There is a great deal of confusion regarding the spend down of assets for Medicaid qualification. For a single person, who can only keep $2,000 in countable assets in Massachusetts, that individual may find him or herself wondering what the money can be spent on without causing any Medicaid disqualification. Similarly, for a married couple, the rules are even more complex. The community spouse, (i.e., the at-home spouse) may generally keep roughly all of the couples assets up to a maximum of $130,380 (in 2021). Depending upon their resources, the couple may have a substantial amount of countable assets, which need to be spent-down before the nursing home spouse qualifies for Medicaid. That is often where the confusion begins because there is so much misinformation about the kinds of things the money can be spent on.
For that reason, we have put together the the following checklist to help people better understand the law…and where the money can be legally spent. For someone who is pursuing Medicaid eligibility, the following are the types of spend-down items, in no particular order, which should be considered:
- Purchase irrevocable, pre-paid funeral plans. The rules regarding funeral plans are complex so you should only deal with a funeral home that is knowledgeable in this type of planning.
- Purchase a new car. It is perfectly acceptable to purchase a new car. The community spouse may even do this and have the entire purchase price come out of the nursing home’s spend-down.
- Payment of nursing home expenses. Of course, nursing home expenses and other healthcare costs can be paid as part of a spend-down.
- Purchase of a new home. Since the home is an exempt asset, in some instances purchases of a new home make sense from a Medicaid planning standpoint.
- Make home improvements. Home improvements are often an excellent use of funds in a Medicaid spend-down. For instance, the community spouse might fix the roof, get a new air-conditioning system, new carpeting, new furniture, etc. The intention here is to fix the house up so that, hopefully, no other repairs will be needed to be done during the lifetime of either spouse. That is especially important since, in many cases, the community spouse will have to spend down to the maximum of $130.380 (in 2021) and may no longer have the resources necessary for large lump sum expenditures which may occur.
- Buy household goods or personal effects. Once again, the intention is to have the community spouse purchase these types of things which are needed to keep the household running without major expenditures down the road.
- Debt repayment. It is common to pay off debts as a way to spend down assets. If the community spouse is over assets, as of the date of MassHealth applicant needs coverage as of, then any payment of debt is limited to Medical expenses incurred within 90 days and a pre-need funeral contract. In other words, it can be disastrous to pay down a debt improperly.
- Vacation. This can be a good idea for the community spouse at a time when there has been a long struggle to keep a loved one at home. The community spouse may be exhausted and a well-deserved vacation could be rejuvenating. Believe it or not, the entire cost of that vacation can come out of the nursing home spouse’s spend-down.
These are, of course, not the only appropriate items for a spend-down. There are other expenses which would also qualify. Which of those options for spend-down are appropriate for your family should be a discussion had with an elder law attorney who is experienced in knowledge with the complex MassHealth regulations.
The main rule to keep in mind is that whatever goods or services that are purchased must be done at fair market value and must be for the benefit of the applicant or applicant’s spouse. Finally, keep in mind that while some of these spend-down strategies will not work as well for a single person applying for Medicaid, there are other types of strategies that can work equally as well.
As always, consult an experienced elder law attorney for guidance.
©Surprenant & Beneski, P.C. 35 Arnold Street, New Bedford, MA 02740, 336 South Street, Hyannis MA 02601 and 45 Bristol Drive, Easton, MA 02375. This article is for illustration purposes only. This handout does not constitute legal advice. There is no attorney/client relationship created with Surprenant & Beneski, P.C. by this article. DO NOT make decisions based upon information in this handout. Every family is unique and legal advice can only be given after an individual consultation with an elder law attorney. Any decisions made without proper legal advice may cause significant legal and financial problems