How Do You Spend Down Assets for Medicaid?

November 28, 2022

Many seniors need elder care, whether in a nursing home, community, or in-home. Medicaid is a needs-based insurance program that assists older adults who cannot afford healthcare coverage. To qualify for Medicaid care benefits, an individual should meet certain assets and state income guidelines. 

Your eligibility for Medicaid significantly depends on your income. If you have more income than what is allowed by the program, you are not eligible for Medicaid. 

Many people want to qualify for Medicaid, but their income exceeds the Medicaid limit. Luckily, even with high income and many assets, one can still qualify for Medicaid benefits, provided their medical expenses are high. However, for this reason, they may need to "spend down" their net worth and assets to qualify for the program.

On average, married couples in Indiana can save up to 100% of their income and assets and still get long-term care benefits for their disabled spouses. For singles who have not completed estate planning, families can save no less than 50% of their elderly parent's property while obtaining elderly care benefits. With the help of an Indiana Medicaid planning attorney, you can even save more. 

What Expenses Qualify for a Medicaid Spend-Down?

Your Medicaid planning attorney will evaluate your finances and provide a strategy to protect your property and obtain long-term care benefits. If you are in an asset and income spend-down mode, you must track all your expenses and bills. The goal is to ensure the surplus income is "spent down" to cater to qualifying costs and bills. The spend-down for a single individual's Medicaid plan can entail the following: 

  • Paying car loans, credit card debt, or a mortgage
  • Purchasing a new home
  • Remodeling your existing home
  • Prepaying burial or funeral expenses
  • Buying a new car to replace an older one
  • Spending on in-home caregiver services
  • Buying personal or household items like clothing and furniture
  • Spending on medical devices not covered by Medicaid or Medicare.

Other expenses that can be counted to meet the spend down include health insurance premiums, prescription costs, doctor visits, and other medical expenses. You can also count balances from previous medical bills.

You cannot give your property to family members or friends to get around the qualifying limits. However, the ACA (American Council on Aging) offers a lot of information about everything seniors facing long-term care struggle with. In addition, the council provides Indiana asset limits that help older adults seeking to understand Medicaid's eligibility requirements.

How the Spend Down Works

You will qualify for Medicaid after your medical bills exceed your spend-down amount. The spend-down is the amount of your income above the Medicaid income limit. As soon as your medical costs exceed your "spend down," you can apply for Medicaid to cover the rest of the medical expenses.

Although you will be responsible for the bills you owe, you do not have to pay the total spend down amount to qualify for Medicaid. You can make plans to pay your old medical bills, while the bills above the spend down are paid by Medicaid. However, you cannot account for the same old medical bill monthly to meet the spend-down.

In this case, you need to track your expenses and be ready to show them to the caseworker to prove eligibility. Although you will not be required to prove eligibility monthly, you must be prepared to provide your current and old medical expenses to the caseworker.

Medicaid's Approach

In most cases, Medicaid is the payer of last resort. It is the entity that pays after all other alternatives have been sought for payment. You can obtain the program's benefits if you meet the eligibility requirement.

There are several requirements to achieve eligibility for Medicaid for all or some nursing home charges. In Indiana, the waiver program can offer assisted or home-based care benefits. If your parent is in a nursing home, the state requires the applicant to attain a level of care referred to as "skilled nursing care." The applicant should be in a Medicaid-eligible bed.

Each long-term care home can only have a specific number of Medicaid beds. Therefore, if it already has its allocation of beds, you will not obtain Medicaid benefits while at that facility. Luckily, Southern Indiana is full of many nursing homes with experienced staff.

Generally, Medicaid requires nursing home residents and their spouses to pay for long-term care before seeking assistance from the taxpayers. Unless you know how to leverage these rules, you will not get help from Medicaid. The last thing you want is to work your whole life, pay your taxes, save for retirement and drain your assets in a nursing home before getting approved by Medicaid. While federal laws cannot advocate for such an outcome, the state can enforce customs that can cause your family to spend life savings in the nursing home.

Choose the Right Medicaid Planning Lawyer

If you or your parent requires financial or long-term healthcare planning, an Indiana Medicaid planning lawyer can help. The lawyer will offer solutions to maintain your family's assets and manage your long-term care needs. Then, when needs are attended to, you can stay focused on what matters most; enjoying life.

When it is time to get into a nursing home, you need to ensure you safeguard as many of your assets as possible. You can achieve this by adhering to the correct rules with the help of a Medicaid planning attorney.

Get in Touch with Our Indiana Medicaid Planning Attorneys

Do you want to discover more about how to spend down income and assets for Medicaid? The attorneys at Applegate & Dillman Elder Law are glad to assist. We understand the obstacles and challenges older adults face during long-term care. For this reason, we strive to offer the support needed to meet Medicaid's eligibility requirements. Contact us to schedule a consultation today.

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