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Articles Tagged with “medicaid planning”

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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.
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The spousal impoverishment provisions of the Medicare Catastrophic Coverage Coverage Act of 1988 changed the requirements for eligibility for Medicaid when only one spouse needs to enter a nursing home and is expected to stay in the nursing home for at least 30 days. The law’s purpose is to preserve some of the assets of the other spouse (the “at-home” spouse). The at-home spouse is permitted to retain one-half of all “countable assets” subject to a minimum of $22,728 and a maximum of $113,640 (this is called the “Community Spouse Resource Allowance”).

The couples’ assets must be analyzed prior to applying for Medicaid. This includes all assets owned by the spouses jointly or individually. The first thing to assess is which assets are countable assets under the Medicaid laws and regulations. The following assets are exempt (not countable): the marital home, personal belongings and household goods, one car or truck, income producing real estate, burial plots and related items, irrevocable prepaid funeral contracts, the value of life insurance policies where the aggregate face value of the policies is less than $1,500 (if the aggregate face value of the policies exceeds $1,500, then the cash value of the policies is countable). All other assets are countable. Examples of countable assets are: cash, savings accounts, checking accounts, certificates of deposit, U.S. Savings Bonds, IRAs, 401(k)s, 403(b)s, nursing home accounts, prepaid funeral accounts which can be cancelled, some trusts, additional cars (in excess of one), other real estate, boats, recreational vehicles, stocks, bonds, mutual funds, and mortgages held on real estate sold. The at-home spouse may retain the exempt assets and one-half of the countable assets up to $113,640. The remainder of the assets must be spent until only $2,000.00 remains.
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