Going into the qualification stages for Medicaid can present a host of problems if you’re unaware of the dynamics that define the government program. One of the biggest misconceptions is the Medicaid spend down. Improperly spending down can wreak havoc and delay coverage for you or your loved ones.
In its simplest terms, Medicaid requires many assets to be used, or “spent down”, in order to cover long term care costs before an applicant is able to qualify for Medicaid coverage. But there are many gray areas, which makes it important to seek out a qualified estate planning professional who can provide clarity and guidance. Keep reading as we delve into the Medicaid spend down and what it might mean for you and your family.
The primary goal of Medicaid is to cover medical costs for low income Americans who have few assets. For those whose income is higher than the guidelines, they must apply the difference as part of the “share of costs” before Medicaid funds are used in any given month. Both the income and asset figures change annually.
Defining the Assets
Exempt and countable assets play a big role in the qualification stage. Exempt assets are those that typically aren’t part of any spend down process, such as a home. Countable assets – such as cash – are those that must be exhausted prior to Medicaid paying for any medical costs. Keep in mind that the numbers will also fluctuate between those who are married and those who are divorced or widowed. Again, an attorney with Medicaid experience is your best ally as you move through the qualification process, but generally speaking, a single person may keep investments, their home and $2,000 in cash. For those who are single and who live in a nursing care facility, they may keep $35 each month – the rest is applied towards his care.
Married couples face slightly different guidelines, depending on their arrangements. For instance, if one spouse remains at home, she may keep the home, a car and varying amounts of cash and investments, usually somewhere around $100,000. This is where proper planning can make a big difference.
Surviving the Medicaid Spend Down
It’s crucial applicants understand this prior to filing for Medicaid. In 2006, Congress opted to change the rules in order to prevent applicants from placing assets in another’s name in order to qualify for coverage, and then reversing that ownership once approval had been secured. This is commonly referred to as the 5 year look back period. It simply means the government will review your finances for the previous sixty months and if any transactions are not in compliance with the law, the applicant must apply that amount to their medical costs – “spend down” – prior to Medicaid being allowed to take over. Not only that, but there are instances where Medicaid coverage has been delayed for months – when it didn’t have to be.
Getting Legal Help with Medicaid Planning in Beverly
There are ways that allow you to maintain assets that might be at risk. You can convert some of your countable assets to an exempt status, thereby protecting them while also ensuring you leave something for those you love most. Call us today to schedule a complimentary consultation. A bit of planning today can save a lot of stumbling blocks tomorrow.
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