A Pittsburgh Fiduciary – Spending Down Assets to Become Medicaid Eligible
Medicaid Spend Down is a process that examines an applicant’s assets and income, and applies the Medicaid limit criteria, which varies from state to determine how much could be spent down, to be eligible for Medicare benefits, especially long-term care.
It is possible to spend down legally, but any gifting that is prohibited by Medicaid, and will result in having their application denied. Most states have a lookback of 60 months, with the exception of California, which is 30 months.
Asset Spend Down – points to consider:
• Countable Assets – Cash, bank accounts, money market, savings. 401K’s and IRA’s can be considered countable assets depending on the state.
• Non-Countable Assets – Exempt assets are the applicant’s primary home, or if a spouse lives in the home, also there is concept referred to as “intent to return home”. Each state has home equity interest limits that varies from state to state. The limits range from $636K to $955K. California is zero.
• Assets can be held in an irrevocable trust referred to as an Asset Protection Trusts.
• Approved ways to spend down: paying off debt, the purchase of medical devices, installing home modifications for medical reasons, and vehicle repairs.
• Personal Care Agreements, are typically structured with a relative or a close family friend. This agreement must be drafted properly and pay should be reasonable for the area.
Income Spend Down – points to consider:
- Some states allow for excess income to be spent on past due medical charges, prescription medications, health insurance premiums, and doctors’ appointments. This option is called the “Medically Needy Pathway”.
- Income cap states, allow for the use of Qualified Income Trusts (QITs), or Miller Trusts. The applicant can direct deposit excess funds into the QIT. The deposited funds can be used for limited purposes such as long-term care, and medical related expenses.
Medicare Spend Down limits vary depending on whether the applicant is an Individual, Marred Couple, or a Married Couple with One Applicant. Additionally, annuities that are converted into an income stream for the Medicaid applicant or their spouse is exempt. Let our experience work for you. Contact Brian Werner for a free consultation. 412-281-1470 [email protected]
WINTHROP PARTNERS is a Fee-Only Fiduciary and Wealth Advisor that provides Investment Management and Wealth Plans to individuals in Pittsburgh and Alleghany County.
Winthrop Partners l 101 East Swissvale Avenue Pittsburgh, PA 15218 l 412-281-1470 l WinthropPartners.com
Disclosures:
The views, opinions, and content presented herein are for informational purposes only. They are not intended to reflect a current or past recommendation; investment, legal, tax, or accounting advice of any kind; nor a solicitation of an offer to buy or sell any securities or investment services. Winthrop Partners does not provide tax advice or legal advice. Before taking any action, you should first consult with a tax or legal professional.
Brian Werner is a Managing Partner at Winthrop Partners. He has more than 25 years of experience in investments, financial planning, entrepreneurial ventures, corporate finance, and banking. Prior to joining Winthrop Partners, Brian was the First Vice President and a Senior Wealth Advisor for First Niagara, where he led the development of First Niagara’s Western Pennsylvania Private Client Services and served on its western Pennsylvania operating committee. He also held roles with PNC/National City, Greycourt Investment Advisors, and Linnco Future Group, Chicago Board of Trade. Brian is a Chartered Financial Analyst and Certified Financial Planner. He earned his MBA from Duquesne University, Magna Cum Laude.