[responsive_vid] Spend down is the process/method a Michigan Medicaid nursing home applicant becomes financially eligible for assistance. An applicant may have $2,000 in “countable” assets. We might say there are two categories of assets for Medicaid: Exempt or “Excluded Assets” and “Countable Assets.” There are other asset rules such as the “community spouse” allowance, rules for treatment of joint property, business assets and “unavailable assets.” These later rules deal with whether any particular asset will be countable and subject to spend down or not.
Excluded or exempt assets are not subject to spend down and include:
A residence where the applicant has lived, value limited to $536,000 unless spouse lives there then no limit;
A motor vehicle, no stated limit;
$1,500 in face value life insurance and funeral preparations;
Prepaid funeral, limited to approximately $11,700 if paid for by cash and $9,400 if paid for by life insurance;
Burial space including cemetery plots.
“Countable assets” includes any other asset that may be reduced to cash and used for spend down. This category includes:
A. Money in:
1. Cash, savings and checking accounts, credit union share and draft accounts
2. Certificates of deposit
3. U.S. Savings Bonds
4. Individual retirement accounts (IRA), Keogh plans, (401Ks, 403Bs)
5. Nursing home trust funds
6. Prepaid funeral contracts which can be canceled
7. Trusts (depending on the terms of the trust)
B. It also includes non-cash assets that could be sold. These include equity in:
8. Real estate
9. second motor vehicle, boats or recreational vehicles
10. Stocks, bonds and mutual funds
11. Land contracts or mortgages held on real estate sold
Spend down does not mean that all the money goes to the nursing home. As a broad rule of thumb, the applicant may spend on things for himself or his property. For example, he may pay for clothing and a funeral for himself . Or he may pay for repairs or improvements to his home. He may repair his car or buy a new car. All of these purchases will be reviewed by the Medicaid office and so prudence must be exercised.
An applicant may also spend down by transfer of countable assets to a spouse or disabled child.
There are many strategies that maximize savings by planned spend down such as divestment of assets combined with a Medicaid annuity.
The best plan for strategic spend down that results in the maximum of savings is to hire an experienced elder law attorney.
Got a Michigan Medicaid problem? Just give me a call and let’s get started,
Jim