Exempt and non-exempt Medicaid spend down items

Last updated: July 22, 2019
Medicaid Long Term Care | Questions and AnswersCategory: Spend DownExempt and non-exempt Medicaid spend down items
medicaidplanner Staff asked 5 years ago

We are spending down my Mom’s assets to qualify for Medicaid. Are there things we can and cannot spend down on?

1 Answers
medicaidplanner Staff answered 5 years ago

When spending down your mom’s assets, there are things that she can and cannot “spend down” on, or said another way, spend excess assets on. This is because Medicaid has assets that are considered countable (non-exempt) and assets that are not countable (exempt) towards Medicaid’s asset limit. Examples of exempt assets are one’s primary home, given the Medicaid applicant or his / her spouse lives in the home and the equity value is under a certain amount (as of 2019, $858,000 in some states and $572,000 in other states), household furnishings, personal belongings, such as clothing, an automobile, prepaid funeral and burial expenses, sentimental items, such as engagement / wedding rings, and life insurance with a combined face value of $1,500 (generally).
Other assets are counted towards the asset limit and these include assets that are liquid, or put differently, can easily be converted to cash. These are the things that your mom cannot purchase as a means to “spend down’ her excess assets. Examples include a vacation home, a collector’s piece of art, and expensive jewelry, such as a diamond necklace. On the other hand, there are many assets that she can purchase as a means to “spend down” her assets that are over Medicaid’s asset limit. These include adding a first floor bedroom, home modifications to improve safety and accessibility, vehicle repairs, medical devices that are not covered by insurance, paying off mortgage and credit card debt, and even taking a vacation. There are also Medicaid planning strategies that can be beneficial in helping your mom “spend down” her assets and gain Medicaid eligibility. For instance, your mom can purchase an irrevocable (cannot be canceled or changed) funeral trust or an annuity (converting assets into an income stream). If your mom chooses to implement a Medicaid planning technique, it is strongly encouraged that she seek a Medicaid planner for counsel, as incorrect implementation can result in a delay or denial of benefits. It’s also important to mention that Medicaid has a look back period of 60-months in all states, but California, and in this state, the look back period is 30-months. The look back period “looks back” from the date of one’s Medicaid application date to ensure no assets were sold under market value or given away (this includes charitable donations) in order to meet the asset limit. Therefore, it is very important that your mom be careful as to not violate this rule.

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