After you have calculated how much your countable assets exceed the Medicaid allowance it is time to review with counsel some of the available spend down options. Below is a summary of some options you should expect to discuss.
Purchasing Non-countable Assets
One of the most useful spend down options available for couples who rent, yet have a great deal of assets is the purchase of a home. Because a home is non-countable up to a relatively high value, and when bought in the name of the community spouse can be immune from any Medicaid lien, this purchase is one of the first options considered.
Other purchases, such as an automobile or personal belongings, may be accepted by MassHealth under certain circumstances. Factors that the application intake workers consider include 1) Whether the object has personal value, 2) The monetary value of the object, and 3) The relationship of the time of purchase to the time of application. Similarly, guidelines used by the state will look to whether the purchase was intended merely to reduce countable assets, and whether or not it was related to the applicant’s needs. An individual’s eligibility for Medicaid can often turn on these classifications.
Paying Present and Anticipated Debts
Paying past debts is generally an acceptable spend down of resources under the MassHealth regulations. Some red flags to MassHealth workers you should be aware of include disproportionate payments made by the applicant to a joint debt, whether the payment of a future debt is within a reasonable period, and whether a prepayment for personal services, e.g. by a family member to spend time caring for the applicant, is made by a formal contract.
Repairs and Improvements to Noncountable Assets
Common and acceptable uses of excess countable assets include paying for the improvement of a home or automobile. In doing so, an applicant enhances the value of his property, but doesn’t get penalized.
MassHealth will still look at whether such an expense actually provided a benefit to the applicant or his spouse. The benefit could be direct enjoyment of the property, or even to maintain its rental value for income purposes. But if it is determined that the benefit goes primarily to the beneficiaries of the applicant’s estate, the Office of Medicaid may disqualify the expenditures putting eligibility for Medicaid at risk.
Prepayment of Funeral Related Expenses
MassHealth will also allow for the prepayment of funeral and burial expenses to be treated as non-countable assets up to certain amounts. The options available for these expenses are typically 1) Burial Space for the applicant, spouse or immediate family member, 2) A separate account or life insurance policy of $1500 expressly reserved for funeral/burial services and 3) A Prepaid irrevocable burial contract/trust account designated for funeral/burial expenses.
This article has been a general review of what you can expect to discuss with your Medicaid application attorney. Because there are many details that were not covered in this overview, you should expect to do a great more planning with your counsel for the options best for you and your family in order to guarantee eligibility for Medicaid.
How an Attorney Can Help the Process
Even knowing all of the strategies that might be used in a spend down for Medicaid will not get you to the finish line. MassHealth applications are extremely detail intensive, as are the asset transfers that are necessary in the spend down process. Most estate planning attorneys don’t even have the requisite knowledge for the application process. The reason to hire a Massachusetts Medicaid attorney, then, is because they are experts in the application process, experts in the rules and procedures for qualifying asset transfers, and experts in the fair hearing process should the application be denied for whatever reason. This is why anyone with experience will agree that one of the best decisions to make before taking any action is to hire experienced counsel.
Read more about eligibility for Medicaid in part 2 of this series: “Protecting the Community Spouse.”