New York Estate Planning & Elder Law Blog
Medicaid is an important needs-based program to help pay for the vital healthcare of millions of at risk people in this country. In fact, many older Americans plan on using some part of Medicaid to pay for nursing home or in-home nursing care later on in life only to find out they do not qualify for the program because they own too many assets.
Fortunately, with a little forward thinking and estate planning, these individuals can spend down their assets to qualify for Medicaid and avoid possible look back penalties, if applicable. In fact, you may already be working on some of these types of thing already and never knew they would help you qualify for Medicaid.
Paying off debt
Paying off debts is one of the quickest and easiest ways to spend down cash assets and help qualify for Medicaid. Common types of debt folks can pay off right away to reduce assets include mortgages, car payments, utilities, medical bills, and taxes.
Almost anything an individual and his or her spouse is legally obligated to pay can be taken care of to reduce assets without any look back penalties. However, prospective applicants cannot pre-pay for many types of services, including utilities and in-home nursing care and have this count as a reduction of assets.
Buying non-countable assets
Certain items like homes, cars, and personal effects are not taken into consideration for Medicaid benefits. As a result, individuals can purchase new homes, cars, and other effects to reduce the size of bank accounts, possibly with the intention of of leaving the estate to heirs and other beneficiaries.
Furthermore, you may be allowed to make repairs or additions to homes and other non-countable assets as a way to spend down your bank account. This can include landscaping, installing a new roof, or putting in new plumbing. So long as the payments go to maintaining or improving a property, these should be safe ways to spend down assets.
It is important to not these assets can only be used by the individual or the spouse. Purchasing these types of assets for other family members or persons will likely count as a gift and be subject to a penalty during a look back period.
Pre-paid funeral services
One type of pre-paid service prospective Medicaid applicants and sign up for without a penalty is pre-paid funeral services. Although it may be difficult to plan for our own deaths, the truth is it can save a lot of time and money from an estate that would be better allocated to loved ones.