How will you pay for the rising cost of long-term healthcare? It’s a crucial End-of-Life concern for any senior.
Since a vast majority of Americans do not have long-term healthcare insurance, many pay for their long-term healthcare costs out of pocket or with assistance from government programs like Medicaid. But what is Medicaid exactly?
It’s a joint federal and state entitlement program that provides medical coverage for more than 50 million children, families, pregnant women, elderly individuals and people with disabilities.
To be eligible, you must meet certain financial thresholds based on your total assets. Your state of residence will determine the amount of assets you can have and still qualify. If you have too much income to qualify, you must reduce your assets until the Medicaid limits are reached. Here is how it works.
Under “Medicaid Spend Down,” your medical expenses are subtracted from your income during a specific time period. Once your income reaches your state’s pre-determined threshold, you qualify for benefits for the remainder of the time period.
One misconception is the only way to reduce your assets is to spend them on the medical care. There are other expenditures that will reduce the value of your estate to enable eligibility – here are just a few. Remember, each state is different so consult an estate-planning lawyer before engaging in any of these spend-down methods.
Legitimate Debt – You may pay any legitimate debt like credit cards, mortgage payments, taxes, car payments, rent, utilities and the costs of home or car maintenance. If you are married, debts by you or your spouse may be paid.
Full or Partial Payments – You can pay off credit cards, mortgage loans and automobile loans partially or in full. This applies to bank loans or other loans you or your spouse are legally obligated to pay.
Pre-Payment – In the case of a mortgage, auto loan or other type of loan, you can prepay the loan off. This does not hold true in all cases however. For example, Medicaid will not allow for a caregiver to be paid in advance for caregiving services not yet rendered.
Read more about Medicaid spend down here.