Spend down is the term used to explain the amount of assets a person must spend before they fall within the limits for qualifying for Medicaid. What can be challenging is making sure you are properly spending down the assets so that Medicaid doesn’t give you a disqualification period, but also making sure the assets are spent in a way that best benefits the remaining family after you are gone.
The key to understanding spend down is knowing the difference between compensated and un-compensated transfers. To illustrate, if you buy a car for $30,000 and the car is valued at $30,000, this is a compensated transfer. Likewise, if you give away $20,000 to your daughter, that is an un-compensated transfer. Uncompensated transfers can cause penalties when you apply for Medicaid.
Examples of some common spend downs that benefit the family include:
- Upgrading to a new vehicle
- Remodeling the house, especially for accessibility concerns
- Paying off debt
- Pre-paying for funeral and burial expenses
Making a mistake in how you spend down your assets can cause serious complications, and make disqualify you from receiving Medicaid. Because this is so important, it is imperative to seek the guidance of a qualified elder law attorney before you begin.
