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Blog > Medicaid Planning > Spend Down Ideas & Strategies for Medicaid Eligibility

Spend Down Ideas & Strategies for Medicaid Eligibility

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January 27, 2022 Medicaid Planning

An applicant is only allowed so many assets to qualify for Medicaid coverage but recklessly spending down your assets can lead to a lengthy penalty period or may disqualify you from Medicaid completely.

Which Assets Does Medicaid Count?

You may be wondering, what will Medicaid actually count as an “asset” for eligibility requirements?

Well, Medicaid applicants are only allowed, roughly, $2,000 worth of countable assets, but this amount will change depending on the state in which you apply. 

Medicaid's countable assets include:

  • Money in bank accounts (checking, savings, money market, etc)

  • Most annuities

  • Stocks or Investments

  • Additional homes, vehicles, land

  • Bonds

  • Mutual funds

  • Certificates of deposit

  • 401k’s and IRA’s (in most states) 

Be Careful of Transferring Money

A fast way to get rid of these assets may be transferring money to children or loved ones so it’s no longer considered your asset, however, Medicaid will penalize you greatly if you transfer these assets for less than fair market value within the past five years before your Medicaid application.

The penalty can range from a few months to many years before you’ll have the opportunity to qualify for Medicaid. And, in many cases, you or your loved ones don't have that kind of time to live on their own and care for themselves. 

Spending Down for Medicaid

There are ways you can begin to spend down your assets while still remaining eligible for Medicaid. 

Tops ways to spend down for Medicaid include:

  • Pay off debts: Pay off your credit card or loan debts

  • Update your House: house modifications and improvements are a great way to add value to your main home and also spend down assets

  • Replace Your Car: if you are driving an old car, think about either purchasing a new car or, at the very least, making repairs to your current car

  • PrePay for funeral expenses: purchase an irrevocable funeral expense trust to prepay for your future funeral expenses

  • Medical devices: any necessary medical devices that insurance does not cover are legitimate ways to spend down your assets

  • Annuities: purchasing a Medicaid compliant annuity is not only a great way to spend down assets but can also increase monthly income while receiving care

  • Hire family to provide care: if you create an agreement with family members, you can pay them for any care they provide you

  • Uncovered medical expenses: anything not covered by your health insurance may be considered as a legitimate way to spend down assets

What Assets Won’t Count Against Me?

When spending down your assets, you may come across other contracts, items or belongings that are not countable assets, or will not count against you and you will not have to spend down. 

Some of these assets include:

  • Primary home

  • One vehicle

  • Funeral and burial expenses ($15,000 or less)

  • Caregiver agreements

  • Primary residence

  • Furnishings / personal belongings

  • One car

  • Life insurance policy with a face value of $1,500 or less

  • Jewelry, weddings rings, etc

To learn about the average cost of in-home care in your area or get an estimate of how much you could save on care costs, use our free calculator. It’s easy to use and can provide great insight into your care options.

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