Follow Kara Linkedin Twitter Facebook
Email Kara Email
Legal Issues
Jun 19, 2018

The Low-Down on the Medicaid Spend-Down

Sponsored Content provided by Kara Gansmann - Attorney, Cranfill Sumner & Hartzog LLP

When a person is facing the prospect of paying for long-term care, that person may eventually turn to Medicaid to cover those costs after running out of money. 
 
Medicaid is correctly understood as a payor of last resort. Generally, this means that the ability to collect from other sources like long-term care insurance, veterans benefits, and a patient’s personal monthly income are exhausted before Medicaid will cover long-term care costs. 
 
To qualify for Medicaid, a person must generally be medically eligible and financially eligible by having only $2,000 in assets. For married couples, an at-home spouse (“Community Spouse”) may retain additional assets.
 
Even when couples and individuals have adequately planned for long-term care before turning to Medicaid, many families are faced with the prospect of having to spend down money in order to qualify. However, a lot of families have questions on how that money can be spent. 
 
During a Medicaid spend-down, individuals and couples may consider spending money on these items:

  • Updating the home. Medicaid applicants may permissibly spend money by repairing and updating the home for the Community Spouse. The concept here is to fix the house so that, hopefully, no other home repairs are needed during the lifetime of either spouse. This is important because, in many cases, after a spend-down, the Community Spouse may no longer have available resources for large, unexpected, future expenditures.
  • A new vehicle. Use caution if purchasing a new luxury vehicle, however.
  • Pre-paid irrevocable funeral plans.
  • Medical care and nursing home care for either spouse.
  • Household goods or personal effects for either spouse. The Community Spouse may purchase items necessary to keep the household running without future, major expenditures. These same personal items could be purchased for an Institutionalized Spouse’s needs in a facility like a television or extra clothing.
  • Debt repayment. The key here is to make sure that the debts are repaid only after the Medicaid snapshot date has been established. 
There are other expenses that would also qualify as part of a legitimate spend-down. Ideally, whatever goods or services are purchased must be for fair market value to avoid the appearance of a gift, which could be penalized by Medicaid.
 
Significantly, the timing of a Medicaid spend-down can be critical in determining how much a spouse can keep. Where families might consult a CPA for tax preparation advice or a financial planner for investment advice, when preparing for long-term care, families should seek help from an attorney who has significant experience with Medicaid laws. 

Kara Gansmann is an attorney in the Wilmington office of Cranfill Sumner & Hartzog LLP, where her practice encompasses elder law and estate planning. Kara advises individuals and families with estate planning needs and asset protection tactics. In this role, she strategizes with clients to preserve assets for long-term care and to leave legacy gifts to family members. Kara works with elderly clients in need of Medicaid crisis planning and Medicaid applications. As part of her practice, Kara drafts wills, trusts and powers of attorney. In the courtroom, Kara represents clients in the administration of estates, guardianship/incompetency proceedings, and guardianship administration. Kara also litigates estate and trust matters, including will caveats, the modification or termination of trusts, and litigation arising from estate documents or fiduciary roles. She is a member of the North Carolina Bar Association Elder Law and Special Needs Section and serves as co-chair of the CLE Committee for that section.  Kara also serves as a liaison between the North Carolina Bar Association Elder Law and Special Needs Section and the North Carolina Bar Association Estate Planning and Fiduciary Law Section.   

Other Posts from Kara Gansmann

Wbj insights revised 0510 121615113531
Ico insights

INSIGHTS

SPONSORS' CONTENT
Lynnwhitesellheadshot

Executive Coaching: Helping Successful Leaders Become More Successful

Lynn Whitesell - Harris Whitesell Consulting
Alycephillipsnew2

Don’t Overlook Those Harder-To-Sell Assets When Making An Estate Plan

Alyce Phillips - Old North State Trust LLC
Dave sweyer 300 x 300

Is It Time To Adjust The Rental Rate On Your Investment Property?

Dave Sweyer - Sweyer Property Management

Trending News

N. Waterfront Park Project Could Draw Neighboring Development

Cece Nunn - Dec 9, 2019

Local Bank Officials Comment On Creation Of Truist

Jenny Callison - Dec 9, 2019

Vantaca Moves To MegaCorp's Former Headquarters

Johanna Cano - Dec 10, 2019

U.S. 421 Utilities Expected To Help Lure Jobs

Christina Haley O'Neal - Dec 10, 2019

Mark Anthony Brands Recognizes Coastal Beverage Co.

Christina Haley O'Neal - Dec 10, 2019

In The Current Issue

NHRMC Building Plans Continue

Even though New Hanover Regional Medical Center’s future ownership status remains up in the air, the health system has not pulled back on it...


First Carolina Bank Hires Cameron, Preps For Branch

The next six months will be busy ones for First Carolina Bank, as the Rocky Mount-based financial institution prepares to open a full-servic...


Filming Reels In Jobs, Spending

Film recruiters this year landed five productions in Wilmington, and all but one project has wrapped....

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2019 Health Care Heroes
August 26, 2019 Power Breakfast: A Healthy Sale?
2019 WILMA Leadership Accelerator
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`