resources as of the first day of the month.
However, Medicaid does not count all of your assets and income. Some resources might be considered as countable, including cash, real estate, and one automobile per household. The status of some assets may change in certain situations. For example, real estate held as a life estate or that is on the market may not be counted.
It’s to your benefit to consult with an experienced attorney before applying for Medicaid or attempting any sort of spend-down activities.
Planning a Spend-Down
After learning you may not qualify for Medicaid because of income and asset limits, you may want to plan a spend-down of your assets. But how exactly do you go about doing this? Here are some important considerations:
- Where are you living?
- Are you married or single?
- What is the source of your income?
- What type of assets do you have?
The answers to these questions may make a difference in how you spend proceed. Make sure your lawyer has all the information needed to advise you about spending down your assets.
Actions That Spend-Down Your Assets and Monthly Income
After carefully assessing your resources compared to Medicaid’s requirements, you may start taking some of the following steps:
- Pay your medical bills. Certain medical bills can be paid to reduce your countable cash assets. In addition to your own, you may be able to pay medical bills for your spouse and your children. You can pay past and current medical expenses, which may include transportation costs, therapists, personal care attendants, home health aides, rehabilitation programs, prescription drugs, and medical equipment ordered by a doctor.
- Pay off other debts. You may be eligible to use excess income to reduce mortgage, auto loan, and credit card balances.
- Sell certain assets. In some situations, countable assets may be sold to pay off medical bills and debts to reduce a recipient’s resources.
- Set up a Miller Trust. Excess monthly income can be diverted to a Miller Trust to stay below Medicaid’s monthly income and resource limits. Funds in the Miller Trust can be used for eligible expenses.
Keep in mind that transferring, selling, or spending assets may result in reductions or delays in benefits.
Spend-Down Your Assets and Monthly Income Wisely
The rules are complicated. Always speak with an experienced attorney before trying any kind of spend-down strategies.
The attorneys at Miller Estate and Elder Law help clients like you with Medicaid planning and applying for benefits. Contact Bill Miller at 256-251-2137 to schedule an appointment.