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.