Selling a car to a “Cash for Cars” company for quick and easy sales

Yes, selling one’s car to a business that offers quick vehicle purchases could potentially jeopardize one’s eligibility for long-term care Medicaid. 
 
First, Medicaid has an asset limit, which in the majority of states, is $2,000. One car, used for transportation by either the Medicaid applicant / beneficiary or someone in the same household, is generally exempt from this asset limit. This means that Medicaid does not count the car’s value towards the state-specific asset limit. However, if one sells their car, the proceeds from the sale could cause them to be denied Medicaid eligibility or to lose their Medicaid benefits. While not considered income, Medicaid will consider any proceeds from the sale that remain the month after receipt as countable assets. This could push one over Medicaid’s asset limit, and if one is over the limit, they are ineligible for Medicaid. 
 
Furthermore, one must be cautious when deciding how to spend the proceeds from selling a car. Gifting assets, such as cash, is a violation of Medicaid’s Look-Back Period, which in most states is 60-months immediately preceding one’s long-term care Medicaid application. During this period, Medicaid looks for “disqualifying transfers”, or in other words, assets that were transferred for under fair market value. Gifting cash is considered a violation of Medicaid’s “look back” and one will be penalized with a period of Medicaid ineligibility. Even after one is a Medicaid beneficiary, they can be penalized for making a “disqualifying transfer”. Therefore, it is imperative that one not sell their car and give away the proceeds. Learn how one can “spend down” extra assets (i.e., cash) without violating the Look-Back Period. 
 
Another piece of this puzzle is how much Carmax, Carvana or another “quick buy” business, or even a private buyer, pays for one’s vehicle. Selling a car for under fair market value (FMV) also jeopardizes one’s Medicaid eligibility. FMV is the amount the car would normally sell for on the open market. The amount for which a car is “under sold” is considered a gift by Medicaid. So say a car’s fair market value is $12,000 and the owner accepts an offer of $9,500. Since the car is worth $12,000 on the open market, Medicaid considers $2,500 to be a “gift”. This violates Medicaid’s Look-Back Rule and can result in a Penalty Period of Medicaid ineligibility. While it is thought that Carmax and many similar “buy quick” businesses do offer fair market value, it is vital that one confirm it is indeed fair market value prior to accepting an offer.