There are limits to the assets you may own and still qualify to receive Medicaid in New Jersey. What those limits are depends on the type of Medicaid coverage you are seeking and your marital status. If you have more than the allowable amount of assets, you can only qualify by reducing them. Reducing your assets to be within the applicable acceptable limit is referred to as “spending down”. Many people think of spending the money on medical care or assisted living facilities as the only way to reduce there assets to the threshold amount. However, purchases of many items, so long as they are purchased for fair market value, and cannot be construed to be an investment, such as art or collectibles, are a valid way to reduce your assets.
If you are anticipating a need for Medicaid, the following are tried, true, and legal methods of spending down your assets, in a way that retains value for you or your family:
Purchase an irrevocable prepaid funeral plan.
Most funeral homes offer such plans. By doing this, not only do you save your loved ones that expense, but you also reduce the emotional burden on those who would have to make the arrangements after your passing.
Purchase a new car.
Only one car per person is exempt from the asset calculation, so if you already own a car, you would have to sell the old one for fair market value. If you give it to someone as a gift, the value of the car will be brought back into your asset value and will have to be spent down prior to becoming eligible for Medicaid.
Purchase a home, or a more expensive new home, and it will be an exempt asset.
This is a particularly good option if there is a “community” spouse (a spouse who does not require Medicaid assistance) who will continue to reside in the home even after the Medicaid recipient needs to enter into an assisted living facility. Of course, as with the new car, if a home was already owned, the old home will need to be sold at fair market value.
Make improvements to your existing home.
Spend your assets on a new roof, carpeting, heating and/or air conditioning, furniture, etc. The idea is to spend the money on items that will require repair or replacement in the future, so that no additional expenditures would be required during the lifetime of the Medicaid recipient or the community spouse.
Purchase household goods or personal effects for future use.
The theory here is that you will spend the money on things that you would buy anyway, and you can buy them while you still have the funds to do so.
The community spouse can go on a vacation.
The community spouse is often exhausted after an extended period of caring for their spouse at home. If time properly, the entire cost of the vacation can come out of the Medicaid spouse’s spend down.
Prepay outstanding loans and debts.
If you are married, this must be timed properly to maximize the amount of the spend down against the Medicaid spouse’s assets.
By utilizing some or all of the spend down options, you can reduce the waiting period for Medicaid eligibility. Of course, you can also pay for Medicaid care and assisted living care. But if you plan properly and time things right, you will be eligible much sooner.
McLaughlin & Nardi’s New Jersey elder law attorneys are here to assist you with Medicaid and Asset Protection Plans, and to help ensure the community spouse can maintain their standard of living to the extent possible. For more information e-mail us or call one of our New Jersey elder law attorneys at (973) 890-0004.