The rules of Medicaid are complex rules that can be difficult to navigate. One of the biggest questions seniors in North Carolina have in regards to the Greensboro, NC Medicaid program is the spend-down of assets. In North Carolina, a single person (unmarried) can only keep $2000 worth of countable assets.
For a married couple, the rules are even more complicated. Most older adults begin thinking about qualifying for Medicaid when one member of the couple is in nursing home care and the other member is living in the community.
Qualifying for Medicaid
To qualify for Medicaid to help reign in a nursing home, and long term in NC, the rules are very strict about what income and assets can be available. Many seniors are faced with the problem of having too many assets to qualify for Medicaid but not enough assets to support both the nursing home spouse and the community spouse.
Medicaid would like you to spend all of your assets first before they provide coverage. Unfortunately, spending all of your assets first can leave the community spouse with nothing left to live on.
Spending down assets is the answer to qualify for Medicaid but there is a lot of misconceptions about where and how the money can be spent to qualify for Medicaid. The wrong spending can disqualify the nursing home spouse from receiving any aid.
If you are currently pursuing Medicaid qualification there are places you can spend your money without penalty or risk of being disqualified from the program.
What Can the Community Spouse Keep?
Medicaid has certain guidelines in place that allow the community spouse to keep up to $3,160.50 in income each month, which is not counted toward qualifying for Medicaid. The family home and the property it is built on are exempt from the Medicaid rules of assets while the community spouse lives in it.
Assets that are counted include:
- Any cash on hand
- Savings accounts, checking accounts, retirement accounts (IRA, 401K’s unless they are currently paying out).
- Stocks, bonds, CD’s, Mutual Funds
- Vacation homes and other properties that are not “primary residences”
Assets that are NOT counted include:
- Primary residence, however, if he nursing home spouse plans on returning to the home, equity value may be assessed.
- Burial or pre-paid funeral expenses
- One vehicle of any value
- Life insurance policies
- Household goods, electronics, appliances
- Engagement rings and other jewelry, heirlooms
Where Can You Legally Spend Your Money
There is a range of financial moves that you can make that will reduce the number of assets that you have without being penalized by the Medicaid program. In North Carolina, a community spouse (that is the spouse that is NOT in the nursing home) can keep up to one-half of the couple’s assets as long as they are within a set limit.
That means the community spouse will have to spend down the couple’s assets until they reach the magic number of $126,420 (as of 2019). Here is a list of how you can spend down your assets:
- Pre-paid funeral plans can be purchased for both spouses without penalty.
- Buy a new vehicle. The community spouse has the right to purchase a new car and can use the purchase price to come out of the nursing home spouses spend down, but you cannot have more than one vehicle.
- Health care costs can come out of the spend down.
- Purchasing a new home can also be a way to qualify for Medicaid since the family occupied home is exempt.
- Home improvements are a great way to use funds in a Medicaid spend-down. Improving your home adds value to the home, and makes the home more comfortable. The goal is to get the house in the best possible condition so that no repairs will have to be made in the future. Big-ticket purchases like new HVAC systems, a new roof, and other home improvements will ensure that the community spouse does not have to worry about big-ticket repairs in the future.
- Buy household goods and personal items that will help to support the community spouse once the spend down is done. The goal is to keep major expenses down after the spend down because resources may be limited.
- Debt repayment can be tricky. Debts should only be repaid after the Medicaid financial snapshot not before. If the debt is repaid too soon than only half of the debt would go against the assets of the nursing home spouse and one half against the community spouse. Timing is everything with repaying large debts.
- Take a vacation. This may seem like frivolous spending but the entire cost of the vacation can come out of the nursing home spouse’s spend-down. A vacation can be a very much needed break for the community spouse.
- Pre-pay for senior care for the community spouse. You can enter into a contract with a family member or an agency as you see fit to pre-pay for senior care.
There are other purchases that you can make that will help you to reach that limit. One of the biggest misconceptions is that every dollar spent has to benefit the nursing home spouse. This is not true. Anything that benefits the community spouse benefits the nursing home spouse, and there is no law that says the money has to be spent on the nursing home spouse solely.
What You Cannot Do Under Spend Down Rules
There are some things you must avoid when you are trying to spend down your assets to qualify for Medicaid. Medicaid does a “lookback period”. For example, you give a portion of your money to family members over the last 5 years to spend down some of your assets. Medicaid looks back over the last 5 years to see if you have been transferring assets. They will penalize you for those gifts. They do not look back beyond 5 years.
You also have to be sure that you are paying fair market value for the things you are purchasing. For example, you buy a 1998 Chevy Tahoe from your grandson for $30,000. That purchase is not likely going to be accepted, it is going to get a second look by the Medicaid examiner.
One of the best ways to be well-prepared is to have a plan in place. While no one can see the future, it is important to plan ahead for potential long term care needs. Consulting with a trusted Greensboro, NC attorney that specializes in Elder Law can help you to plan ahead and learn more about Medicaid, managing your assets, and making the right choices for you and your spouse. Contact our office today to get the help you need navigating Medicaid and other senior legal questions.